How private investment can accelerate Northern Ireland’s ambition

When Clarendon Fund Managers was first set up 25 years ago, it’s fair to say the concept of private capital/equity investment was not well known in Northern Ireland, and for some of those company founders who did consider it, there was a deeply ingrained reluctance to take funding in return for what they saw as giving up a share in their business.

Thankfully, since then, most of those old misconceptions have been dispelled and the lack of understanding about what equity investment can do to supercharge the growth of a business has been addressed, with a vibrant early-stage equity investment ecosystem and a range of funding options now available to businesses.

We couldn’t have foreseen in the early 2000s that Clarendon would be marking the second anniversary of managing the Investment Fund for Northern Ireland equity fund, part of the British Business Bank’s Nations and Regions Investment Funds.

The £45m fund makes equity investments of up to £5m in Northern Ireland-based smaller businesses and we are proud to have completed 12 investments to date, totalling £19m since the fund was established in December 2023.

The fund was launched by the Bank because, despite the progress in the local market, NI had what is termed an “equity gap” with companies often falling between the lower levels of funding which business angels and local venture capital funds offered, and the big numbers provided by larger UK funds.

This was particularly true for ambitious companies looking to secure their first major investment round and meant that founders with high potential companies were seeing growth slow or were forced to look for funding from outside the region.

I’m encouraged that three of the first 12 companies to have secured funding from IFNI are led by female founders and we also have the ability to invest in traditional, family-owned businesses and take a hands-on approach to supporting them beyond simply providing capital.

Importantly, the fund also gave focus to regions of Northern Ireland which had previously been underserved or where equity investment had gained little traction and has enabled us to fund firms at the early, growth and expansion stages of their journey.

What is perhaps still not fully understood is that equity investment isn’t just for certain sectors or types of business and the first investments from IFNI attest to this, with funding provided to smaller businesses drawn from all corners of NI from consumer products to Health and Life Sciences, ICT and fintech.

They include Needi, a tech startup business from Armagh which has grown its revenues by a factor of four since taking investment; Neurovalens, a pioneering medical device company which has launched its products for the treatment of health challenges such as insomnia and PTSD in the US; and medical imaging firm Cirdan, which has built its order book considerably. A significant exit was also achieved when innovative reformer Pilates business Reform RX was acquired by iFIT Inc, a global leader in connected fitness.

For Needi, equity investment has been instrumental in professionalising and scaling the business. It has enabled team expansion, accelerated core technology delivery, and improved revenue and performance visibility. This has unlocked new high-margin revenue streams and supported deeper relationships with enterprise clients, generating millions in sales.

Investment has also helped Stora, which has developed an AI-enabled, all-in-one self-storage software platform, to begin scaling. Capital has supported senior leadership hires and faster product development and also allowed the business to enter new international markets – increasing the company’s valuation significantly.

I mention all of this because we still believe there is more that can be achieved to help some of our most innovative businesses take the next step in their growth trajectory.

The IFNI provides flexible, patient capital and has acted as a catalyst for some of the companies we have funded by providing a degree of confidence that has enabled them to attract additional private investment from investors.

In fact, IFNI investment has crowded in a further £29m of additional capital and we think there is a real opportunity for more private capital to work alongside funds like IFNI to deepen the equity ecosystem in Northern Ireland and ensure high-potential businesses have an even better chance of scaling up successfully.

In my view, the scale of ambition among NI businesses has never been higher and as we look ahead at year three of the fund, our team are focused on deployment of funds and supporting ambitious founders across the province at every stage of growth.