Up to £190bn of private capital investment could be unlocked to boost UK growth

A new report from the British Private Equity and Venture Capital Association (BVCA) has identified a series of solutions to unlock billions in additional investment by the private capital industry into sectors central to the UK’s future economic growth.

Investing in a better economy finds that as of the end of 2024, UK-based private capital funds have £190bn of capital available to invest, which is expected to be deployed over the next three to five years.

This BVCA estimate includes new data from over 2,000 venture capital, growth equity and private equity funds. Historically, around half of the funds managed in the UK, known in the industry as ‘dry powder’, are deployed here.

The industry currently backs 13,000 businesses across the UK, supporting 2.5 million jobs, two thirds (69%) of which are located outside of London. In 2024, the total amount invested by private equity and venture capital in UK businesses was £29.4bn, which was itself a 44 per cent increase on the amount invested in 2023.

The report makes a series of recommendations about how to increase the amount of capital invested in high potential sectors, including those identified in the Government’s 10-year industrial strategy.
 

• In life sciences – UK biotech firms raised £3.5 billion in capital, with venture funding accounting for over £2 billion in 2024 alone. Yet, while early-stage activity remains strong, the market thins significantly at growth-stage. This has left many companies dependent on US crossover funds, leading to a loss of domestic IP, talent, and scaling opportunities.
  
  The BVCA is calling for government backed programmes such as the British Business Bank’s new £4 billion Growth Capital Initiative to ensure participation by emerging and sector-specialist life sciences fund managers, including extending support to those focused on early growth-stage equity.
   
• In digital technology – AI already accounts for a quarter of recent UK venture capital funding, but the ability of world-class universities across the UK to spin out innovative companies is hindered by complex internal procedures and investor processes.
  
  This could be addressed by Government adopting all recommendations made in the 2023 independent review of spin-out companies, which are yet to be fully implemented.
   
• In defence – The private capital sector is increasingly engaged, raising new funds and partnering with government. UK-based defence tech companies raised £295 million in equity in 2022, up from £15 million in 2013, with strong growth continuing into 2024. But greater coherence across policy, regulation, and messaging is needed to scale their impact.
  
  Procurement reform and access to government contracts, especially for mid-market and scale-up investors would support greater levels of private capital investment. Phased approaches based on pilots and trials ahead of full procurement awards would support this and give investors confidence in the opportunities available to smaller players in the market.
   

These recommendations will be discussed today at the BVCA’s Investment Policy Forum in Central London. The event will bring together parliamentarians, policymakers, think tanks and business stakeholders as well as representatives from the private capital industry and the businesses that they invest in. 
 

Commenting, BVCA Chief Executive, Michael Moore, said:

“With £190bn of dry powder available to invest, the private capital industry is ready to play a bigger part in strengthening the UK’s growth trajectory.

“The UK has huge strengths in sectors like AI, life sciences and defence which can be built on, but this will require action from Government with a renewed focus on removing the barriers and friction which is holding back even greater levels of investment.”

Notes to Editors:  

For further information, please contact:  
James Gribben, BVCA Senior Communications Manager
Email: [email protected] 
Mobile : 07854897974

Dry Powder Methodology

‘Dry powder’ refers to the total amount of committed but un-invested capital under management of private equity and venture capital funds.

The BVCA estimate for dry powder includes information from over 2,000 venture capital, growth equity and private equity funds managed from the UK. 

Firm & fund level dry powder information for BVCA members is collected as part of activity survey via the European Data Cooperative platform. If dry powder data is not provided as part of the submission, it is estimated based on historical data and adjusted for submitted fundraising and investment amounts. 

Dry powder information for non-members with funds managed from the UK is based on fund size data obtained from public sources, factoring in fund vintage year and typical capital deployment schedule.

The following funds are excluded from the statistics: infrastructure funds, real estate funds, private debt funds, distressed debt funds, funds of funds, accelerator/incubator funds, business angel activity.
 

About the British Private Equity & Venture Capital Association  

The British Private Equity and Venture Capital Association (BVCA) is the industry body and public policy advocate for the private equity (PE) and venture capital (VC) (private capital) industry in the UK. With a membership of over 600 firms, the BVCA represents UK-based private capital, as well as the wider ecosystem of professional advisers and investors. The private equity and venture capital industry has a vital role to play in driving national and regional growth. Currently almost 13,000 companies, employing more than 2.5 million people, are backed by private equity and venture capital investment in the UK.