Welcome to the Northern Business Podcast. Each week we will be talking to people active in business and the economy about the big issues driving growth in the North of England.
We are sponsored by Vertu Motors, one of the UK’s largest motor retailers. Check out its website at Vertu Motors.com.
Our host is Graham Robb, owner of Recognition PR. Recognition helps scores of businesses promote their products and services; some are featured on this podcast.
Make sure you never miss an episode by subscribing on YouTube or wherever you get your podcasts.
In the studio today we have Alasdair Greig, director at North Star Ventures and down the line is Matthew Stephens, a Property Development Director with over 25 years’ experience in the market and also president of Barnsley and Rotherham Chamber of Commerce.
Later our reporter Joss speaks to Joshy Jin, Co-Founder of WowzaBox.
Welcome to the Northern Business Podcast. Each week we talk to people active in business and the economy about the big issues driving growth in the north of England. We’re sponsored by Vertu Motors, one of the UK’s largest motor retailers. You can check out its website at the VertuMotors.com.
I’m Graham Robb, owner of recognition PR and we help scores of businesses promote their products and services. Some are featured on this podcast. Don’t miss an episode by subscribing on YouTube or wherever you get your podcasts. In the studio today we have Alasdair Greig, who’s the director of Northstar Ventures.
We’ll be talking money and how you can get money into businesses in the north of England. And down the line is Matthew Stephens. He’s a property developer by trade with 25 years experience in the market, but he’s also president of the Barnsley and Rotherham Chamber of Commerce.
And later, my colleague Joss will be speaking to Joshy Jin, co-founder of of WowzaBox, which is a very interesting culinary business based in Newcastle. Well, first of all, Matthew, welcome to the program from Barnsley proper, taking it up today. Your business is involved in
Property, but Barnsley seems to be a town that’s on the up. But it’s always great to talk about towns on there. Why do you think Barnsley is on the up? Yeah. Good afternoon, Graham. And actually I mean Rotherham head office, the Chamber’s head office in Rotherham actually.
But there we are, the Barnsley and Rotherham Chamber. I’m proud to be the President. I’m in my second year of a two year presidency, so most of my working life has been spent actually in property in Barnsley. So in answer to that question, yeah. Barnsley is very much on the up
And Barnsley has invested significantly in its town center. It’s had some huge uptake, particularly in, you know, in the growth of the town center and the surrounding areas as well. And I think a lot of that has been down to the Council
Putting that, you know, putting their faith in the town and and building, you know, the new glassworks development, which is transforming the town center. So that actually is actually the capital. Yeah, that is not that’s just one part of the jigsaw. You know, many moons ago we developed a large private sector development
We Plaza, which was the first private sector getting involved in Barnsley. Now Barnsley, like many northern towns, obviously has had its fair share of problems and knocks over the last 30 years. And there has been this initiative, the Towns Fund initiative
Over the last five or six years, or it was maybe interrupted a little bit by COVID, but I’ve seen towns around the north getting receipt of towns fund money. How is that managed and how is it delivering change in a town like Barnsley? Yeah. So take Barnsley for example.
I’m privileged actually to be chair of the Goldthorpe Towns Fund Board, part of my role as chamber president. So I was invited to chair that board about three years ago and that’s been successful in being awarded £23.1 million from government from that Towns Fund. So we know I’m seeing how it’s been spent.
You know, it’s got some real key projects and property regions stuff this, that stuff around culture and we’ve got some stuff around housing in particular because one of the major issues is around housing, particularly the quality of some of the housing stock, which is very poor.
And we’ve got some, you know, some really exciting things happening in Goldthorpe, which is, you know, much needed investment. These former mining communities, which have been so decimated really over the years, are really now starting to show signs of recovery, actually things like the towns.
But now I this podcast comes out of the north east Darlington which and Darlington is a is a town not a not a city and it’s had a big injection of capital by a governmental campus coming into town.
