Venture Capital firm, Par Equity, has been a partner of the Propel@YH digital accelerator programme since 2023. We sat down with Partner Robert Higginson to discuss how venture capital funding can help innovators get off the ground, why Propel@YH is an ideal partner to help with this, and why working together across the North is key for the HealthTech industry.
So Robert, what is venture capital and how did you get involved with Propel@YH?
Venture capital funding is a type of private equity aimed at early-stage innovative companies that have a high growth potential, such as those attracted to the Propel@YH accelerator. Investment in venture-backed businesses is very much a ‘people business’– people invent, people invest, and people buy from people.
Par Equity had an interest in further building its involvement in the ecosystem around Leeds and in Yorkshire, and creating a long-term relationship with West Yorkshire Combined Authority, which is why we recruited three people and opened an office in Leeds. Venture capital investment managers tend to be quite small organisations – that will often focus on a bounded geography and investment area. So, after meeting the team at Health Innovation Yorkshire & Humber and learning about its Propel@YH digital accelerator programme, we realised, with our focus on Yorkshire and health technology, we could all help each other if we had more or a formal involvement.
We want to support and accelerate the adoption of technologies into the NHS, to promote a more innovative NHS, and the Propel@YH programme is a good vehicle for this. As Investors in Residence at Health Innovation Yorkshire & Humber, we share an interest in attracting inward investment, from domestic UK and internationally, and they have developed programmes targeted at this.
As an investor, we are constantly searching for innovative IP-rich companies that could have a large international impact on high-priority problems such as ill mental health and waiting lists. After agreeing terms on an investment, conducting thorough due diligence and finally deploying capital – we work with the other members of the board and the management team to successfully execute their plan and deliver value for all stakeholders (patients, clinicians, trusts, local government, regional development groups and of course investors).
What types of companies do you support and what kinds of benefits would they see from working with you?
Par Equity is interested in many of the same types of companies that are found on the Propel@YH accelerator – so highly motivated executives and companies with innovative solutions packaged into clinical-grade regulatory-approved products – targeted at improving the care in our health and social care systems.
Investors, be they venture capital investment managers or local Angels (who invest small amounts of capital, usually at an earlier stage) should offer their investee companies a great deal more than just capital. They will usually have specific domain experience such as imaging, biopharma development or orthopedics, and will have seen many of the challenges facing young companies. They will have mature networks of experts to contact to address an issue. The early-stage companies that Par Equity has invested in, in the past, have resulted in our firm being as much ‘company builders’ as investment managers.
As much as investors conduct diligence on foundational technologies, products and markets, they also seek to understand team dynamics and figure out how well they can work with the founding team. That team should also do their homework and seek to reference their incoming investors after all they will likely be working together for many years. The relationship between the founders of the company and their investors should be very close and trusting, with a shared common goal of addressing an unmet need and delivering value.
How does it work? Can Venture Capital Funding support economic growth in the region?
Not all investors will be focused on a region or particular geography. In Par Equity’s case, we specifically developed an investment case and went out to large investors to attract capital into the North (Yorkshire, Scottish Central Belt, North East). The relationships we have formed with both West Yorkshire and South Yorkshire Combined Authorities, local hospitals and foundation trusts are all part of first understanding and supporting the specific priorities of the region. In practice, this means we seek out teams and young companies to support within the region and encourage others to relocate. By leading investment, we also can crowd-in capital, talent and intellectual property from outside the region.
How does Par Equity work with Propel@YH?
At its most basic, Par Equity provides a three-hour masterclass as part of the Propel@YH programme – covering the key aspects of Angel and Venture Capital investment in the UK. However, Par Equity’s support extends much further than the class. We have an open-door policy for those who are part of the programmes to reach out anytime they need to. We are a super-connecter to experts, key opinion leaders and many other investors. For those that approach us, we have transparent and honest discussions with innovators, so even if we can’t help everyone, we try to point them in the right direction.
You said your goals aligned with those of Propel@YH, can you expand on why Propel@YH is different from other accelerators?
Propel@YH is based in Leeds and draws innovative companies into the region, providing a pathway directly into the local health and care systems – supporting the sourcing and adoption of innovative solutions for the benefit of the local population. The programme also provides a service to Leeds City Council in terms of early-stage companies developing locally. The team is constantly developing its portfolio of programmes, including its international programmes and has an established reputation with high-quality content, presenters and mentors. They also spend time developing relationships with other groups such as the Association of British HealthTech Industries (ABHI).
What challenges do HealthTech startups face in Yorkshire and the Humber and how can you help them?
The biggest challenge for young companies is the difficulty getting traction inside the NHS and attracting early-stage funding into this very challenging risky sector. That’s why programmes like Propel@YH are crucial – they are a ‘front door’ to the health system. HealthTech companies have questions about the NHS’ key priorities and the pathway to adoption, and this is where Health Innovation Yorkshire & Humber’s Propel@YH programme can help. Geography can be a challenge to attract young companies to relocate, or open satellite offices as it’s not London or Edinburgh. The poor transport infrastructure in the north also doesn’t help at all with conducting business and attracting investors to the region.
What is one piece of advice you would give to a HealthTech startup?
The most important advice I can offer to young companies is to do your homework and thoroughly prepare a comprehensive package of documents in advance. Take time to do the research, leverage your trusted relationships and target the introducers and investors that are most likely to be interested in your business. The key is aligning your company focus and needs to what the investor is interested in at that particular time.
Finally, what are your views on investment in the North now and in the future?
At a high level, a lot is happening as the result of a new UK government, UK institutions and internationally right now. The UK government’s initiatives around encouraging pension funds to invest in infrastructure and centres of innovation – and the good work of the British Business Bank, is really helping. Unfortunately, the demands and stresses on our health and social care systems are not improving as our population ages. Investors in all aspects of health and care are finding it as hard to raise and manage their capital as the companies are building their businesses.
It is crucial that the different areas that make up the north and the different centres of excellence in the North work together to develop a platform that is easy for innovators, entrepreneurs and investors to succeed. International companies and investors require clear signposts and with the challenges of a poor transport system, we need to do what we can to make a good impression.