The performance of UK venture capital is a notable success story after what has been an otherwise challenging period for businesses across the world. The third annual UK Venture Capital Financial Returns report from our parent company, the British Business Bank, clearly illustrates the importance of venture capital as an asset class to investors, innovative companies, and the wider economy.
Since the previous report 12 months ago, UK VC funds with a 2008 to 2013 vintage have seen a significant increase in performance, with pooled Distributions to Paid In Capital (DPI)Distribution to Paid-In (DPI) is a measure of the cumulative distributions returned to the investor from portfolio company exits relative to the total amount of capital paid into the fund to date multiples climbing from 0.79 in 2020 to 1.05 in 2021, and the pooled Total Value to Paid In Capital (TVPI)Total Value to Paid In (TVPI) is the ratio of the current value of remaining portfolio investments within a fund, plus the total value of all distributions from exits to date, relative to the total amount of capital paid into the fund to date multiple up from 1.81 to 2.09.
Whilst those numbers are impressive enough by themselves, they also compare very favourably with the US. Historically the US venture capital industry has generally outperformed its UK and European counterparts. However, this latest analysis shows the gap not only continues to close, but in some cases has even reversed. US funds with a 2002 to 2016 vintage recorded a pooled DPI of 1.12, higher than the UK figure of 1.01, but for TVPI, the situation is different – the US pooled TVPI of 1.97 is 0.11 points lower than the UK figure.
This report from the British Business Bank continues to provide an extremely useful and important insight into the UK venture capital ecosystem. By comparing performance numbers with the US and, for the first time this year, Europe, this comprehensive analysis enhances understanding of the asset class among domestic and international investors. The UK venture capital industry is in rude health, and British Patient Capital is committed to building on this success by supporting high growth, innovative companies led by ambitious entrepreneurs who want to build successful, world-class businesses.