And it’s also when various bits and pieces and the other towns and the north east Teesside area won towns fund like Redcar. But quite often people don’t live in the towns much more and getting people to live near to shops and and getting getting getting towns developed so that they’re not just
Nice places to pop in and visit a charity shop, but they’re nice places to inhabit and do more than just visit for a couple of hours at the weekend. Yeah, having much to do. And so much of that is around housing growth and you know, Barnsley
As a council and Rotherham, both the council, which I’m working with very closely as president of the chamber, got some really ambitious housing growth targets. And you’re right, it is about getting people to live in these towns. Now if you take something like Goldthorpe, I know significant variances in the market.
I know you’ve got streets of houses that are boarded up in Goldthorpe, some of which are going to be repurposed as part of the Challenge Fund and brought back into use. What’s really interesting is in some of them are our members chamber. We’ve had a real huge uplift in the amount of developers
Wanted to build in places like Goldthorpe and not seen as directly as a result of the Towns fund, but certainly the towns fund monies which are improving the town center environment and some of the educational, cultural things around it, you know, is having a knock on effect. And there is that demand
For housing in areas such as go full and you are seeing towns now take ownership of the issue, particularly through independent traders. You know, for at least a decade, many of our town centers as opposed to city centers, have been subject to big decisions by corporate holdings of large
Retail chains deciding that they’re exiting the market because retail is changing and you are seeing, are you not, independent stores, people taking a punt on selling different things and creating more lifestyle shopping experience that is not happening in South Yorkshire as it is happening parts of the north, east, north, west.
What’s really interesting is if you take, you know, we represent 1100 members in both Barnsley and Rotherham on the way to South Yorkshire. If you take Rotherham as an example, Rotherham is in a very different place to Barnsley in terms of that retail.
So Rotherham in one way has got probably certainly the largest, one of the largest of the Metrocentre is one as well, one of the largest shopping centers in the UK, literally from where I’m sitting now, you know, 2 minutes drive away as well as Parkgate,
Which is a significant town center out of town shopping center. So the town center, medical center, you well met Meadowhall. Yeah, exactly. So Rotherham has got Meadowhall on Park, so it’s got a double whammy of impact on town center Barnsley is different because Barnsley’s always had a really strong market.
There’s been a market in Barnsley for, you know, best part of, you know, since the 12th century. I think it was back in the day, you know, so this is always had that market trade is now what’s interesting about Barnsley is not only is footfall increased over 30% pre-COVID
Since the town center transformation, but what’s really interesting to me is the amount of independence sweet below the national average in terms of vacancies, which is a positive. And we are way, way ahead of the national average in terms of independence. So there’s a lot of independent shops in Barnsley,
And you’re right, and some of the larger brands have more expenses moved out. But again, they’ve gone to the periphery. But you know, the idea now is it’s about repurposing. So Barnsley Council sells. You’ve recently acquired the lumber center and they’re looking at repurposing
That there’s going to be a health care function that they brought health care to the High Street in Barnsley and the Community Diagnostic Center in the center of the Glassworks has been an enormous success, which I think other towns are looking to replicate across the country.
You know, getting these services right is very important. The things that you have to come into town for a health check, for example, and also the public realm, the way in which the payments are laid out, the ability to put block your bike up somewhere safe
If you want cycling, ability to park your car somewhere cheap and safe. These are very important elements as well as a proper production facilities. Exactly. And again, you know, within Barnsley, they’re looking at it is going to be an to travel have Rotherham are doing something similar in Salford they’re trying to promote
Bike groups, bike usage and that type of thing in the town center. So now let’s talk about the chamber. Your Chamber of Commerce has 1100 active members and those active members have this good. These are good data. 100,000 people are employed by the space of your roles.
