MEIF Proof of Concept & Early Stage Fund
MEIF Proof of Concept & Early Stage Fund is a UK government-backed equity fund, managed by Mercia, that invests in early-stage Midlands companies inside the wider Midlands Engine Investment Fund. Its one tracked water bet is Industrial Phycology, an algae-based wastewater treatment startup. As of 2026 it has backed one water company across three deals.
Compiled by Antoine Walter, (don't) Waste Water, from official filings and direct intelligence in Leviathan.
The take
MEIF Proof of Concept & Early Stage Fund is not a fund in the usual sense, but a pocket of public money with a specific job: get equity into the Midlands' earliest-stage companies, where private investors rarely go first. It sits inside the Midlands Engine Investment Fund, a programme the British Business Bank built with ten Local Enterprise Partnerships, the regional business and council bodies, and which has put more than £200m into the region. The day-to-day investing is run by Mercia, the Midlands manager that won a £23m mandate to deploy it. As of 2024 the original Midlands Engine Investment Fund has completed its investment phase and been succeeded by the £400m Midlands Engine Investment Fund II, so this fund is now in run-off rather than writing new cheques.
What lands MEIF Proof of Concept & Early Stage Fund on a water map at all is a single company: Industrial Phycology, or I-Phyc, which uses algae to strip phosphorus and nitrogen out of sewage and wastewater, then recovers the leftover biomass as fertiliser or biogas. It is a textbook proof-of-concept bet, a nature-based fix for the phosphorus pollution that chokes British rivers, exactly the kind of early science this fund exists to back. Mercia and the Parkwalk-run University of Bristol Enterprise Fund backed I-Phyc together, with Mercia investment manager Kiran Mehta taking a board seat, and the company has since moved its base to Birmingham, inside the fund's Midlands patch.
For a newcomer the honest read is that MEIF Proof of Concept & Early Stage Fund is a regional development tool, not a water specialist: it backs Midlands innovation across software, deep tech and life sciences, and water shows up once, through I-Phyc, rather than as a thesis. Its cheques are small and early by design, capped around £750,000 into rounds of up to £2m, the gap-filling money a young company takes before commercial investors arrive. With the original fund now closed to new deals and MEIF II carrying the mandate forward, its water legacy is essentially that one algae-based bet, and whether the successor backs more water is the open question.
Water Commitment Score
Compiled from official filings, third-party records, and direct intelligence from investors and founders, in Leviathan · recomputed monthly · as of Jun 2026.
How they invest
Portfolio · 1 water companies
Invests alongside
Highlighted = profiled on (don't) Waste Water.
Frequently asked
- What does the MEIF Proof of Concept & Early Stage Fund invest in?
- MEIF Proof of Concept & Early Stage Fund backs very early-stage companies across the Midlands, from software and deep tech to life sciences, on behalf of the Midlands Engine Investment Fund. Managed by Mercia, it writes small equity cheques to firms too young for most private investors. Its one tracked water company is Industrial Phycology.
- Who manages the MEIF Proof of Concept & Early Stage Fund?
- MEIF Proof of Concept & Early Stage Fund is managed by Mercia, the Midlands-based investment manager, on behalf of the British Business Bank and ten regional Local Enterprise Partnerships. Mercia investment manager Kiran Mehta led its water deal, the algae-based wastewater startup Industrial Phycology, before moving on from the firm.
- What water company has the MEIF Proof of Concept & Early Stage Fund backed?
- MEIF Proof of Concept & Early Stage Fund has one tracked water company: Industrial Phycology, or I-Phyc, a UK startup whose system uses algae to remove phosphorus and nitrogen from sewage and wastewater. The fund backed it across three rounds alongside the University of Bristol Enterprise Fund; I-Phyc is now based in Birmingham.
- Is the MEIF Proof of Concept & Early Stage Fund still investing?
- MEIF Proof of Concept & Early Stage Fund was part of the original Midlands Engine Investment Fund, which has completed its investment phase. As of 2024 it has been succeeded by the £400m Midlands Engine Investment Fund II, run under the British Business Bank's Nations and Regions Investment Funds, so the original fund is no longer making new investments.