Northern Gritstone, the venture capital firm funding northern England’s deeptech and life sciences ambitions, has secured a further £20m of common share commitments in the first tranche of a year-long rolling deal, with the British Business Bank joining hedge fund grandee Andrew Law as a cornerstone investor.
The fresh capital increases the Leeds-based company’s permanent capital base to £382m, building on the £362m closed in April 2025. Government-backed British Business Bank has written a check for £10m, bringing its total exposure to Northern Gritstone to £40m and strengthening its position as the largest backer of UK venture and venture growth capital funds. Mr Law, chief executive of London hedge fund Caxton Associates, has increased his own stake, although the firm has not disclosed the size of his latest involvement.
The round marks the opening salvo of a broader fundraising program that Northern Gritstone plans to undertake through 2026, a remarkable show of conviction at a time when much of the European venture capital market remains reassured.
Since its inception in May 2022, Northern Gritstone has invested capital in 51 companies operating in semiconductor design and manufacturing, advanced materials, secure computing, artificial intelligence, health technology and gene therapies. Many of its portfolio companies are spin-offs from the so-called Northern Arc universities of Leeds, Liverpool, Manchester and Sheffield, which together generate almost £800 million in research funding each year, 92 per cent of which are rated world-leading or internationally excellent.
Investors’ concern is that Northern Arc is now the fourth pillar, alongside Oxford, Cambridge and London, of what the industry has dubbed Britain’s “tech diamond” – a region that Northern Gritstone says is structurally undercapitalized compared to the quality of its intellectual property pipeline.
For the British Business Bank, the commitment is part of a broader thesis on the spinout economy. Between 2022 and 2024, the bank backed almost a quarter (24 per cent) of all university spin-outs in the UK, cementing its role as the default co-investor for funds poised to transform academic research into commercial ventures.
Northern Gritstone chairman and former Goldman Sachs chief economist Lord Jim O’Neill, who coined the term “Northern Powerhouse” during his time at the Treasury, said the latest vote of confidence would help accelerate the firm’s work across the Northern Arc. “We are very grateful for this further support from the British Business Bank and Andrew Law to continue the development of global businesses in the North of England, coming from our Northern Arc university ecosystem,” he said. “In this way, investors are contributing to future higher value-added activity and the productivity of the North.”
Chief executive Duncan Johnson said the speed of the rolling closing underlined the resilience of the region’s innovation story. “This strong start to Northern Gritstone’s rolling closing in today’s challenging fundraising environment demonstrates the belief in innovation coming from the north of England,” he said. “The region is now an integral part of the UK’s technology diamond and we are proud to support the North’s incredible talent and help commercialize ground-breaking research into international commercial ventures.”
Christine Hockley, managing director and head of commercial equity funds at the British Business Bank, described the decision as a conscious bet on science-based growth. “UK universities are a powerhouse of ground-breaking research and Northern Gritstone plays a vital role in transforming world-class research from the North of England into high-potential, IP-rich businesses,” she said. “Our increased commitment reflects the bank’s ambition to grow life sciences and deeptech businesses, which are critical to the UK’s future growth.”
With rolling closing now open and further tranches expected over the next 12 months, Northern Gritstone’s next challenge will be to convert institutional interest into the kind of capital required to prevent the UK’s best Northern spinouts from drifting across the Atlantic in search of subsequent funding.
