April 2025 VCT newsletter

The Northern VCTs' Newsletter

April 2025

The latest Northern VCTs' Newsletter: Explore our portfolio performance, new investments including exclusive interviews with portfolio CEOs sharing market insights and growth strategies. Stay informed on shareholder updates and key developments.Contents

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This newsletter was brought to you by Mercia Fund Management Ltd who manages the Northern VCTs.

vctshareholderenquiries@mercia.co.uk

www.mercia.co.uk/vct

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Mercia Fund Management is the manager of the Northern VCTs and is authorised and regulated by the Financial Conduct Authority (FRN: 524856). Mercia Ventures is a trading name of investment funds managed by Mercia Fund Management Limited, a subsidiary of Mercia Asset Management PLC.

Welcome and thank you

I’m delighted to share that this year’s Northern VCTs fundraising round closed successfully, with the full target of £36.0 million raised across all three VCTs.

We are incredibly grateful to our existing shareholders for their continued support and warmly welcome our new investors who are joining us on the next stage of our journey. We hope you will be able to join us at our 16th Northern VCTs' Shareholders Seminar, 7th October 2025.

In this edition of the Northern VCT newsletter, we provide news from the VCT industry, an update on the portfolio, and details of how to sign up for the upcoming seminar.

Thank you once again for your continued support. We look forward to putting the newly raised capital to work and continuing to build a portfolio of businesses that are ambitious, resilient and creating real value across the UK.

Peter Dines

Managing Director, Mercia Ventures

Celebrating 30 Years of VCTs

This year marks the 30th anniversary of the VCT scheme, celebrated in the Venture Capital Trust Association’s (VCTA) landmark report, ‘The Changing Faces of VCTs’. As Northern VCT shareholders, your investment continues to play a vital role in supporting innovative businesses, driving growth and shaping industries across the UK.

Over these three decades, your support has enabled businesses like Promethean Particles, one of our portfolio companies highlighted in the report, to thrive and achieve their potential. Promethean Particles exemplifies the type of innovative and high-impact businesses your investments help nurture, illustrating the real-world impact your capital has on our national economy and broader industry advancements.

Mercia Ventures, as an active member of the VCTA, remains committed to advocating for policy improvements to further enhance the VCT scheme. Our efforts include past appearances at Treasury Committee hearings and recent detailed submissions to the Treasury and policymakers, outlining necessary enhancements to support the scheme and the businesses that it empowers.

The recent appointment of Lord Clarke as Honorary President of the VCTA further demonstrates our industry's ongoing dedication to maintaining and strengthening the scheme’s effectiveness.

Read the full report

AIC roundtable explores the future of VCT investing with leading fund managers and journalists

In addition to the VCTA, the Association of Investment Companies (AIC) recently hosted a roundtable to also mark 30 years since the introduction of the VCT scheme in the UK. This discussion explored the evolution, achievements and future opportunities of VCT investing, reflecting on how these funds have supported British start-ups, scaleups and entrepreneurs. The event featured leading VCT managers, including Mercia’s Peter Dines, James Hendry, Investment Director at Gresham House Ventures and Robert Whitby-Smith, Partner at Albion Capital.

Participants highlighted several core themes during the discussion:

Economic and social contribution

VCTs have played a crucial role in the UK economy by channelling over £12.5 billion into thousands of innovative small businesses since their inception in 1995. These investments have not only driven economic growth but have also created tens of thousands of jobs, making a significant social and economic impact.

Sector growth and innovation

VCT funding has historically targeted sectors with substantial growth potential, such as Technology, Healthcare, Fintech, Consumer and innovative solutions in Sustainability and Deep Tech (IP-rich businesses). This targeted approach has supported the emergence of high-performing UK businesses, many of which have become national or even global successes.

Navigating economic uncertainty

Despite economic challenges, including financial crises, market volatility and the recent pandemic, VCTs have demonstrated resilience. Participants emphasised the importance of a long-term perspective in venture investing, highlighting that VCT-backed companies have often shown significant adaptability and continued growth even during uncertain times.

Continued government support

The government's recent decision to extend the VCT scheme until at least 2035 reflects ongoing confidence in its value. Participants broadly welcomed this support, noting it ensures a stable and attractive environment for both companies and investors to commit to long-term growth strategies.

Future opportunities

Looking ahead, the discussion touched on emerging trends such as AI, Climate Technology, Digital Transformation and Healthcare innovations as key areas of opportunity for future VCT investments. These sectors were identified as critical to maintaining the UK's competitive edge in global innovation.

Watch the discussion:
VCTs – A 30-Year Legacy

Portfolio update

Looking ahead, with the recent close of our fundraise, and our portfolio companies continuing to grow, we remain committed to supporting ambitious founders and delivering value to our investors.

The Beauty Tech Group

The Northern VCTs first backed Manchester based CurrentBody in 2018. Now part of The Beauty Tech Group, as the demand for at-home beauty devices has grown, this Northern VCT investment has developed itself as a go-to platform, offering cutting-edge LED masks, skincare tools and clinically backed treatments.

With its international expansion in full swing, a high-growth e-commerce model and a loyal customer base, The Beauty Tech Group is on track to become one of the UK’s standout beauty success stories.

