NStar funding helps local firms to get off the ground

Since it was established in 2004, NStar has generated £33m of new cash to support fledgling technology companies in the region.

Since it was established in 2004, NStar has generated £33m of new cash to support fledgling technology companies in the region.

NStar recently created a venture capital management company, NorthStar Equity Investors, which operates two new venture capital funds for the region.

NorthStar Equity Investors Ltd is based in Newcastle and is regulated by the Financial Services Authority. It operates The North-East Proof of Concept Fund (POC) and the North-East Co-investment Fund (NECOIF). Together the funds have brought £33m of new money into the region.

The North-East POC is aimed at taking forward technology opportunities that emerge from local universities and businesses. This £10m fund has now made 28 investments, and is expecting to make around 200 in total over its four-year investment life. The fund is being financed by money from One NorthEast and the European Regional Development Fund.

Dr Richard Exley, who runs the POC, commented: "With this fund we are looking to make investments at a very early stage, where conventional venture capitalists fear to tread. Our purpose is to help drive and develop new technologies and business ideas into deals capable of receiving further investment. We're operating right at the front end of the whole process."

The North-East Co-investment Fund targets much bigger deals, again with a focus on technology-related opportunities.

With £23m of European finance, the fund targets companies needing anything up to £2m of equity capital. The fund, which started considering investment proposals last December, is now close to making its first investments. It will provide a proportion of the funds needed on any deal, investing on a matched-funding basis alongside the private sector.

Jonathan Gold, chief executive of NorthStar Equity Investors, and joint founder of NStar with Andrew Mitchell, said: "These funds are now beginning to create and grow new technology companies in the region. The larger £23m Co-Investment Fund is helping to attract other private sector investments into the region to participate alongside the fund.

"The POC team has already made significant progress financing 28 projects with a contribution of £1.6m over the last year since its launch."

Many companies and academics across the North-East region have already taken advantage of the funds to develop their technology-business ideas.

A Gateshead company has recently received a £60,000 POC investment from NorthStar Equity Investors to develop an innovative new technology for the retail fuel industry. eGasStation is using fuel-monitoring technology, first developed in the US, and adapting it for the UK market. The software will help fuel retailers improve cost management and monitor environmental impacts.

The NEPOCF investment will enable the team to trial the software at sites in Northampton and Chester-le-Street and if successful the team will seek further investment next year.

Martin McTague, managing director, said: "Without this funding we wouldn't have been able to explore the capabilities of this technology and take our project to the next stage. In the current climate I think we would have really struggled to raise the money in other ways."

Technology-based companies looking for investment should contact Richard Exley or Alex Buchan at NorthStar Equity Investors on (0191) 211-2301 or visitwww.northstarei.com. For more information on NStar visit www.nstarfinance.com.


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