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Jamie Hardesty

Which North East firms benefitted most from a record quarter of northern tech investment?

Northern tech investment enjoyed a record rise in the third quarter of 2017, double the value of the previous three months.

Northern tech firms secured growth investments totalling £207.6m, heavily up on Q2’s total of £101.5m and almost four times the value achieved in the same period last year (£54.8m in Q3 2016).

The data, analysed by KPMG’s Northern tech sector team, shows that there were 45 growth investments made between June and September 2017, as well as a further 26 acquisitions.

There were six investments into North East-based tech companies, with a top three by value of: the £2.48m investment in North Shields-based Broadband Satellite Services; the £1m investment by Maven in global mobile consultancy Hedgehog Lab in Newcastle; and Sage plc’s shares transactions to the value of £710,000.

Three M&A transactions involved North East based tech businesses, led by the £61.4m acquisition of Newton Aycliffe’s Kaiam Lasers by US headquartered II-VI.

Graham Pearce, KPMG’s tech sector lead for the North, said: “With over £200m of invested funds, this is the most heavily invested quarter since we began our analysis a year ago.

“Testament to the fact that a rise in Northern tech investment is not just down to one or two extraordinary ventures, Q3 has also seen the highest number of transactions of the past twelve months.”

After a £125m investment by Old Mutual in Northwich-based e-commerce business, The Hut Group, KPMG found software had the strongest quarter with £30.4m invested in 17 companies, closely followed by internet and media businesses, with £29.2m invested in 13 companies.

On a rise in investment from overseas, Pearce comments: “Overseas investment in UK tech has historically been London centric, but a number of recent investments have seen significant overseas interest, with funds flowing in from tech enterprises and financial investors across the US, Europe and Asia.

“The size of these investments is not minor; for example, the recent £20.2m PushDoctor fundraise in Manchester saw participation from Silicon Valley-based Partech Ventures and Paris-based Seventure Partners.”

The Northern Powerhouse Investment Fund, which opened in February 2017, made four investments of under £1m in Northern tech start-ups in Q3, with three in Yorkshire and one in the North East.

There were 26 completed acquisitions in the quarter, a 79% increase on Q3 2016. Pearce concluded: “This suggests confidence in the M&A market returned to the Northern tech sector in the year after the shock of the Brexit vote.”

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