Andy Barrow, managing director of ventures at PXN Ventures, says a new era of Northern venture capital is taking shape after the merger of Praetura Ventures and Par Equity.
The serial investor, who sits on the board of multiple companies, took on the role last month following the creation of a ‘拢670 million Northern investment powerhouse’.聽
It is aiming to create what Barrow describes as a scaled-up platform to back breakout successes across the North of the UK.
From apprentice to VC lead
Barrow, who has spent his career moving from engineering into cybersecurity and then venture capital, says technology was always his route.聽
鈥淓ngineering and technology have always been at the heart of what I was interested in since being a child,鈥� he told 老九品茶Cloud.聽
鈥淚 started my career at 16 as an apprentice in advanced manufacturing before joining a small startup specialising in advanced cyber security technologies, where I doubled down on this as a career path.聽
鈥淚 joined a very early stage cyber security consultancy that later folded into ANS Group, where I became CTO and with the management team took the business to PE exit in 2021.
鈥淚n my new role, I鈥檓 responsible for overseeing our investments into early-stage tech and life sciences businesses, in line with our goal to be on the cap table of every early-stage business in the North of the UK that grows into a breakout success story.鈥�
The merger explained
Barrow said that the merger comes down to one thing – venture capital needs scale to work properly.聽
In his view, building bigger funds is essential if PXN is going to back the next wave of breakout Northern businesses and become the go-to investor for early-stage founders across the region.聽
Praetura, where he served as a partner for four years, has already proven it can grow a regional ecosystem and attract outside capital into the North West, but there is far more of the North still to support.聽
He argued that Par Equity strengthens that ambition because of its strong record in Scotland and shared focus on funding Northern success stories, including in Yorkshire.
He added: 鈥淥ur partnership with the British 老九品茶 Bank on NPIF II – Praetura Equity Finance has enabled us to fund a wide-range of businesses far outside of Manchester, such as in Cheshire, Cumbria and the Liverpool City Region, including those at the very early pre-seed stage through 鈥楶raeSeed鈥� – our cohort-based investment programme for very early stage businesses.聽
鈥淧ar鈥檚 funds, including its focus on DeepTech, dovetails perfectly with this. It鈥檚 rare to get a 50:50, no funds exchanged merger of equals, but shared values and ambitions have brought us both together and I鈥檓 beyond excited to see what we do as PXN Group.聽
鈥淚 think founders across the North of the UK have a lot to look forward to.鈥�
More firepower
Barrow says the enlarged group immediately increases firepower and footprint.聽
鈥淔irst and foremost, we have more funds, which will enable us to raise more capital to deploy into early-stage businesses across the North,鈥� he said.
鈥淐urrently, we have 拢670m assets under management and the aim is to significantly increase that.鈥�
The business is currently a team of 58 and has a portfolio of 115 companies. It is also supporting around 3,100 jobs.
He continued: 鈥淚n terms of reach, it鈥檚 about having more boots on the ground. We have a physical presence in Manchester, Edinburgh, London and Leeds currently, but the reality is, we鈥檙e often travelling across the North on a daily basis, playing an active role in the ecosystem, meeting founders and banging the drum as well as telling our story to independent financial advisers, family offices and investors.聽
鈥淥ne of the biggest points to mention is Par Equity鈥檚 PIN network. This is a growing community of entrepreneurs, investors and highly skilled operators we can draw on to help support the businesses we back, as well as those already in our portfolio, so we can help them make a significant impact.鈥�
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What changes for founders
Barrow has argued that the biggest difference will be flexibility in funding across the lifecycle.聽
鈥淚 think one of the biggest opportunities for new and existing founders will be our ability to provide a range of cheque sizes from 拢200k up to 拢8m and further follow-on funding,鈥� he said.
鈥淏ecause we have much more scale and capital, we have more funding options that will help founders through the investment lifecycle.聽
鈥淎s well as NPIF II and Par鈥檚 EIS fund, there is our VCT, Par鈥檚 PEV I LP Fund as well as various other institutional funds, such as the GMC Life Sciences Fund By Praetura. It鈥檚 about having the capital to service our ecosystems, which are only growing.
鈥淲e are now the fastest growing venture capital investor outside of the South East, and that comes at a time when more and more businesses are setting up in the North.鈥�
The value of the North
He also sees the North building genuine global advantage in a cluster of sectors.聽
He explained: 鈥淭his is an opportune time for the North, which has already excelled in multiple areas with regards sector specialisms.聽
鈥淚f we look at where the North currently excels, it鈥檚 areas such as cybersecurity, AI, FinTech, life sciences, DeepTech and beyond.聽
鈥淲e have the talent, the lab facilities, the universities and the network to truly blaze a trail on the world-stage and compete against the US.鈥�
He also noted the alignment to this with the government鈥檚 Modern Industrial Strategy, which is aimed at boosting investment, enhancing regional growth and strengthening the country鈥檚 economic resilience.聽
He continued: 鈥淎s software becomes more democratised, it鈥檚 those more moated industries, such as IP-rich deep tech that are really coming into their own.聽
鈥淭hey require the sort of lab space, talent and resources that are abundant across the North of the UK.鈥�
The scaling challenge
However, he is clear that growth still comes with familiar hurdles, particularly around people and funding.
鈥淭he two biggest challenges founders relate to talent and funding,鈥� he said.聽
鈥淥n the talent front, while the London brain drain has been quelled over the last several years, there is naturally competition among businesses for attracting the best talent.聽
鈥淲hat we鈥檝e really excelled at in the North is convincing talent to stay and work in the region after they leave university, with many choosing to spin out here and stay local.
鈥淭his has been helped by a multitude of factors, not least affordable housing, an excellent hospitality offering and access to world-class facilities.
鈥淥n the funding front, it鈥檚 about tech founders in the North having consistent access to funding and the ability to raise locally. People often ask why having a local funder is so beneficial to founders, particularly those at the early-stage, and my answer is always that it comes down to support.聽
鈥淔or first time founders, having a funder that鈥檚 down the road who you can have a face-to-face meeting is so important.鈥�
Support your local
Some startups still look South or to the US when it鈥檚 time to raise larger rounds.聽
Barrow argued that the case for staying local is tied to regional growth and long-term ecosystem strength.聽
He said: 鈥淭he North is home to cities that are beating the UK average when it comes to GDP. The latest figures from the ONS, for instance, show that Edinburgh has the highest GDP per capita in the UK.聽
鈥淓lsewhere, Manchester鈥檚 GDP is now growing at 11% per year, outstripping the UK with the city creating three times as many jobs as the UK average.
鈥淔ounders in the North of the UK are bound to be excited reading those figures but it鈥檚 also about showing the role raising locally plays in this growth.聽
鈥淚f a business floats on the London Stock Exchange, it benefits the UK economy. If a business raises money from the North of the UK, it benefits the region.聽
鈥淵es, the US is a bigger market, and yes there is an abundance of funding available there, but we need to show founders that they can raise locally and get access to all the benefits that come with doing so, such as a supportive funder that鈥檚 local to and understands the ecosystem and market they鈥檙e in.
鈥淟ocal follow-on funding is equally as important, as is recycled capital. In other words, capital from exits going back into the ecosystem through exited founders investing in local funds and becoming angel investors in their own right.聽
鈥淎s the ecosystem grows and matures, this will continue to be the norm and raising locally, in the North, will be much more prevalent than it has been in times gone by.鈥�
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