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19 September 2011

Deals in Motion

A round up on deals so far



Fund ManagersBy

By the end of August 2011, The North West Fund had completed 31 investments, injecting an average of £182k into each business. The total amount invested by the Fund across the 31 companies came to just under £6m. 


The great news is that this success does not reflect just an initial flurry of activity. All six of our experienced fund managers continue to report consistently strong levels of applications, with a large number of deals across the six sub-funds still being assessed or in due diligence.


From corporate financiers to accountants and lawyers, intermediary networks continue to be a source of particularly high quality deal flow. We are seeing positive trends in activity flowing from our concerted effort to work more closely with banks and other funders for the benefit of the region's businesses.


In order to complete the 31 investments made during the first eight months of the year we have succeeded in attracting an additional £7m of co-investment from banks and other investors. This highlights the importance of the Fund's gap funding proposition, as we are equally happy to fund either the whole of the funding requirement or the "final piece of the jigsaw", particularly given the challenges that it is acknowledged continue to constrain the UK's mainstream lenders.


To date, we have completed a number of deals where we have co-invested alongside banks. In January, for example, FW Capital invested £200k from The North West Fund for Business Loans in Tuff X Processed Glass, a commercial glass and conservatory roof glass manufacturer based in Widnes. The investment matched a £200k loan from Lloyds TSB Commercial in Liverpool, and enabled the company to move to larger premises, reduce its cost base and increase production capacity in order to meet the growing demand for its products.


Of course, that is not to say that we do not have the flexibility to complete deals where we are the sole investor. Indeed, our largest investment to date saw EV inject £500,000 from The North West Fund for Venture Capital into Power Vision, a company formed to commercialise new opportunities in anti reflective coating for spectacles. This investment, which was completed without any co-investment, will enable the company to exploit its technology and expedite its growth strategy. You can read more about our investment in Power Vision in this edition of The North West Fund News.


We have been pleased with the breadth and variety of applications that we have received to date, encompassing businesses in all corners of the region and in a wide range of industry sectors. In particular, our three sector-specific funds - biomedical, digital & creative, and energy & environmental - have been overwhelmed by the volume and quality of deal flow, both from businesses already based here and from those looking to relocate to the North West to take advantage of the growth opportunities in their sector that the region offers.


SPARK Impact, which manages The North West Fund for Biomedical, has been enthused at the variety and quality of investment ideas focused on solving problems in the health sector. The team has already completed six pathfinder investments, which will fund research into an exciting variety of new medical products, devices and services.  A strong pipeline suggests that this momentum is likely to build further over the coming months and years.


The North West Fund for Digital & Creative has completed three investments to date, supporting businesses operating in areas as diverse as digital product development, e-commerce services and online learning. Applications continue to flood in to AXM Venture Managers from companies involved in television production, advertising, marketing communications and electronic publishing, putting the Fund on course to build a strong and diverse portfolio.


CT Investment Partners, which manages The North West Fund for Energy & Environmental, has also been pleased with the variety of opportunities it has seen over our first eight months. The sector represents a hugely varied range of products, services and processes, all with the aim of improving performance while reducing ecological impact. The Fund completed its maiden investment in May, in Runcorn-based fuel cell system developer, ACAL Energy.


Overall, it has been an extremely busy first eight months in operation for The North West Fund, and we are very pleased with our progress.  Whilst the challenge to meet our investment objectives, support economic prosperity and employment generation and create a lasting legacy for the region remains, we are confident that we are firmly on the right track. But there is of course much more still to be achieved, and we look forward to updating you on our progress in our next newsletter.

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