NORTHERN businesses received £226.55 million in venture capital investment in 2018 across 100 deals, according to the latest Venture Pulse report published by KPMG.

However, with investors demonstrating greater caution, the report highlighted a 30 per cent year-on-year drop in venture capital funding for the region’s businesses, down from £327.33million in 2017.

In total, £7,707million was invested across the year in the UK by global and domestic VCs, a four per cent fall in comparison to the previous year (2017: £8,058million). Despite the total value of investment falling at a significantly higher rate than the UK average, the North performed better in terms of maintaining deal quantity – a 14 per cent drop compared to the UK average of 25 per cent. The overall reduction in northern investment was felt most keenly in Yorkshire where VC interest fell by 69 per cent to £40.4 million (2017: £128.5 million), and the North West, where the value of overall investment dropped from £173.4 million to £122.2million – a 30 per cent difference.

The outlook in the North East was much more positive, with capital investment up 151 per cent from £25.5million to £64.0million and the number of deals in the region increasing from 24 to 30.

Graham Pearce, KPMG’s Head of Technology in the North, said: “The North remains a fertile and active market for venture capital but investors appear to be keeping their powder dry as they wait for trading conditions to become clearer, particularly given the risks when working with early stage businesses. Our report indicates that there is still a healthy appetite from seed through to later stage investment, particularly with IT and healthcare businesses, as northern research hubs continue to perform highly. As such, the region should strengthen its resolve to prosper in 2019 even if investors remain shy in the first half of the year.”