I mean, it’s a relatively small area by population and that’s a very good membership roll of members of the Chamber of Commerce. What are the big issues they face at the moment? Privately owned businesses who are members of the Chamber of Commerce in South Yorkshire, What would you say? Actually,
I think I think if you’d ask me the question over the last couple of years, clearly there’s been issues, obviously coming out of coal, which, you know, there’s clearly issues around export. Some of our businesses suffered in terms of export, our own export business businesses suffered. You you know, it’s been a challenge.
Clearly the cost of living is a massive thing. One of the real big opportunities that we see so is a chamber. And with the anchor institutions around this is buying local, you know, something that a lot of businesses are saying, look, how can we get to work with the council?
One of the challenges, they say based in Rotherham, how do we get to work with the council when we can? We want to try and help that process. So I think one of the challenges, it’s clearly been, you know, things around export, around skills, recruitment,
Those seem to have eased some of our members two years ago were really struggling to recruit. We had members in Barnsley who had hundreds and hundreds of vacancies that they couldn’t fill. That does seem to have settled down now. The labor market has settled down, but there’s clearly had a meeting this afternoon
Around skills and construction skills. Still, a lack of people getting in to construction is a concern. But again, as a chamber we work closely with the colleges she Barnsley College Road and College. You know I’m proud to be governor Northern College. We do some really good things as well,
Which is an outdoor college which is based in Barnsley as well. Matthew, what do you think is the most common form of funding that your members will take? Will they go traditional route banking, Will they go the route of, you know, informal finance, family loans,
Or are you seeing people actually scaling up by getting selling part of the shares, the venture capitalists and that kind of a route? Well what are you seeing is active at market. We’ve got a real diverse membership and we’ve had companies that fashion
And because they’ve had investment from from outside, outside the region. Yes, it varies really. But I do sense that the funding market is easing a little bit, but it has been challenging, particularly over the last 12 months. And obviously uncertainty around things like interest rates hasn’t helped.
So I do find that the high street banks, you know, we used to have a number of members of the chamber who are high street banks and we have a couple now, but a lot of them, they just not I don’t see them as a business, really, which is a criticism. Well, look,
It sounds from everything you’re saying, a really positive narrative about what’s happening in South Yorkshire and Rotherham and Barnsley. And I think it’s fantastic to hear it and can I just say the very best to you and congratulations on your own award last year where you were given one of the awards.
Are we going to hear somewhere? Well, yeah, we’ll flush it on our screen. I’m going to just remind myself it was property developer Personality of the Year. It was. Well, thank you very much. I was honored. And I think that, yeah, it was 20
Years of hard work really to get that and potentially not that much recognition. But yeah, I think it was really good to be honored by my peers. I was very privileged, but I thank you. Well, we’re pleased to do it and do come on one of our podcasts again.
It was great to hear the news from South Yorkshire. Thanks, Matthew. Thank you. Well, let’s turn now to Alasdair Greig from Northstar. Now Northstar, your business is all about funding. What would you what did you have to think of what he was just saying about the different ways in which those
Kind of business are funded? Well, I think it’s fascinating. We’ve heard all about, you know, building town centers, I suppose leveling up a town we haven’t used. But but very much, you know, how do we drive prosperity in the north? I’m someone from from from Cambridge originally, who’s been living
In the north east for 17 years. And I think, you know, complementing all you’ve discussed in terms of new retail, independent business, new housing, etc., culture. Venture capital, I think is a sort of key ingredient, a key sort of piece of the jigsaw puzzle that allows highly scalable businesses
To get the funding they need to really grow, scale and become the kind of high quality, high impact employers of the future. And that’s what I think, you know, the North needs in spades now. I want to talk about some of the solutions. You’ve got to start in a minute.
But let’s just look a little customer minds a little back here because you’ve released your environmental, social and governance report. It sounds a bit trendy that I’ve got to say, Alasdair, but it’s showing that you have made a significant commitment of capital to female funded and female led businesses.
In fact, according to my data here, it’s more than seven times the industry average then, and you’ve done it here in the north east of England. Was that a big task? It was a big task. I mean, and it’s an ongoing task.
