Private capital backs 873 North West firms as gaps persist

By Daniel Okafor

Private capital backs 873 businesses across the North West—393 through private equity and 480 through venture capital—according to a UK Private Capital report produced with Gallagher.

The companies support around 247,000 jobs and generated £15.7bn in gross domestic product in 2025, the report says.

UK Private Capital launched the report in Manchester as its roadshow reached the city, with Gallagher as its report partner.

What does private capital already fund?

The report sets out three figures for investment in 2025:

• Buyout investment into established and mature companies totaled £1.4bn.
• Venture capital accounted for £214m, supporting early-stage businesses seeking market entry.
• Growth capital totaled £166m for early- and mid-stage companies looking to scale.

Michael Moore, chief executive of UK Private Capital, said:

“Private capital already plays a substantial role in the North West economy, backing businesses across every sector and supporting a vibrant spinout ecosystem. Over the past five years, the region has attracted more than £8.5 billion of investment, supporting companies to innovate, scale and compete.”

Where do university spinouts fit?

The report identifies 171 active university spinouts across the North West. Manchester accounts for 70, Liverpool for 21 and Lancaster for 17.

It points to research strengths at the University of Manchester, the University of Liverpool and Lancaster University. The regional research base also includes life-sciences hubs in Liverpool, Daresbury and Alderley Park.

The report also describes a persistent North–South divide that limits investor engagement. It said:

“Many fund managers remain reluctant to establish a physical presence outside London and the South East, reducing the depth of local networks and access to decision-makers. While Manchester and Liverpool both have distinct investment offers, Manchester increasingly serves as the region’s focal point for capital and attention.

“Commercialising the North West’s university research remains a critical but underdeveloped part of the ecosystem, with structural and cultural barriers still slowing the journey from discovery to investable business.

“These challenges are compounded by a persistent shortage of early-stage and follow-on private capital, reflecting the low density of locally based venture investors. Strengthening commercial pathways and expanding the regional funding base would help more promising companies start, scale and remain in the North West.”

The constraints operate in sequence, according to the report. Commercialisation barriers delay the move from research to business. Thin local networks restrict access to investors and decision-makers. A shortage of locally based venture investors then limits early-stage rounds and follow-on funding.

What changes could close the gap?

The report calls for several linked policy changes:

• Scale programmes that help spinouts and innovation-led businesses commercialise and raise external funding.
• Ensure pension reforms and Local Government Pension Scheme pooling support regional growth and a diverse private-capital ecosystem.
• Improve awareness of private equity and venture capital among small and medium-sized enterprises seeking growth capital.
• Strengthen regional skills infrastructure and modernise high-skilled visa routes.
• Accelerate planning decisions and investment in transport, energy, digital infrastructure and strategic growth sites.

Together, the recommendations target both sides of the funding problem. They seek to prepare spinouts for investors while widening the pool of capital available in the region. The report also treats pension assets, specialist skills and basic infrastructure as complements to private investment.

Do backed companies perform better?

Henham Strategy’s analysis for the report produced three comparisons:

• North West companies with private-capital backing were 20% more likely to deliver sustained annualised revenue growth above 10% per year than unbacked firms.
• Venture-backed firms were 40% more likely to be internationalised than firms without venture-capital backing.
• North West venture-backed firms were 2.5 times as likely to file patents as businesses without that backing.

The report presents these findings as relative likelihoods rather than guaranteed revenue, export or patent outcomes.

The next test for Manchester and Liverpool is whether pension-pooling, skills and infrastructure reforms bring investors closer to the region’s 171 spinouts. The report says the early-stage and follow-on capital shortage must ease for more university discoveries to scale within the North West.