News Article

Fledgling high-tech firms looking to grow in the region have been given a further boost on the road to success by One North East.

The regional development agency’s board has approved £2.4m worth of funding to extend the Proof of Concept Fund (POC) to the end of 2009.

The POC provides investment at the critical earliest stages of business creation and aims to stimulate the growth of young companies, who may need equity capital to finance the development of new technologies.

The investment builds upon a £750,000 pilot by the Agency in 2004, which contributed to a main fund of £10m alongside Government Office for the North East through the European Regional Development Fund.  

The latest investment in the POC adds to the region’s comprehensive suite of funding to assist companies at every stage of their evolution. These funds together have made £100m available to regional businesses. 

Fund management company NorthStar Equity Investors (NSEI) delivers the POC, which has made 140 investments to date, including over 100 start ups and creating more than 200 jobs.

One North East anticipates that its latest investment into the POC will lead to a final total of 190 investments by the end of 2009, with over 150 of these being start ups. 

The POC is designed for companies in their earliest stages and can be used as an initial source of finance to businesses looking for future investments.  Over £20m of follow-on investment has already been attracted by the POC portfolio. 

To date, eight businesses have progressed from the POC to the £23m North East Co-Investment Fund (COIF), also managed by NorthStar Equity Investors (NSEI), which provides venture capital in partnership with public or private sector investors and has been designed to encourage co-investments with a consortia of investors.

Malcolm Page, One North East Assistant Chief Executive (Resources), said: “Economic regeneration is closely linked with business development, as outlined in the Regional Economic Strategy (RES), and so it is essential that ambitious growing companies are able to unlock their potential by accessing the appropriate finance for growth. 

“Funds like the POC are creating a sustainable system of support for innovative firms.  Returns made from the fund’s investments are then reinvested into the region and can potentially be used to support businesses in the future.”

Dr Richard Exley, Head of the Proof of Concept Fund at NSEI, commented: “POC is one of the leading funds of its type available in the UK and provides vital opportunities for businesses and individuals which will directly contribute to shaping the future economy of the North-East. We are constantly encouraged by the range of ideas we see from technology entrepreneurs, existing companies and the universities in the North-East and eagerly anticipate new high quality POC deals.”

Andrew Mitchell, Chief Executive of NStar, said: “The Proof of Concept Fund has been hugely successful in supporting investment in the North East. It’s made a major impact in driving forward innovation in science and technology by supporting early stage businesses.

“Many of the companies that have received POC funding have gone on to secure additional investment. The new finance will enable more firms and ideas to achieve commercial success.”

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For more information please contact: Melanie Armstrong, press office, One North East on Tel: (0191) 2296894. e-mail: melanie.armstrong@onenortheast.co.uk