After securing an £80 million raise for the Northern VCTs, Mark Payton, Chief Executive Officer of Mercia, joined us on TEI Magazine for an exclusive interview.
Mark outlines what is currently driving such strong investor demand in the North, and the sectors which Mercia is looking to support. He also discusses how important funds like the Northern VCTs are for pushing regional innovation forward, and looks ahead to the future.
TEI: You’ve recently closed a record £80m raise for the Northern VCTs. What’s driving such strong investor demand?
MP: The main driver is that the Northern VCTs are performing well under our management – blending a measured investment rate, solid performance in the portfolio and supported by cash realisations such as the recent IPO of The Beauty Tech Group. For investors, the structure itself remains compelling, VCTs offer attractive tax reliefs alongside access to a professionally managed portfolio of fast-growing companies, and that combination continues to resonate.
In addition, the 2025 November Autumn Budget outlined changes to the tax relief on VCT investment from April 2026 onwards which also brought forward investor demand from retail investors seeking the benefit of the 30% income tax relief historically available versus the revised relief of 20% going forwards.
TEI: Do you view this as a sign that investors are increasingly looking beyond London and backing regional opportunities?
MP: Mercia has always believed in the strength of the UK in its entirety – hence our 11 regional offices. Historically, businesses felt they needed to relocate to London, Oxford or Cambridge to access capital and talent, but that is increasingly no longer the case. Geography has become less of a constraint for starting and running a business than it used to be, and investors are beginning to reflect that shift in where they choose to deploy capital. London still has a very strong gravitational pull due to the density of capital in particular, but we continue to see many exciting businesses being established in cities and regions across the UK.
TEI: Where will this new capital go, and what kinds of sectors are you looking to support?
MP: The new rule changes in VCTs will benefit the larger, active venture investors such as Mercia Ventures looking to make a meaningful impact by providing deeper pools of capital associated with our valued support. At a high level we continue to seek out the best UK entrepreneurs who are building disruptive companies based in the UK (across Mercia Ventures, over 80% of what we do is outside of London) that we believe will reach substantial scale and value.
Our core sectors of focus remain software & AI, health & life sciences, consumer and deep tech reflective of our own deep domain expertise. Fundamentally across all of these we are looking to invest in and work with Founders who have a deep understanding of their domain and are building a business from a clear desire to help their customers achieve things in a way that others haven’t before.
That could mean backing a software business solving a real operational problem for its customers, or a consumer brand bringing a genuinely fresh approach to an established market — the common thread is founders who really know their space and are building something with lasting value.
TEI: How vital are funds like the Northern VCTs in terms of pushing regional innovation forward?
MP: Based on the most recent reports, 21% of high growth businesses in the UK are found in the broader London region attracting 66% of the national investment capital, demonstrating a significant imbalance in the availability of capital. Operations like the Northern VCTs are critical in helping move private capital into earlier-stage, high-growth businesses, particularly outside London.
Our investment team is based in the major cities around the UK, accessing the most promising companies. London, Oxford and Cambridge remain important, but not at the cost of regionally-backed entrepreneurs. Without this kind of capital, many regional businesses would find it much harder to recruit, innovate and scale. With our increased capital raise, we can access and provide capital to the most promising businesses that deserve it, wherever they are located in the UK.
TEI: Looking ahead, what does the outlook for regional investments look like?
MP: Many cities around the UK are continuing to build momentum, often around technology clusters. We know that success breeds success, and the people who’ve helped grow successful businesses go on to found, join or back the next wave, often in their own regions and communities. That flywheel effect is increasingly visible across the UK. The outlook remains positive, and we think the next decade could bring some really exciting regional success stories.
Mark Payton, Chief Executive Officer of Mercia
Since co-founding Mercia, Mark has led the sales of Hybrid Systems Ltd (to Myotec) to create PsiOxus Therapeutics Ltd, Warwick Effect Polymers Ltd (to Polytherics Ltd) to create Abzena plc, Oxford Genetics Ltd (sold to WuXi AppTec) and led the founding investment in Allinea Software Ltd (sold to ARM).
Prior to Mercia, Mark played a leading role within Oxford University Innovation (OUI), the technology transfer operation of the University of Oxford, spinning out BioAnalab Ltd (sold to Millipore), Oxford Immunotec Ltd (listed on NASDAQ), Oxitec Ltd (sold to Intrexon) and Natural Motion Ltd (sold to Zynga). Following his time at OUI, Mark was the vice president of corporate development at Oxxon Therapeutics Inc, prior to its sale to Oxford BioMedica plc.
