Venture capital firm Par Equity has launched a £100 million fund targeting early-stage startups in the north of the UK.

Par Equity Ventures 1 is is Par Equity’s first ever institutional VC fund and aims to rebalance funding for early stage companies across the country.

The UK’s tech ecosystem is centred around London, with London, Oxford, and Cambridge absorbing 80% of venture capital investments.

Edinburgh-based Par Equity said it will focus on an area north of the Midlands, and while the fund will be managed from Par Equity’s central Edinburgh office, it also has operations in Leeds and Sheffield.

The firm has joined with the Scottish National Investment Bank and British Business Investments, with additional input from the Strathclyde Pension Fund.

While the target is 100 million in total, its first close sits at £67 million, and will be aimed at tech companies with “high-growth potential” across the north of the UK, particularly businesses with strong IP. 

Specifically, Par Equity will be looking at climate tech, industrial tech, and health tech, with the latter category serving up a lucrative exit for Par Equity when Best Buy acquired its Edinburgh-based portfolio company Current Health for $400 million in 2021, Europe’s second-largest digital health exit.

Managing partner Paul Munn emphasised the strength of north’s educational institutions, stating that half of the UK’s leading universities are situated in the region, renowned for their excellence in science, technology, and engineering.

Partner Andrew Noble added: “People often forget that the North of the UK is a big market in its own right. Worth around $1trn GDP, it would be the eighth largest economy in Europe, but is still largely overlooked by investors.”

To date, Par Equity has deployed £167 million in capital, supporting 78 startups and executing 423 individual transactions, including follow-on investments.

The move comes as a new report says equity finance is now favoured over debt finance as a source of company capital.