Highlights from the BVCA Summit 2023
In the first of our summary notes from the BVCA Summit we cover the main highlights. This year’s theme: Private Capital. Public Value.
The private capital industry is set to play a key role in driving economic growth and public value in the UK, according to leading industry professionals and politicians at this year’s BVCA Summit.
Speaking at the annual gathering of the private capital industry in London, Garry Wilson, Managing Partner of Endless LLP and BVCA Chair, said that the private capital investment model had proven itself to be very resilient over multiple economic cycles in recent decades, and it is now positioned to play a crucial role in supporting companies and communities across the UK.
Despite falling business confidence in the wider economy, Mr Wilson said this often proves a good time for private equity investors to act counter-cyclically. “Nobody is putting their chequebooks away,” he said.
However, in a climate in which deal-flow has inevitably slowed, private capital firms are focusing more on supporting their existing portfolio companies, providing capital for investment in operations and to fund ‘add-on’ acquisitions of compatible businesses.
Beyond investment returns
Mr Wilson, Chair of the BVCA for one year, said that the focus of today’s private capital industry extends beyond a myopic focus on profits and returns.
“This industry is full of decent people with good values, and we don’t just want to make profits, but to really make businesses better. In the past, we would measure this by job creation, but this has expanded now, to driving environmental, social and governance improvements in every business we acquire.”
This sentiment, of private capital leading to public value, was echoed by speakers across venture capital, private equity, and private debt throughout the day.
Capital was also identified as one lever that the UK could still pull in order to tackle its low productivity levels, a factor that most economists consider to be a major obstacle to growth. Delegates were told it was time to shift the burden away from labour - with workers having to work harder and longer to just keep pace with inflation - and allow capital to take on more heavy lifting.
The Summit follows the announcement of the Mansion House reforms that encourage UK pension funds to invest more into private capital.
There was widespread agreement that boosting outcomes for UK pension fund holders was the most effective way to demonstrate the public value of private capital to the wider public and to demonstrate the longer-term value of private investment.
“The UK needs growth, and we are demonstrating that private capital is a crucial ingredient.” This is what will underscore the industry’s ‘licence to operate’, Mr Wilson said.
“We’ve got nothing to hide and lots to be proud about,” said Mr Wilson. “Frankly, I believe private capital is the best investment model out there.”
“The global capital for capital”
This bright vision was also shared by Deputy Prime Minister, Oliver Dowden, who addressed delegates with a “bold” goal - for the UK to be “the global capital for capital.”
Mr Dowden noted that the number of ‘unicorns’ in the UK (start-up companies valued at more than $1bn) is greater than several of our largest European neighbours combined.
He further spoke of the vital role private capital plays in “forming thousands of business success stories across the UK”, citing BVCA statistics that 90% of the investments made by BVCA members are in SMEs, with over half outside of London and the South East.
Mr Dowden expressed the government’s ambition for companies to ‘start, scale and stay’ in the UK and the government’s support to ensure this is the case by working with private capital to encourage investment in the UK.
Addressing regional inequality
The Labour Party’s support for the industry was demonstrated in the afternoon when the Shadow Economic Secretary to the Treasury, Tulip Siddiq MP, joined BVCA Chief Executive Michael Moore on stage. Ms Siddiq outlined Labour’s plans to grow the economy with their key priority focus being on addressing regional inequality.
Ms Siddiq further expressed Labour’s ambition to work with private capital firms to tackle the climate crisis with the transition to Net Zero being a second critical priority and that Labour recognise the opportunity of this collaboration in order to progress at pace.
Alongside the attendance of key political stakeholders and over 800 BVCA members, journalists attended the Summit including from Bloomberg, Reuters and The Times who heard first hand from members about the support they have continued to provide to businesses throughout the current economic climate.
Further insights from the BVCA Summit