Patient Capital Strategy

The decision by the UK to leave the European Union brings with it a period of uncertainty for our members and the businesses in which they invest. We believe the government can create the right regulatory, tax and fiscal incentives to support business and for private equity and venture capital firms.

This means ensuring the UK’s asset management industry is globally competitive and that the UK remains an attractive place to set up a fund manager, invest and conduct asset management activities. A competitive asset management sector also benefits the wider industries that rely upon a thriving private equity and venture capital sector, including banking, administration, legal, audit and other professional services.

The government is aware of the need to stimulate innovation and growth in the post-Brexit economy, and launched a number of initiatives in 2017/18 including:

The UK’s private equity and venture capital industry is well placed to support these initiatives, and make the UK one of the most competitive places in the world to start or grow a business. Our members are long-term investors that seek to develop sustainable businesses across the UK.

Patient Capital Review Outcomes

In November 2016 the government announced that HM Treasury would lead a Patient Capital Review (PCR) to further strengthen the UK as a place where growing innovative firms can obtain the long-term “patient” finance that they need to scale up. For the UK venture and growth capital industry, the PCR is a key part of the government’s industrial strategy programme.

A consultation, Financing Growth in Innovative Firms, was launched in August 2017 to explore ways to improve the flow of patient capital to the UK’s innovative firms. Venture capital schemes such as Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs), were considered as part of the review. The government responded to the consultation at Autumn Budget 2017, announcing an action plan to unlock £20 billion of investment over the next ten years. The government's full response to the consultation can be found here.

The BVCA is working with the government and the British Business Bank (BBB) on the review’s outcomes:

  • Patient Capital Fund of Funds Programme – The BVCA and BBB hosted a joint roundtable in March with fund of fund managers to discuss the new private sector Fund of Funds for patient capital. The request for proposals has now been published and further details can be found here.
  • British Patient Capital – The BBB launched British Patient Capital in June 2018. This is a new £2.5bn programme designed to enable long-term investment in high growth potential companies across the UK led by ambitious entrepreneurs who want to build successful, world-class businesses. This entity will house the VC Catalyst programme which covers venture and growth funds. Further information about the fund and the request for proposals can be found here. The BBB also gave a presentation to BVCA members at a town hall meeting in July 2018 and their slideshow presentation is available here.
  • National Security Strategic Investment Fund (NSSIF) – The BBB has also encouraged BVCA members to consider applying to the NSSIF programme. The National Security Strategic Investment Fund (NSSIF, en-sif) is the Government’s corporate venturing arm for dual-use advanced technologies. It is a joint initiative between HM Government and the British Business Bank. NSSIF invests commercially in advanced technology firms, alongside other investors, supporting long-term equity investment – ‘patient capital’ – and harnesses the Government’s unique technology expertise. Its objectives include accelerating the adoption of HMG’s future national security and defence capabilities and the development of the UK’s dual-use technology ecosystem.
  • Pensions Task Force – The BVCA is a member of a HMT taskforce looking at pensions investment and how to tackle barriers related to investing in illiquid assets. A summary of the work of the taskforce to date is available here.
  • EIS knowledge intensive fund consultation – HMT  published a consultation on the capital gap that knowledge-intensive companies face, which explores possible options for an EIS fund structure aimed specifically at investment in knowledge-intensive companies. The BVCA response can be found here.
  • Advance assurance process – The BVCA has highlighted our concerns about delays with HMRC’s advanced assurance process for the schemes as this is preventing managers from deploying capital. Discussions with HMRC and HMT are ongoing on how the process can be streamlined.

If you would like any further information on the BVCA’s work in this area, please contact the Policy team.