British Business Bank anchors Northern Gritstone’s £20m rolling close as northern deeptech push gathers pace
Dante Ulanday - News Writer and Moderator 
Northern Gritstone, the venture capital firm bankrolling the North of England’s deeptech and life sciences ambitions, has pulled in a further £20 million of ordinary share commitments in the first tranche of a one-year rolling close, with the British Business Bank stepping up as cornerstone investor alongside hedge fund grandee Andrew Law.
The fresh capital takes the Leeds-headquartered firm’s permanent capital base to £382 million, building on the £362 million closed in April 2025. The state-backed British Business Bank has written a £10 million cheque, lifting its total exposure to Northern Gritstone to £40 million and reinforcing its position as the single largest backer of UK venture and venture growth capital funds. Mr Law, chief executive of London hedge fund Caxton Associates, has topped up his own stake, though the firm has not disclosed the size of his latest commitment.
The round marks the opening salvo in a wider fundraising programme that Northern Gritstone intends to run through 2026, a notable show of conviction at a moment when much of the European venture market remains becalmed.
Since launching in May 2022, Northern Gritstone has deployed capital into 51 companies spanning semiconductor design and manufacturing, advanced materials, secure computing, artificial intelligence, healthtech and gene therapies. Many of its portfolio businesses are spinouts from the so-called Northern Arc universities, Leeds, Liverpool, Manchester and Sheffield, which between them generate close to £800 million in research funding each year, 92 per cent of which is rated world-leading or internationally excellent.
The pitch to investors is that the Northern Arc now sits alongside Oxford, Cambridge and London as the fourth pillar of what the industry has dubbed the UK’s “Technology Diamond” — a geography that Northern Gritstone argues is structurally under-capitalised relative to the quality of its intellectual property pipeline.
For the British Business Bank, the commitment is part of a wider thesis on the spinout economy. Between 2022 and 2024, the Bank backed nearly a quarter (24 per cent) of all university spinout deals in the UK, cementing its role as the default co-investor for funds prepared to turn academic research into commercial businesses.
Lord Jim O’Neill, chairman of Northern Gritstone and the former Goldman Sachs chief economist who coined the “Northern Powerhouse” label while at the Treasury, said the latest vote of confidence would help accelerate the firm’s work across the Northern Arc. “We are very grateful for this further support from the British Business Bank and Andrew Law to continue developing global businesses in the North of England originating from our ‘Northern Arc’ university ecosystem,” he said. “In this way, investors are contributing to future higher value-added activity and the North’s productivity.”
Chief executive Duncan Johnson said the speed of the rolling close underlined the resilience of the regional innovation story. “This strong start to Northern Gritstone’s rolling close in today’s challenging fundraising environment shows the belief in innovation coming from the North of England,” he said. “The region is now an integral part of the UK’s Technology Diamond, and we are proud to support the incredible talent of the North, helping to commercialise groundbreaking research into internationally commercial businesses.”
Christine Hockley, managing director and head of commercial equity funds at the British Business Bank, framed the decision as a deliberate bet on science-led growth. “The UK’s universities are a powerhouse of breakthrough research, and Northern Gritstone plays a vital role in transforming world-class research from the North of England into high-potential, IP-rich businesses,” she said. “Our increased commitment reflects the Bank’s ambition to scale life sciences and deeptech businesses, which are critical to the UK’s future growth.”
With the rolling close now open and further tranches expected over the coming twelve months, Northern Gritstone’s next challenge will be converting institutional interest into the kind of scale-up capital needed to keep Britain’s best Northern spinouts from drifting across the Atlantic in search of later-stage funding.
