Northern Gritstone, a life sciences and deeptech investment firm based in the UK, has just completed a significant £50 million fundraise.
This new milestone marks an exciting chapter for the company, which has been making waves in supporting university spinouts and cutting-edge technology ventures.
To dive deeper into the firm’s mission and the future of innovation in the North of England, we caught up with CEO Duncan Johnson to discuss his background, the firm’s approach, and the road ahead.
Duncan Johnson’s Background and Journey to Northern Gritstone
From Accounting to Venture Capital
Duncan Johnson’s career path began in a rather unconventional way.
Initially trained as a receiver and chartered accountant, Duncan spent his early years working with bankrupt companies in the East End of London.
By the age of 22, he was being sent to run struggling businesses for two to three months at a time.
This experience, which he describes as a “baptism of fire,” gave him invaluable insights into the world of business and finance.
This early exposure sparked Duncan’s interest in venture capital and private equity. He transitioned into investment banking, eventually joining the private investment side of Royal Bank of Scotland.
After a successful stint as a founding partner of an SME-focused private equity fund manager, he spent nearly a decade at RJD Partners.
From there, Duncan moved on to lead Caledonia Private Capital for 11 years.
In 2021, Duncan became the founding Chief Executive of Northern Gritstone, driven by his belief in the untapped potential of innovation in the North of England.
One of the most striking statistics that fueled his decision was that in 2019, less than 3% of UK university spinout investments were directed towards the North (£27.5 million out of a total of £1240.9 million).
Introducing Northern Gritstone and Its Mission
Northern Gritstone’s Formative Years and Strategy
Northern Gritstone was born out of a partnership between the Universities of Leeds, Manchester, and Sheffield in 2019.
Duncan came on board as CEO in 2021, helping establish the firm as an independent entity.
The company’s primary goal is to support founders through the commercialization process of turning university research into successful life sciences and deeptech businesses.
Northern Gritstone’s approach is unique in that it not only focuses on university spinouts but also invests in early-stage companies outside the academic environment.
A notable example of this is Pragmatic Semiconductor, which raised the largest-ever European semiconductor venture funding round in late 2023.
At the heart of the firm’s investment philosophy is the idea of “profit with purpose.”
Duncan explains that the firm aims to generate strong returns for shareholders while also creating societal and economic impacts.
These include creating high-skilled jobs in the North of England, where businesses benefit from the multiplier effect of well-paid employment and regional economic growth.
The Firm’s Strategy for Growth and Innovation
Becoming a Leading European Investment Business
Northern Gritstone’s strategy is ambitious: it seeks to become the leading European investment business for IP-rich businesses in deeptech and life sciences.
Initially, the firm raised £312 million in permanent capital and has now grown that amount to £362 million, with committed capital in place for continued investment.
Since its launch, Northern Gritstone has invested £62 million into 32 companies, with co-investors adding an additional £281 million, bringing the total amount invested to £343 million.
The firm has made significant strides in supporting early-stage businesses, but Duncan emphasizes that capital is only one piece of the puzzle.
Supporting Startups Beyond Capital
NG Innovation Services: More Than Just Investment
Northern Gritstone’s support for startups goes far beyond just providing capital.
In early 2024, the firm launched NG Innovation Services, a program designed to provide the additional tools and resources needed to help startups thrive.
Duncan explains that Northern Gritstone’s investment portfolio includes world-class science and technology, particularly coming from universities in the North of England.
The key to success, however, is helping ambitious founders turn these scientific innovations into scalable, customer-focused businesses.
NG Innovation Services plays a critical role in this by bringing in the right talent and infrastructure to support growth.
The innovation services provided by the firm include:
- NG Studios: A venture-building program delivered in collaboration with top-tier partners.
- NG Talent: Mentorship for leaders and access to expertise from industry veterans.
- NG Business Services: Essential business services, including HR, Finance, Insurance, and IT.
- NG Growth: A program that helps transition technology-led businesses into customer-focused ventures.
- NG Co-Investors: A network that connects founders with investors from pre-seed stages onward.
These services, together, form a robust toolkit to help startups maximize their chances of success in the early stages of their journey.
The Importance of Northern Gritstone’s Shareholders
Backing from Leading Institutional Investors
Northern Gritstone is supported by some of the UK’s leading institutional investors, including Columbia Threadneedle, Fulcrum Asset Management, and major UK pension funds like M&G, Aviva, and L&G.
Duncan notes that these investors recognize the unique potential of university spinouts and the growing innovation scene in the North of England.
They are also committed to seeing the benefits of their investments flow into the regional economy to support long-term growth.
What Makes a Great Founder?
Key Traits for Success
Duncan’s advice for aspiring founders is simple but impactful. He emphasizes the importance of ambition, enthusiasm, and stamina in the face of the challenges that come with building a business. He encourages founders to:
- Think big: Build a company with growth in mind.
- Place talent at the center: The right leadership team will drive a company’s success.
- Be customer-focused: Focus on solving customer problems, not just developing products.
- Seek help: Leverage networks, including the one offered by Northern Gritstone, to access advice and support.
Startups that Stand Out to Northern Gritstone
Innovative Startups Worth Celebrating
Duncan shared a few examples of startups that Northern Gritstone is particularly proud of. These include:
- Phlux Technology: A Sheffield spinout that raised £9 million in its Series A round, focusing on ultra-low-noise infrared sensors.
- Silveray: A company revolutionizing radiography with bendable x-ray materials, applicable in both industrial and healthcare settings.
- Optalysys: A Leeds-based startup that uses photonic technology to secure data without decryption, working with industries like banking and healthcare.
- Imperagen: A Manchester-based biotechnology firm specializing in AI-driven precision enzyme engineering for various sectors, including pharmaceuticals.
- Pragmatic Semiconductor: A groundbreaking microchip maker that raised £182 million in 2023, producing flexible, ultra-low-cost microchips for a wide range of applications.
Conclusion
Northern Gritstone’s vision is to empower the next generation of life sciences and deeptech innovators in the North of England.
By combining intelligent capital, strategic support, and a network of world-class services, the firm is paving the way for startups to thrive on both a local and global scale.
With a clear focus on “profit with purpose,” Northern Gritstone aims to not only deliver strong returns for investors but also create meaningful, long-lasting impact in the region’s economy.