Northern expansion on agenda for investment firm

INVESTMENT firm Mercia Technologies is planning to expand its network of partners in the Midlands and the North to help developing technology businesses secure the growth funding they need.

The Warwickshire company, which has invested Leeds University spin-out Science Warehouse, a cloud based procurement platform, is also looking at further tapping into the technology sector in Scotland with plans to link up with new universities and expand its range of contacts.

The group, which has invested £8.4m in up and coming technology businesses in the 14-week period following its stock exchange listing, believes there could be major opportunities in the various regions – and one that is being ignored by fund managers in the south.

Mark Payton, chief executive, Mercia Technologies, said: “There is nowhere near a shortage of investment opportunities outside of London and the South East.

“We position ourselves as national investors – despite our base in the Midlands – because this is driven by the nature of the digital economy.”

The firm currently works with nine universities across the Midlands in identifying spin-off technology businesses which require capital in order to achieve the next stage of their growth.

Its investment strategy enables in to operate an incubator fund (Mercia Fund Management) for young technology start-ups, together with a number of direct investments.

MFM has grown to the point where it has 44 firms within its portfolio and the group also boasts 18 direct investments – three of which (VirtTrade, Crowd Reactive and Soccer Manager) have been funded since its admission to AIM in March.

The company said its intention now was to build on the growing position in Digital Entertainment and its related sub-sectors. The portfolio balance within the direct investments will remain a priority across the group’s sector focus.

It will continue to proactively seek investment prospects without being tied to any one source or type of deal flow.

The group intends to selectively expand its incubator and university partnership network but will retain a strong focus on sourcing high quality deal flow from the Midlands, the North and Scotland.

“We want to work with people who have a deep knowledge of their sectors,” said Payton.

“We are proactively talking to partners all the time and the response from the universities in the North of England and Scotland has been very encouraging.”

“By maintaining good contacts we can invest in a relatively early stage in a company’s development and many of the businesses we support have relatively modest capital requirements,” he added.

The group has raised £4m to enable MFM to invest tax-efficient capital over the next 12 months.

It said its intention was to “build a portfolio of potential emerging stars before deploying the balance sheet follow-on investment”.

Close