And I think just to be utterly clear, you know, we you know, management is key to all of the businesses we back. You know, it’s it’s key to to getting the businesses to grow in scale. And we’re always looking for a diverse team, to be honest. And that’s that’s the ultimate objective.
But there is no doubt about it. The pendulum has swung too far in the past. You know, there’s there’s loads of literature on the technology industry. It is terribly male dominated. And I think I think it’s you know, everybody understands now that a diverse team both but age, ethnicity, gender.
Having a good, diverse team kind of helps with results, helps to bring, you know, more experience, etc. around the table. So yeah, we’ve been actively and proactively looking to bring in more diversity to our teams. But our ultimate objective is not all men, it’s not all women. It’s a good, diverse team,
But you have to sort of push the pendulum a bit to get to that point. Well, let’s talk about that. A good quality investment that you’ve made by way of example of the kind of thing that North Star Ventures will get involved with, and that is advanced electric machines.
You raised around 23 million to help that company. Well, yeah. I mean, this is this is really interesting, actually, and I think highlights a number of aspects of opportunity in the north east. I mean, one of my bugbears is that, you know, we hear a lot about about leveling up.
We hear a lot about the UK as a science superpower, etc.. And yet we sit here in the in the Northeast with our universities, some of them, you know, highly regarded, research intensive Russell Universities, but with very, very, very limited access to capital to commercialize the great academic base that they have.
You look at Oxford, Cambridge, the university in the Golden Triangle, you know, Oxford, for example, has 800 million available to commercialize its academic base. We have close to zero in the north east of it, to be brutally frank. So am a very interesting example of a company that spun out of the
Engineering department of Newcastle University about five years ago selling a brand new concept. Then next generation electric motor, which doesn’t use rare earth metals. So you’re really strategic for the UK and you know, in quite a short period of time it’s gone from pure consent
Through various rounds of funding, including quite a bit from ourselves to what’s now a very substantial ramp up for the north east, £23 million round that was closed a few months ago and that is to expand there that that the factory in in Sunderland
Diversify their product base and they’re sitting on significant orders from a number of global brands mostly in electric trucks to start with but also looking at electric vehicles. But know really interesting example of the kind of innovative technology that can come out of this region, a lot of it
Based on universities and frankly where that is. There’s a whole lot more to come. And I suppose my my, my, my big buy, big plea is we need to do more to bring more capital to the region to take advantage of these kinds of opportunities.
Now, you’re doing this by launching three separate initiatives in the year 2024. Let’s go through them all. First, is the North East a venture fund, if we’ve got that right with Venture North funding, a lot of attention. So Venture North is a collaboration with universities and the concept behind that. BE Yup.
So we’re working very closely in partnership with the North East universities led by Durham and Newcastle, and this is to bring together their first real commercialization fund. So where we’re trying to pull together capital of about £75 million, which will be, you know, the first significant
Sum that can drive future AMM type opportunities. Okay. I know there are some some fantastic stories that have come out of universities and Sedgefield, and that’s all came out of Durham University. And I my own firm is working with an emotion which came out of Teesside investing.
So that’s a fund that’s on its legs. It’s starting to walk, as it were. No, we’re in the process of raising. We’re hoping to get to a first close this year during 2024. But this space watch this. We’ve got commitments from the universities themselves who are who have committed cash to the fund.
We’ve got about 25 to 30 million committed so far. And we’re trying to get to a first close of 50 million sometime this year. Okay. Well, that’s great. And the money for that will come from the city or institutional investors. Now, there are opportunities for private investors
To invest in other funds that you want to deploy in the northeast. Let’s talk about the first one, the ERISA law. What’s that that you’re launching? So, I mean, our background has always been in raising money from institutional investors, and that’s what we’ve been deploying for the past,
You know, 15, 16, 17 years and mostly sort of quasi government sources of funding. And we just at the same time we’ve we’ve often co invested with angels when we’ve done specific deals. So quite often with our own funds, we brought in specific angels in alongside us in particular deals.
