Praetura and Par Equity merge, bringing together £670m in funds
UK investors Par Equity and Praetura Ventures are merging to create PXN Group, a £670m investment firm focused on the north of England, Scotland and Northern Ireland as the two firms look to double down on closing the regional funding gap in the UK.
VC mergers aren’t common — with the notable exception of General Catalyst and La Famiglia joining forces in 2023 — but some in the industry expect more might happen as funds struggle to reach their targets amid the liquidity crunch.
Dave Foreman, founder of Praetura Ventures and new CEO of PXN Group, says that one reason for the merger is reaching the scale he thinks will become more necessary to succeed in venture.
The biggest VC firms are getting bigger: last year saw Balderton raise $1.3bn, Index Ventures raise $2.3bn and Accel raise $650m in fresh funds.
“I think being subscale is not necessarily a great place to be within venture, and I think there are opportunities for a business with significantly more scale, more assets under management. I think the scaled businesses in this sector will get bigger and the non-scale businesses will potentially struggle to catch up,” Foreman says.
The T&Cs
The deal, which is subject to regulatory approval, will see Edinburgh-based Par Equity and Manchester-based Praetura Ventures continue to run their respective funds, which between them can write tickets of £200k-£8m from early-stage through to growth.
There aren’t yet plans for PXN Group to raise a fund of its own. Paul Munn, founder of Par Equity and new executive chair of PXN Group, tells Sifted that Par will close its latest fund at the end of June at around £75m; it set out to raise £100m after a first close of £67m in October 2023.
“We need to deploy that money, so I think the next version of that would be a PXN Group product,” he says.
Par Equity is focused on early-stage B2B investments in healthtech, climate tech and industrial tech, driven by tech like robotics, photonics, advanced materials and artificial intelligence, whereas Praetura has a focus on SaaS, fintech and healthtech businesses.
For the merger to go ahead LPs across the two firms’ funds had to consent to the change of control of the fund manager. Nothing changes in the day to day running of the funds; all of them will be managed by existing fund managers. “It’s the same people pursuing the same investment thesis in that market but with greater resources behind them,” Munn says.
“Everything we were historically doing continues exactly as is,” says Foreman. Nothing changes with carry, or existing portfolio companies, he adds. “The only time that would be different is if we started to raise a PXN fund.”
Serving an “underserved” market
VC funding in the UK is predominantly focused on the capital. London brings in 51% of venture capital while Scotland, Northern Ireland and the north of England bring in a combined 20%, according to a report by the British Venture Capital Association.
The north of the UK is “underserved”, Munn says. “The challenge in the north is the dearth of money at so many levels and amounts, from small, medium and large cheque sizes.
“We’ve got fantastic research institutions and universities, particularly looking at Edinburgh University in terms of data and AI and robotics, down to Manchester and Leeds where there’s a lot of industrial tech. One thing we’re not short of is opportunity, the scarce resource is the funding.”
To move the needle on the northern ecosystem, Dave says more exits are also needed. “The big thing the early-stage ecosystem really needs is to start seeing on a regular basis really successful exits that founders have taken capital, created something consequential, exited and then reinvested back into the startup ecosystem.”
