Mercia Asset Management – one of the UK’s most active capital providers to SMEs – has increased the amount it has invested in the first half of 2023 by 24 per cent.

Mercia, which provides capital nationwide through its network of 11 offices, has completed 132 investments with a total value of £94.6m in the six months to the end of June this year, compared to 97 investments totalling £76m during the same period last year.

Around 85 per cent of the total value of investment went to firms outside of London, in line with its mission to address the funding gap in the regions.

The figures for both years include debt funding from Frontier Development Capital, which Mercia acquired during 2022.

Key investments during the six months included Sitehop, a Sheffield company with a new encryption solution for telecoms and data networks; Zedify, the UK’s largest electric bike parcel delivery network; CanSense, a Swansea company with a blood test that aims to diagnose early-stage bowel cancer; Medherant, a University of Warwick spin-out developing the world’s first testosterone patch for post-menopausal women; Invincibles Studio of Leeds, which is behind the leading football game Soccer Manager; and Clitheroe-based PropTech firm Glider.

Mercia typically invests sums of £500,000 to £10m. Over half of the funding it provides is in the form of venture capital to early-stage and growth businesses, with the remainder predominantly in differing forms of loan finance.

Mercia invests another £2m into growing AdTech

Mercia manages a range of third-party funds including parts of the Northern Powerhouse Investment Fund (NPIF), Midlands Engine Investment Fund (MEIF) and North East Venture Fund (NEVF).

It raises its own EIS and VCT funds, and invests directly in some businesses from its own balance sheet. It is committed to expanding its funds under management to meet the growing demand, specifically toward regional businesses.

During the six months Mercia also achieved a number of successful exits. Middlesbrough games developer SockMonkey Studios was sold to Behaviour Interactive of Canada; HR Tech firm Horsefly Analytics of Knowsley was sold to LDC; and Manchester-based parking reservation platform ParkVia to CAVU, part of the Manchester Airports Group plc.

Meanwhile Knutsford-based Texere Publishing, one of the world’s fastest-growing scientific publishers, was acquired by US company BroadcastMed; and Manchester-based tech consultancy Intechnica by another US company, Crosslake Technologies.

Dr Mark Payton, CEO of Mercia, said: “Mercia is a team of 130 people and supporting new and growing businesses to scale is in our DNA. Despite the flatlining economic climate, we have increased both the value and volume of investments during the first half of the year as we support the next generation of successful entrepreneurs. Our track record of successful exits shows that our approach not only helps to nurture rising stars, but also achieve returns for investors.”

He added: “Mercia was founded in 2010 to bridge funding gaps across the UK. Despite regional disparities, we have been able to pick winners throughout the UK and we are trusted time after time by investors and business founders. Mercia’s combination of pools of differing, but aligned, capital with proactive support is powering ambitious businesses, and attracting further external investment.

Mercia invests over £120m in 2022

“This is helping to build thriving start-up communities across the UK, with a support network of advisers and professionals, creating a sustainable environment for business growth and job creation.

“With a continued focus on diversity, equity and inclusion, Mercia is also exploring ways to engage with communities that have yet to fully connect to capital providers, and we intend to play an active role in changing this. We look forward to creating more success stories in the second half of the current calendar year and beyond.”