Andrew Noble: opportunities need more capital
The venture capitalist tells TERRY MURDEN that the north’s early stage companies face a funding battle with the Golden Triangle
As a former Olympian, Andrew Noble knows what it takes to hit the heights of success. But he’s concerned that Team spin-off in the north of Britain is not operating at peak performance. It’s not because of a lack of talent. He feels there is a missing link in the much-vaunted eco-system for early stage companies.
Noble was Great Britain’s number one skier, competing in World Cups, the 2009 World Championships and the 2010 Winter Olympic Games. Since retiring from professional sport he’s been a high flyer in PXN Group, formed by last year’s merger of Edinburgh-based Par Equity and Praetura Ventures in Manchester.
It created one of the top venture capital companies in Scotland, the north of England and Northern Ireland. Yet there is an issue gnawing away at Noble’s competitive ambitions.
“We see huge opportunities to support high growth companies, but there is a lack of capital to support them,” he says. “Thousands of companies at an early stage have difficulty with visibility.”
Capital available for these fledgling companies is too heavily-weighted to the south of England and to the Golden Triangle around Oxford, Cambridge and London, he says. It is sucking in almost all the funding support, leaving good ideas elsewhere starved of cash and other support.
It’s not for any shortage of skills and ideas. “We have world class science and research in the north of the UK, ” says Noble, “more research than the Golden Triangle, but it is often missed by policymakers and VCs in London.
“Companies in the Golden Triangle raise four times more capital than those in the north where it takes two to four times longer for spin-outs to reach their first capital round. The further you leave the deep pool of capital the harder it is to raise it.”
His comments are backed by data from UK Private Capital (formerly the BVCA) which said 84% of venture capital funding is invested within two hours of the VC companies’ offices. And most of them are in the south.
He says policymakers in the north – governments and their various enterprise vehicles – need to do more to create the conditions that attract capital. No prizes for listing tax and constitutional uncertainty among the factors that investors consider before committing their cash.
Noble joined Par Equity, based in modest offices in Edinburgh’s New Town, as an intern. He was 26 and had been thinking of a career in corporate finance during his days on the slopes when his ski partners included Chemmy Alcott, the curren,t and now last, presenter of the BBC’s Ski Sunday after news that it is being axed.
“I loved ski-ing though it’s not a sport that pays very well,” he says. He studied at Insead and spent some time with McKinsey’s before returning to Par Equity and forming a close leadership bond with Paul Atkinson and Paul Munn who remain in senior positions with the enlarged business.
PXN Ventures has enjoyed some significant successes in its first year and is benefiting, as forecast, from the two partners’ access to greater firepower and ability to do bigger deals. The firm has £760 million in assets.
Noble is a big fan of Wordsmith, the Edinburgh-based legal AI startup, which last month raised $14 million following $70m raised in June. It could become one of the next unicorns – a company valued at $1 billion. Scotland, says Noble, needs more Wordsmiths.
“I am not seeing Wordsmiths or Skycanners [the travel search company] being created fast enough,” he says. “Better co-ordination would help.”
By that he means that, despite good intentions, those operating in the eco-system are still not working effectively together. “Founders in Scotland have access to 440 programmes. We are guilty of producing too much information that is un-coordinated.”
He says ministers still don’t get it right, even when they think they are doing good. The latest talk about from the Westminster government of an “exit tax” on spin-outs that sell to overseas buyers is aimed at ensuring taxpayers are not being left empty-handed and the country is not robbed of talent when foreign companies buy British innovation.
Noble says he understands the motive behind the exit tax but worries about unintended consequences.
“If the government narrows the potential acquirers of a company it deters investors when it is seeking funding.”
PERSONAL CHECKLIST
Occupation: Chief operating officer, PXN Group
Birthplace: Edinburgh
Age: 42
Education: Birkbeck, University of London (International leadership); Insead (Master of Business Administration)
Career highlights: Olympic skier; Par Equity, McKinsey, Transition Capital, Par Equity, PXN Group
Fantasy dinner party guests: Elon Musk (Tesla, SpaceX) and Jeff Bezos (Amazon)
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