We’re now going the next stage in the sort of high net worth market, if you like, by bringing together our first year funds. So this is, as you may know, is is a is is basically allows very significant tax advantages to encourage
High net worth to get involved in the early stage equity market. This is the enterprise investment scheme. Correct. Give us this tick off all the advantages are someone watching who has some disposable cash and if interest rates are going down, they may have made up the apple.
But I mean, perhaps the key advantage is you get a very substantial income tax relief by investing in this fund. So a 30% income tax relief, if it’s a CIC, which would come on to talk about it’s actually a 50% relief really happened at the point of investment.
So they have it. They happen at the point of investment. And they’re also, you know, very significant other advantages in terms of the capital gains tax free, in terms of any gains you make to the fund if things go wrong. There are very strong loss reliefs that come into play.
They’re also advantages in terms of inheritance, etc.. So very significant tax rate would be we shouldn’t underestimate the capital gains tax allowances because capital gains tax itself, the threshold is falling like a stone is death. The people who don’t expect to pay capital gains tax are now getting caught. Yeah, yeah.
And of course if there is a Labor government, it hasn’t been widely advertised, but there is a lot of talk about capital gains tax going up, correct? Yeah. Yeah. So, so so you know, so you know, very simply tax advantages because it’s not about the tax advantages, it’s about the investment opportunity.
And you know, our first fund, which we’re actually launching this month, is an escrow fund. So it’s all about investing capital in the best regional scale up companies. So companies in the clean tech and healthy aging sectors that are well into their commercialization journeys, they’ve got established management teams.
They’ve got a, you know, a clear product market fit. They’re scaling well, they’ve got revenue and they just need the next bit of capital to really scale and get to that exit point that brings a return. Let’s remind ourselves what scale up is. It’s growing by 20% a year or more.
It’s growing that a state bond for three years or more and it’s employing more than ten people. So that is scale up. So the significant companies to watch on that, they are they are they’re the companies. I mean, we’re trying to create, you know, companies, the scale of SAGE, if you like.
And we would like to see, you know, another ten companies the sort of size and scale of sage in region. So you’re aiming to create this fund and you said 75 million is your target for the the venture fund. What about for the IRS?
Well, we the IRS funds, we raise it on an annual basis. So we’re raising somewhere between three and 5 million in this first fund, which will we’ll be raising between now and the end of March. And then we’ll have that fund ready and closed by the start of the next tax year.
And we’ll be investing that the that fund during the course of the 12 months of the next tax year. Now the final fund is the it’s slightly more risky but maybe is important as well and that’s the assist start up yeah C funding Yeah but we won’t have further scale up
Opportunities if we don’t continue to invest in the start up ecosystem. You know, we’ve been involved in this region for four for many years. We’ve got good relationship with universities. We believe, as we’ve discovered you discuss, is a fundamental opportunity, particularly through the universities
But also through some of the institutes that are in region as well. And so, yeah, the idea of the Swiss fund is about investing in very, very early stage businesses. First, institutional money in in order to take advantage of what is often a very significant growth in valuation point
From that start point to the kind of stage we talked about with M where they get to the point where they can raise £23 million from, you know, national stroke international investors. This is one is a couple of stages before that to get the companies
To that point before I round up on this, from the company’s point of view, let’s just look at it from the investors point of view. Yeah, if an investor is going to commit well, you minimum investments, 25,000. Correct. In the £75,000 or more in one of these funds. Yeah. The advantage
Of doing it through a fund rather than just talking to an entrepreneur and investing yourself, what’s the what’s the significant advantage? I think people underestimate make the difficulty of starting and scaling and crucially exiting one of these companies. And the important thing about investing with somebody
Like ourselves is we will be sitting on the board. We’ve got quite a lot of experience in going through the journey. We provide very significant support to the management teams as they as they add talent to the business, as they find their their markets, as they grow the company.
