A UK biotech company whose unique laboratory gut model is used to trial new drugs and foodstuffs without the need for animal testing has raised a further £750,000 from the North East Venture Fund, supported by the European Regional Development Fund and managed by Mercia Ventures.
The funding will help Newcastle-based Aelius Biotech to expand its presence in the US and European markets and complete work on its new laboratory in the city’s Blandford Square. Aelius provides testing services for consumer health, pharmaceutical and ‘functional food’ companies including Huel. It models how substances will be digested by the body to help customers to de-risk product development and improve formulations.
Aelius’s model is the only one of its type that can simulate all three stages of the digestion process – from substances passing through the gut, crossing the mucus layer on its surface and being absorbed into the body. While other models focus on the first or final stage, Aelius has developed the world’s first cell-compatible mucus, enabling it to create a fully integrated model.
Aelius was founded in 2018 by Dr Peter Chater, Dr Matt Wilcox and Professor Jeff Pearson based on their research at the University of Newcastle. The company received initial £1.25m funding from Mercia Ventures and the North East Venture Fund in 2023.
Since then it has increased staff from five to 15, and attracted a host of new food clients including a number of alternative protein and lab-grown meat manufacturers. Aelius doubled its revenue in 2024.
“Over the last year we’ve demonstrated the market for novel and improved in vitro testing methods and expanded our customer base as well as the Aelius team. Along with our move to our new premises, this latest funding will enable us to accelerate our growth in international markets, particularly in the US.”
Dr Peter Chater, the company’s CEO
“The pharmaceutical and food industries have a clear need for better laboratory models to drive faster product development. Aelius’s model was created to meet this need. The company has been growing steadily and has attracted blue-chip clients and gained a strong foothold in the food industry. This latest funding will help it expand internationally and pursue its aim to become a global leader in its field.”
Chris McCourt of Mercia Ventures
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About Mercia Ventures
Mercia Ventures is a proactive venture capital investor focused on being the first-choice partner for growth. Mercia Ventures makes equity investments of up to £10million across all sectors, with specialisms in Software, Consumer, Healthcare and Deep Tech.
Mercia Ventures is part of Mercia Asset Management PLC and sits alongside its wider private equity, debt and proprietary balance sheet capital operations. The Group has 11 offices in the UK and Mercia Ventures’ national footprint and 48 strong investment team draws on their experiences as founders, PhD scientists, software engineers, corporate financiers and management consultants to help our partner companies successfully achieve their ambitions. Mercia Asset Management PLC currently has c.£1.4billion of assets under management and, since its IPO in December 2014, has a portfolio of over 400 start-ups from pre-seed to Series B. Mercia Asset Management PLC is quoted on AIM with the epic “MERC”.
The Group raises its own Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EIS) Funds and details about open offers can be found through Mercia’s website.
Mercia Asset Management PLC is quoted on AIM with the epic “MERC” and includes the following wholly owned subsidiaries –
- Mercia Fund Management Limited is authorised and regulated by the FCA under firm reference number 524856
- Enterprise Ventures Limited is authorised and regulated by the FCA under firm reference number 183363
- EV Business Loans Limited is authorised and regulated by the FCA under firm reference number 443560
About The North East Fund
The North East Fund is a suite of five venture capital and loan funds which was established in April 2018, to invest £130m in around 600 North East businesses in the period to December 2023. The fund managers provide business development advice and investment finance to small and medium sized enterprises based in the seven Local Authority areas of North East England: Northumberland, North Tyneside, Newcastle, South Tyneside, Gateshead Sunderland and County Durham. The programme encourages investment in and the commercialisation of new technologies, including low carbon technologies, as well as stimulating new business creation, private investment and entrepreneurialism in the North East, with a view to creating over 2,500 new jobs. The North East Fund has overall responsibility for the programme, which is delivered through five separate funds, each managed by independent, FCA regulated fund managers. Details of these, and up to date information on the progress of the programme, is available on The North East Fund’s website
The North East Fund has been established with funding from the North East of England European Regional Development Fund programme, the European Investment Bank and from returns on previous North East based, publicly supported investment funds. It is jointly owned by the seven North East local authorities.
About the European Regional Development Fund
The North East Fund will receive up to £66,500,000 of funding from the England European Regional Development Fund as part of the European Structural and Investment Funds Growth Programme 2014-2020. The Department for Levelling Up, Housing and Communities is the Managing Authority for European Regional Development Fund. Established by the European Union, the European Regional Development Fund helps local areas stimulate their economic development by investing in projects which will support innovation, businesses, create jobs and local community regenerations.
About the European Investment Bank
The European Investment Bank (EIB) will lend up to £60,000,000 to the Northeast Fund programme. The European Investment Bank is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
