Northern Gritstone is opening a Northern Gritstone San Francisco office as it looks to pull more US investment into the portfolio of spinout companies it backs from universities across the north of England. The move stops short of deploying capital stateside, the focus remains firmly on helping British deep-tech companies access American money, talent and networks, rather than chasing US deals.
The investor was launched in 2021 to back companies emerging from research at the universities of Leeds, Manchester and Sheffield. It has since raised £382m and extended its scope to include spinouts from the University of Liverpool. On its own site, Northern Gritstone says that the share of spinout funding going to the North of England has increased fourfold since it began investing in 2022, a figure that speaks to how little of the UK’s venture activity historically reached beyond the London-Cambridge corridor.
What the San Francisco move is actually for
The firm is hiring a venture partner based in the US. According to The Times, that person will be tasked with connecting portfolio companies to networks, capital and business development opportunities, not sourcing new investments for Northern Gritstone itself. The budget for the office and the hire is around $1m.
Chief executive Duncan Johnson was direct about the rationale. ‘We want to get more US capital,’ he told The Times. ‘It means you can grow quicker, because [the US is] better at procuring, and their risk appetite for [investing in] technology is higher. It allows us to recruit more talent into our businesses.’ He also acknowledged the structural disadvantage British companies face when trying to raise from American funds without a US presence: ‘[UK companies] trade at a discount in the US […] and capital is good at finding opportunities. But you’ve got to make the effort to go and make it easy for them.’
In a separate statement, Johnson framed the office as a bridge rather than a beachhead: ‘Our portfolio companies are rooted in the North, but our ambitions are global when it comes to scaling them. Access to deeper pools of US capital, talent and networks will let us turbocharge the international expansion of world-class research coming out of Northern universities, helping them achieve better commercialisation and, ultimately, higher exit values. Our venture partner will serve as a key differentiator, creating a smoother transition for our portfolio.’
Northern Gritstone San Francisco and the portfolio it represents
The companies Johnson is talking about span a range of deep-tech categories. Northern Gritstone’s portfolio includes enzyme engineering spinout Imperagen, photonics chip company Optalysys and semiconductor scaleup Pragmatic Semiconductor. These are exactly the kind of capital-intensive, long-cycle businesses that can struggle to raise large follow-on rounds from UK investors alone, and for which a warm introduction to a US fund manager can matter considerably more than geography suggests it should.
Which raises an obvious question: if the problem is that UK deep-tech companies trade at a discount in the US, does a single venture partner in San Francisco move the needle? The argument, implicitly, is that it lowers the friction enough to start changing the dynamic. US investors are not going to fly to Leeds or Sheffield to kick the tyres on an enzyme engineering company they have never heard of. A local contact who can translate the proposition and facilitate introductions is, at minimum, a credible first step.
What the model does not answer is whether the fourfold increase in northern spinout funding Northern Gritstone cites is a result of its own activity, a broader shift in UK venture geography, or some combination of both. The firm naturally presents it as evidence of momentum. Either way, the decision to plant a flag in San Francisco rather than, say, Boston or New York suggests the firm is betting that the Valley’s appetite for deep technology (semiconductors, photonics, advanced biotech) is the right match for what its universities are producing.
Northern Gritstone confirmed to Sifted that it is hiring for the venture partner role now.