As part of its broader omnichannel strategy, the brand recently launched its first-ever UK clinic in Cheshire, blending in-person aesthetic treatments with its market-leading at-home devices. This move showcases the group’s ability to innovate and build deeper connections with its customers.

Following a period of significant growth, the company is now actively exploring its strategic options, which may include pursuing a listing on the London Stock Exchange. This has been picked up by several press outlets:

Included in the next few pages are highlights of some positive investments that we have had across the investments within the funds.

Northern VCTs welcome Napo to our portfolio

A new investment in a business that’s making pet insurance simpler, smarter and more accessible.

We’re pleased to welcome Napo, an innovative pet insurance platform, to the Northern VCT portfolio as part of its £12 million Series B funding round, led by Mercia Ventures. With support from DN Capital, Companion Fund, MTech Capital and Helvetia Venture Fund, this brings Napo’s total funding to £30 million, a significant milestone as the company scales up.

Founded in 2021, Napo is redefining pet insurance with a digital-first model that goes beyond traditional policies. Offering lifetime cover, 24/7 vet access, dental and behavioural care and multi-pet discounts, Napo provides pet owners with a seamless, all-in-one solution.

With its AI-driven automation, positive customer reviews and a strong Net Promoter Score, Napo is already making waves in the market. This latest investment will help the business strengthen its technology, expand market share and grow its team as it continues its mission to bring fairer, more comprehensive pet insurance to modern pet owners.

As a new addition to the Northern VCT portfolio, Napo embodies the type of high-growth, customer-focused business we seek to back, one that is shaking up an established sector with innovation and scale.

Duke & Dexter: A growth story

A brand on the move, delivering results and redefining British style.

British luxury footwear brand Duke & Dexter, backed by the Northern VCTs, continues to stride forward with impressive growth and strategic expansion. Known for its bold, contemporary takes on classic British footwear and clothing, the brand is rapidly scaling both in the UK and internationally.

Since 2022, Duke & Dexter has achieved:

79% revenue growth in the last eight months, on track to surpass £10 million in 2025
100+ global stockists, including Selfridges, END., Neiman Marcus & Kith with retail partnerships growing 100% year-on-year
A thriving Women’s range; now a £1 million+ business, demonstrating strong market demand.

By reducing product costs by 25% in 2024 and improving marketing efficiency, Duke & Dexter is on track to grow 2025. With its products featured in GQ’s must-have lists and worn by high-profile customers, this is a brand that continues to push boundaries.

As a Northern VCT portfolio company, Duke & Dexter exemplifies the kind of ambitious, high-growth consumer business we seek to back, one that blends creativity, strong commercial fundamentals and global potential.

HowNow secures follow-on investment as growth accelerates

Developing one home for all learning and skills.

The Northern VCTs have backed HowNow, the AI-powered learning and skills platform. HowNow has extended its Series A funding round to £7.5 million, with Mercia Ventures and Pearson continuing with their support alongside Fuel Ventures.

Mercia Ventures first backed HowNow in 2023, recognising its potential to transform skills-first learning. Since then, the company has achieved:

350% revenue growth over the past two years
More than doubled its workforce, now employing 75 people across London and Mumbai
Expanded globally, serving customers in over 30 countries
Major enterprise wins, including TomTom, MoneyBox, Bausch & Lomb, UKTV and Good Energy
AI-powered innovation, launching HowNow AI to help businesses map skills gaps and connect employees to relevant learning opportunities.

This follow-on investment is another example of the Northern VCTs’ ability to attract syndicate investment, bringing in co-investors such as Pearson and Fuel Ventures. By leveraging our network, we not only provide capital but also ensure portfolio companies have access to industry expertise and commercial opportunities.

With workforce upskilling a growing priority for businesses, HowNow is positioning itself as a category leader in AI-driven learning. The continued support from the Northern VCTs highlights our confidence in the company’s vision, execution and ability to scale, reinforcing our commitment to backing high-growth businesses throughout their journey.

Optellum: Revolutionising early cancer detection

A powerful collaboration enhancing cancer diagnostics and expanding global reach.

The Northern VCTs’ portfolio company Optellum has announced a strategic partnership with Volpara Health, a global leader in breast cancer analytics software. This collaboration integrates Optellum's AI-driven lung cancer detection technology with Volpara’s established breast imaging analytics solutions.

Through Volpara’s global network of over 3,500 healthcare facilities, clinicians will gain access to Optellum’s Virtual Nodule Clinic, an AI-powered tool designed to accurately identify and manage patients with suspicious lung nodules, improving early detection and patient outcomes.

Combining Optellum’s lung nodule assessment expertise with Volpara’s breast cancer analytics advances early cancer detection, providing clinicians with precise diagnostic tools to intervene sooner for both lung and breast cancers.

For Northern VCT shareholders, this partnership highlights Optellum’s continued growth, innovation in healthcare technology and expanding global presence.

The 16th Northern VCTs' Shareholder Seminar

The 16^th Northern VCTs’ Shareholder Seminar will be held on the 7th October in London.

You will have the opportunity to meet some of the portfolio company management teams, members of the Mercia investment team and the Northern VCT Boards. There will be a presentation providing insights into the investment portfolio and an opportunity to ask questions.

Click here to register your interest or use the QR code.

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