We will be part of the solution – regional VCs pledge to tackle southern bias and lack of diversity

Venture capital and private equity firms founded in the North have said they are up for the challenge of investing in regional growth companies, and a diverse and sustainable way. 

Reacting to the news on TheBusinessDesk.com yesterday that the powerful Treasury Select Committee had slammed their industry for a southern bias and a poor record on diversity, senior players in the North West pledged to be “part of the solution” as outlined in TheBusinessDesk.com Invest North report launched last week which called for moves to “unlock the transformative potential of Britain’s investment capital through a committed programme of policy and regulatory reform … to back more fast-growing businesses across the North towards reaching scale.”

Sim Singh-Landa, investment director at Praetura Ventures told TheBusinessDesk.com that change needs to come from within the venture capital community:

“For many founders and investors, this imbalance in the VC industry is a well-known challenge. Many public and private sector organisations are doing great work to change these norms, but more must be done from within the industry.

“The current status quo isn’t working, so all VCs need to seek out and change the biases within their portfolios, investment teams and deal sourcing strategies. There is a substantial body of evidence proving that greater diversity of thought leads to better returns and improved portfolio diversification.” 

She said Praetura supports projects such as Fund Her North, to identify and support women entrepreneurs. 

“We are continuously looking at how we can invest in founders from a variety of backgrounds, this includes having a diverse investment team, an inclusive investment process and support ecosystem champions, such as Fund Her North.”

Last year Praetura produced a report What’s Powering the Powerhouse? – which found a lack of capital through equity funding, accelerators and support that amounts to £4.97bn in the North West, £3.8bn in Yorkshire and Humber and £1bn in the North East, totalling almost £10bn.

Singh-Landa said: “Our own research found a massive equity funding gap in the North West, when compared to South East counterparts. London does not have a monopoly on entrepreneurism. The North needs to continue to champion our breakout success stories to help inspire the next generation.”

Asked about the damning Treasury Committee report, William Chappel, Partner and Head of Growth Credit at Palatine said: “This is an important report and we recognise that the current early-stage funding ecosystem needs more regional balance and focus beyond London and the South East.

“The launch of Palatine Growth Credit earlier this year was a response to the funding gap we know exists in the regions, and we hope to be a part of the solution in ‘levelling-up’ the growth funding landscape.

Chappel also said that Palatine, which has achieved B Corp status as a benchmark for sustainability, is committed to ESG objectives across its investment portfolio.

“ESG has been a cornerstone of Palatine’s investment approach for more than a decade. We are passionate about supporting great management teams who are open to the potential of all elements of ESG, including ethnic and gender diversity.”

The new chairman of trade body BVCA is Garry Wilson, founder of private equity investor Endless, based in the Leeds and Manchester.

On taking up his appointment Wilson said: “We have a great opportunity to tell our story and to speak up about how private capital can deliver benefits for millions of people in the UK. Almost 2m jobs across the UK are supported by private capital investment, with 65% of those investments made in businesses outside of London. 

“By explaining who we are investing money on behalf – pension schemes, universities, charitable foundation to name a few – we can show that we can generate returns for the beneficiaries of those investments whilst having a positive benefit in the communities where we invest.”

The BVCA is also urging PE and VC firms to accelerate progress on diversity overall with the understanding that this is only the start of the journey.

A diversity report published in May 2023 found that “notable progress” has been made in increasing the proportion of women in the junior and mid-level roles, but progress at the senior levels has been slower.