Challenges I face as a private equity investor in Yorkshire: Mike Clarke

York, in particular, is experiencing a surge in biotech spin-offs from its prestigious university, a testament to the region’s entrepreneurial spirit.

Despite this progress, we face ongoing challenges as a private equity investor trying to support and accelerate this entrepreneurial growth. Research conducted by YFM Equity Partners in partnership with CEBR on the Yorkshire Entrepreneur Economy revealed that 45 per cent of entrepreneurs in Yorkshire rely on personal savings to fund their businesses.

While Leeds stands out as the fifth most entrepreneurial city in the UK, only 14 per cent of its businesses have taken private equity investment, which is significantly lower than the national average of 24 per cent.

This highlights a pressing need for better communication and education about private equity as a growth enabler. I often meet entrepreneurs who are cautious about external investment, unsure of the benefits it can bring.

Many don’t realise that private equity aligns our success with theirs – we grow together. Unlike bank funding, which prioritises regular repayments and the lender’s returns, private equity fosters long-term partnerships focused on sustainable growth.

For me, cultural fit is critical when working with entrepreneurs. We are not just looking to invest in a business; we look to partner with management teams whose ambitions and values align with ours.

These relationships often span four or five years, and building trust takes time, especially in a region like Yorkshire, where a strong bootstrap mentality is deeply ingrained. Finding the right partners here requires persistence and a genuine commitment to understanding their goals.

Another challenge faced recently is the slowdown in the mergers and acquisitions (M&A) market. This can make it harder to execute deals, even when the right opportunities arise.

While I’ve seen deal volumes start to recover in the second half of 2024 following the recent budget, confidence remains fragile due to ongoing economic and political uncertainty.

Navigating these complexities is part of the job, but it’s a balancing act to ensure we are delivering real value to entrepreneurs while addressing market pressures.

Despite these hurdles, I’m proud of what we’ve achieved at YFM Equity Partners. Our British Smaller Companies VCT fund had a record-breaking year in 2023, and our latest fundraise is already exceeding expectations. This shows there’s real appetite for investing in ambitious, fast-growing companies like Force24 and Checkmate Fire in Leeds, and I’m confident Yorkshire has the talent and potential to meet this demand.

For Yorkshire’s entrepreneurs, private equity isn’t just about funding—it’s about partnership.

Here at YFM, we want to empower them to achieve their vision while sharing in the risks and rewards of growth. Our mission is to make this opportunity better understood and more accessible, so together we can unlock Yorkshire’s full entrepreneurial potential and build an even stronger regional economy.

Mike Clarke is a Partner at YFM Equity Partners