British Patient Capital Response to Small Business Finance Markets 2024 report

As this year’s report notes, there has been a clear turning point in the market. 2021 was an exceptional year with record levels of activity and high valuations, so while we saw a comparative decline in equity investment last year, the reality is that this is a market correction and sets the foundations for the next phase.

With £13.4bn of dry powder to invest as of the end of 2023, which is 58% more than at the same point in 2021, there is a clear opportunity. Firstly, the equity finance market has matured: the UK VC market is the third largest in the world and has evolved from being an early stage-focused market to one that can support companies at all stages. Most notably, follow-on deals made up 56% of the market, up from a third in 2014.

The opportunity is in using this dry powder and increasing maturity to address gaps in funding particularly R&D-intensive sectors, where groundbreaking ideas can eventually develop into innovative, commercialised products. Here, investment requires large pools of patient capital, and the UK market remains further from the global forefront. British Patient Capital’s Future Fund: Breakthrough programme was developed to address this, and just this week announced a £10 million investment in Curve Therapeutics, an innovative business pushing the boundaries of UK life sciences with its drug discovery platform. As Curve has demonstrated from its base in Southampton, there is huge potential outside of London, and we need to ensure investment continues to reach across the whole of the UK to build a strong ecosystem of innovation for the future.

Christine Hockley Managing Director for Funds, British Patient Capital