While the Small Business Equity Tracker Market examines the trends for UK smaller private companies raising capital, it doesn’t comment on the paucity of UK investors writing big checks for later stage funding rounds in the UK. In 2020, according to a report by Tech Nation, the majority of capital for venture growth funding rounds came from overseas, primarily North America.
While this is a strong endorsement of the opportunities for investors in UK tech, it does mean that UK savers risk missing out. The UK is the third largest pension market in the world, yet makes the smallest allocation to alternative assets, such as venture capital – 8% versus the average of 26% for large, mature pension countries. A report by the British Business Bank, showed that retirement savings could be increased by 7-12% for a 22-year-old, if their pension scheme made 5% of investments in the UK’s fastest growing and most innovative companies via venture capital funds.
Strengthening the UK market for later stage venture capital isn’t just important for our savers, it helps our companies to also achieve scale and success while remaining anchored in the UK. It also gives our ambitious growth stage founders a go to source of patient capital when global markets may be less buoyant, and the opportunity less obvious. That’s why a key part of our investment strategy is to bring more UK based venture growth funds to market.