Beyond London: Why it makes sense for Ascension to invest in the regions | Ascension Insights

London hosts 40% of Europe’s venture capital (VC) firms, creating a strong investment landscape. However, this concentration leads to 70% of VC investment being funnelled into London, leaving startups in other UK regions with more limited access to funding. Fortunately, as Alex Hamilton from Dealroom reported earlier this year, this trend is changing. London's share of UK VC investment has declined from a peak of 75% in 2019, indicating a shift towards more geographically diverse investment. With the start of Ascension’s impact funds in 2018 and the resulting lens that guides our investments, we understand the importance of building a geographically diversified portfolio in order to not miss out on less visible regional “Impact Dragons” (fund returners). Our latest institutional impact fund, Ascension Fund III, aims to create income opportunities and reduce costs for the lowest 40% of the population by income level. With many of the lowest earning regions based outside of London, particularly in the West Midlands and North East, we’re seeing a number of innovative solutions to the cost of living crisis coming from the regions, particularly across Energy, Fintech, and Health. Our most recent investment is a Liverpool-based startup, Heatio. Heatio is revolutionising the residential energy market by utilising smart metres and IoT to provide real-time energy management. This innovation helps homeowners optimise and reduce energy consumption, lowers barriers to accessing decentralised renewable energy sources, and cuts energy costs. This is particularly significant as living costs, including energy, are rising, especially for low-income families. By increasing access and affordability of renewable energy, Heatio contributes to reducing social inequalities. As regional ecosystems continue to grow, it will become increasingly important to strengthen relationships with relevant stakeholders to source quality deal-flow outside of London and additionally invest into innovations that impact communities across the UK and abroad. Since inception, Ascension has been dedicated to regional investments with examples including:

Workstream: based in Northern Ireland, a commercial management platform helping construction companies manage project finance.
Vochlea: also based in Northern Ireland, this company’s voice-to-MIDI controller turns your voice into any instrument.
We Are Group: based in Coventry, delivers large-scale, community-led programs through its Wel-Tech Platform, offering tailored services, training, advice, and guidance to improve lives.

Early on, Ascension was approached by Finance Birmingham to manage a £6m early-stage tech fund on behalf of the city. This initiative required us to invest in Birmingham-based businesses, building strong regional relationships and helping to develop a local ecosystem. One notable success from this fund was Mutt Motorcycles, which resulted in a double digit multiple return for our investors. For our Fair By Design fund, we organised a series of regional roadshows to expand our deal-flow sources and help our portfolio to commercially scale across the country. We are gearing up for a new series of events and we’d love to have our regional network involved. If you’re interested in attending or know regional stakeholders who might be, please get in touch to collaborate!