Turning the North East’s innovation strengths into sustainable growth

Sarah Newbould, Associate Director  at the British Business Bank, explores the North East’s growing innovation economy and why access to finance will be critical to turning the region’s strengths into long-term growth.

The North East has a strong track record of innovation. Its industrial heritage has provided the foundations for expertise in areas such as manufacturing and energy, while its universities and research institutions continue to develop new ideas and technologies.

Today, that expertise is creating opportunities in some of the sectors expected to shape the UK economy over the coming years, including clean energy, advanced manufacturing, digital and technologies and life sciences.

The opportunities for the region are significant, but developing a successful innovation economy takes more than generating good ideas. The conditions must be created for businesses to commercialise good ideas, scale and ultimately become significant employers and contributors to the regional economy.

Turning innovation into commercial growth

For ambitious businesses, finance can be critical at several points in that journey. Developing new technologies or bringing a product to market can require substantial investment, often before a business has established significant revenues. As companies grow, they may then need further capital to continue developing through research and development. Access to the right type of finance at the right time can therefore determine whether a business is able to take its next step and drive growth.

This business investment also carries wider benefits for local communities. When businesses successfully secure investment and grow, they can create skilled employment, develop supply chains and attract further investment into the region. Over time, this can help strengthen the wider ecosystem and create more opportunities for the next generation of businesses.

Creating the conditions for investment

There is already significant expertise and activity across the North East, with investors, universities, businesses and other organisations supporting innovation. The focus should now be on continuing to build these connections and ensure businesses can access capital as they move through the different stages of growth.

This is where public investment can play an important role alongside private finance, particularly where it helps reduce barriers to investment and gives private investors greater confidence to back regional businesses.

We are seeing this through the Northern Powerhouse Investment Fund II (NPIF II), which has facilitated almost £275m into more than 400 businesses across the North since launching in 2024, including more than £122m in private sector co-investment.

In the North East, we’re already seeing the impact this can have on local businesses. One is Newcastle-based MySalesCoach, which secured a £1m investment from NPIF II – Maven Equity Finance alongside an additional £500,000 from existing investors. The funding is being used to develop its technology platform, expand its sales and marketing activity with the aim of growing globally, helping to build an international brand all from our region. Multiply this across all the business that could benefit from investment and grow, and this has real benefits not only for the regional economy, but the UK as a whole.

A new opportunity for the North East

The British Business Bank’s new Innovation Clusters provides another opportunity to build on this progress. The North East has been allocated £12m as part of more than £57m being invested across five Innovation Clusters in the North. Delivered through NPIF II, the funding will enable further equity investment into businesses operating across a wide range of sectors including those identified as priorities within the Government’s Industrial Strategy.   This targeted approach recognises the strengths that already exist in the region, while helping businesses with the potential to contribute to future economic growth access the capital they need.

Ultimately, the ambition should be to create an environment where innovation can translate into sustainable businesses and long-term economic value. The North East has the research, expertise and entrepreneurial talent to make this happen and ensuring businesses can access finance as they grow will be an important part of turning that potential into reality.