And crucially, we’re sort of alongside them, always reminding them about the you know, about the journey and the fact that we do have to achieve an exit, of course, which they which they which they want to do.
But it’s very easy to put off the exit to to a future time of ownership as well. They’re getting something from it by getting you on the board as well. It’s not just managing them from the point of view of the company.
You what kind of investments will you be if you just look at the is one start the scale up one what kind of requests and applications will you be looking at and scrutinizing? What numbers will I mean we we are going to
This is our first foray into this market where we’ve deliberately gone for a relatively low risk initial fund. So we already have quite a significant portfolio of businesses that have got to an interesting stage like an AM. So we’re going to be restricting this cash towards companies that we know very well.
Either they’re in our portfolio or we know them through partner venture capital firms. So so, you know, if there’s not going to be much of an application process from from the entrepreneurs perspective, we kind of have a pipeline of of options already and we seed want to start at once.
Is that that that’s very different And where yeah we spend a lot of time via the team building our pipeline of early stage opportunities both in the university context but also outside of it in the broader sort of tech ecosystem at any 1.. in time.
You know, we’re sitting on a pipeline of several hundred opportunities, you know, in the north east. Obviously we’re not actively involved in all of those, but we’re keeping an eye on them. We’re looking at the ones that develop. And at any point in time, we’ve got a sort of a hit
List of 10 to 15 companies that were sort of getting seriously involved. And what kind of links will you be giving them? The smaller ones, the startups. So so, you know, initially the very early stage is normally a few hundred thousand pounds in in a sort of pre-seed or seed round
Just to end you really what you’re doing then is almost placing a series of bets, you know, you know that the failure rate in that very early stages will be quite high. These are high risk opportunities. And the idea with these funds is you sort of place
Your bets, if you like to start with, work with the companies and try and double down on the ones that are meeting their milestones, successfully commercializing, you know, demonstrating real progress. Okay. Well, just before we go, go back to Matthew. Do you have are you working with funds like this in South Yorkshire?
Is this because he talk about money specifically for the north east region? Yeah, Yeah. I mean, I’m personally not, but I am aware of funds that are in working closely with unis. We’ve got obviously one of the great things that Rotherham’s got is the advanced manufacturing part of the MOOC,
Which is partly the uni Scheffler uni lead on that. But yeah, you’re right, there are things like that in South Yorkshire, certainly. Well, Matthew, thanks for joining us. Thank you. Thank you again and thanks Alasdair, and all this fund goes off. Well, I’m sure it will.
There’s a lot of interesting things to invest in, but our next piece is the kind of thing you might want to invest in. It’s a new business to due to the culinary expertise of the Chinese market. And let’s talk to my colleague Joss, who’s been speaking with Joshy Jin, co-founder of WowzaBox.
Thanks, Graham, this week I’ve come to WowzaBox factory in Team Valley it’s a really exciting start up this bringing authentic Chinese cuisine to British kitchens. It’s just hit 150,000 meals delivered. So we’re going to have a little chat with Joshy Jin, the founder, about what this fantastic business is doing.
So WowzaBox has shipped out 150,000 meals in just over a year’s time since we launched in 2022 and we achieved half million sales, is unprecedented growth from our past, definitely. Chinese food is the most popular choice when it comes to dining. However, quality Chinese food is not accessible to everybody.
Now, with our methods, we can cover the whole meal in the UK to enable customers, wherever you are, you can have a decent, true restaurant quality Chinese meal in as little as 10 minutes. So I think people are going to love it.
So the, 150,000 meals we know over a half of it is from repeating customers and we have new customers onboard every week. This shows the great growth potential in the future. So 150,000 meals is just the tip of the iceberg.
We are aim to be the most popular Chinese food brand in the UK. That was great, Joss, will definitely be tasting so that some of the staff at recognition have already ordered from Wowza. It’s a great, great entrepreneurial activity. And well done Joshy for that.
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