Investments soar to £281m for venture capital firm

Mark Payton

Mercia Asset Management, a Henley-in-Arden-based financier for small and medium-sized enterprises (SMEs), increased its investments by 39% in 2023.

The firm injected more than £281m – its highest annual investment to date.

This boost was accompanied by the backing of 195 companies, up from 176 in 2022. Around 77% of these investments were directed outside of London, as Mercia says it looks to bridge the funding gap across all regions of the UK.

The majority of Mercia’s investments were in the form of venture capital, with a significant portion also allocated to loan finance, facilitated in part by Frontier Development Capital, which Mercia acquired in 2022.

Mercia’s largest investment was nDreams, a virtual reality studio in Farnborough, to Canadian games publisher Aonic, for an enterprise value of £90.3m.

Other exits included the sale of various entities such as Secure Empty Property, SockMonkey Studios, Intechnica, and ParkVia.

Dr Mark Payton, CEO of Mercia, said: “At a time when the overall supply of new venture capital has been in decline, Mercia has continued to back compelling businesses located across the UK. 2023 has been a record year for us in terms of the value and volume of transactions and we expect a further marked increase in 2024. Our track record shows that our approach helps to nurture rising stars, build thriving start-ups and scale-up communities, and create an environment for sustainable business growth while achieving returns for Mercia’s fund investors.

“While the economic climate remains challenging, we expect the recovery to start in earnest toward the end of this year. We encourage companies to reach out to us now so we can help them strengthen their business and prepare for future growth. We look forward to supporting many more businesses in the year ahead.”

Keira Shepperson, director of regional funds at British Business Bank, said: “Investment from the Northern Powerhouse Investment Fund and Midlands Engine Investment Fund has reached businesses in all corners of their regions. From companies creating groundbreaking technology in small towns to manufacturers in big cities, the opportunities that have been unlocked have helped establish thriving business communities across the North and the Midlands.”