Finance Yorkshire finds its tech niche with first investment from £5m fund

“There’s a part for Finance Yorkshire to play in the future,” said chief executive Alex McWhirter, a former mechanical engineer turned investment boss, as the fund announces its first investment from its £5m extension fund.

“Leeds and Sheffield LEPs really stepped up to the plate [with the extension fund] – they realise the difference we make to businesses in their patches,” said McWhirter, following a turbulent time for the fund post-Brexit.

Now Finance Yorkshire has made its first investment from the new fund in York-based company TouchRight Software, founded by husband and wife team Terry and Rachel Lightfoot.

The pair have received a £50,000 Business Loan to invest in their business which develops software for estate agents, enabling them to generate reports for landlords.

Roger Marsh OBE, chairman of the LEP, said: “We contributed to the Finance Yorkshire extension fund to demonstrate our commitment to give practical support to SMEs in the Leeds City Region to access finance and grow.

“The investment in TouchRight Software to develop innovative products is a clear example of how such finance can make a difference by creating jobs and laying the foundations for further expansion.”

Ian Atkinson of Finance Yorkshire, Martin Bell of Red Sky and Terry and Rachel Lightfoot of ToughRight Software

An investment like this is representative of the types of businesses the extension fund will allow Finance Yorkshire to help, said McWhirter.

“There’s still a big gap in finance as this moment in time, and companies are still looking to invest. It’s best to do it now, when we still have circumstances we can control, but more certainty would allow businesses to get on with what they want to do – stopping is not an option,” he said.

Though the Northern Powerhouse Fund, set to launch next week, will be providing funding to similar companies as Finance Yorkshire and the North West Fund, this is an opportunity for Finance Yorkshire, said McWhirter, which has already aided 470 companies and invested £130m in its seven-year history.

But FY needs to evolve, and one of the areas of interest is technology and early stage businesses following the success of its Seedcorn Fund.

“Startups are considered very high risk by traditional lenders due to long manage-out periods and extensive structural support that is usually needed for growing digital businesses.

“We’re not under the same commercial pressures as banks. Of course we have to make returns in a timely fashion, but we are prepared for the longer wait, we’re pretty agile and have a good track record. There’s not been any ‘oh no’ moments!”

TouchRight fits into Finance Yorkshire’s evolving criteria as a proptech business looking to grow quickly. The tech bubble is in full swing in the UK, but will there by growing investor fatigue in the market due to the sheer volume of tech businesses out there? McWhirter thinks not.

He said: “I don’t think we’ll get bored, but we will become more careful and more speculative.

“Tech businesses can metamorphose into different things, so I shouldn’t think we’d get tired of technology businesses just yet. It’s just the nature of the market – some will fail which will make people more cautious.”

McWhirter highlighted he fintech, healthtech and advanced manufacturing sectors as areas where tech businesses in Yorkshire will thrive.

“We should be looking at the next technological advancement to come along. Artificial intelligence will be a big change to everyone’s way of working. It will be used in areas like insurance, taking people out of the process.”

But Finance Yorkshire does not want to become a tech investor only. There will still be a place for more traditional investments and companies, in particular a food and drink focus which has led several breweries to impressive expansion.

With three companies now listed on AIM, Finance Yorkshire has proven its credentials and this period of change will see it prove its mettle.

“You do this because you’re heart’s in it, and to make a difference in the region, and funds like ours can make a difference,” said McWhirter, and no doubt will continue to do so if this Scotsman has anything to do with it.