Venture Capital Update - British Business Bank steps up VC support
The VC View
Over the past year, we have been working closely with VC members, the British Business Bank (BBB) and the Government to determine how the BBB can play an even bigger role in supporting venture and growth equity.
This culminated in a major funding announcement as part of the Labour Government’s first multi-year spending review. As a result, the BBB can now invest in more first-time and emerging funds, can increase investment across the nations and regions, and has the flexibility and funding to back larger funds and deals. This is a welcome boost and builds on the talent and expertise the BBB has developed in recent years.
The BBB plays a critical role in the business ecosystem because it catalyses investment. The due diligence that the BBB undertakes on their investments is a strong and reassuring signal to other investors that helps unlock further capital for ambitious fund managers. As our Chief Executive, Michael Moore, said in response to the announcement, the changes to the BBB’s remit represent an important step towards more high growth companies attracting the capital they require and addressing the scale-up gap – something that the BBB’s previous remit wouldn’t have allowed it to do.
This is a significant development for VC, and would not have been possible without the input of BVCA members. We will continue to work closely with the BBB as it begins to roll out its exciting new programme of activity, more details of which can be found below.
Chris Elphick, Head of Venture Capital, BVCA
Insight
UK start-ups are embracing ESG
Authored by Ewa Skornas, Research Manager, BVCA
This month, BVCA research Manager Ewa Skornas delves into ESG_VC’s latest annual research and benchmarking report, which analysed the ESG performance of venture-backed businesses.
The report, underpinned by analysis conducted by the BVCA, finds that UK start-ups outperform international counterparts on environmental metrics, defying the trend seen in other territories.
BVCA Round-Up
POLICY:
BVCA welcomes £6.6bn boost for the BBB
The BVCA welcomes a £6.6bn funding package for the British Business Bank, which includes the announcement of a new Industrial Strategy Growth Capital programme that will invest in key sectors for VC, including defence, life sciences and clean energy.
A new “Investor Pathway Capital programme” is designed to support first-time and underrepresented fund managers. The BVCA views this as a major step toward building a more inclusive and dynamic venture ecosystem by lowering barriers to entry for new talent.
The creation of new Nations and Regions Investment Funds is also significant, including £350m allocated to the East and South-East of England. These areas have previously lacked dedicated BBB regional funds. A further £100m will be invested into existing programmes, alongside the introduction of Cluster Champions to connect local innovation ecosystems.
The Regional Angels Programme will also be expanded, with greater funding and operational support to bring more diverse angel investors into early-stage markets.
Together, these measures mark meaningful progress in building a more diverse, regionally balanced and resilient venture capital landscape in the UK.
For more information about the BVCA’s policy engagement, please contact Baderin Tejuoso, Senior Venture Capital Executive.
POLICY:
Pension scheme consolidation to drive investment in private capital
The BVCA has welcomed major pension reforms as the Government confirms that it will press ahead with significant consolidation of defined contribution and local government pension schemes.
Private capital is a major focus of the reforms set out in the Pensions Investment Review which was published on Thursday, 29 May. Larger pension schemes will have a greater ability to build capability in their investment teams to invest in private market assets.
The Review sets out the need to improve the attractiveness of the UK as a place to start up and scale up businesses, with improvements to the supply of domestic capital. It highlights that there has long been an ‘excessively narrow’ focus on cost that is detrimental to saver outcomes.
These commitments follow the BVCA’s intensive engagement with the Government and Parliamentarians on this theme. The association will continue to engage with stakeholders to advocate for ensuring there is sufficient supply of capital to smaller funds.
For more information, contact Policy Manager, Access to Capital, Karen Hurst.
ESG:
BBB, BVCA and VentureESG launch VC data harmonisation project to remove barriers to investment
The BBB, VentureESG and the BVCA have announced the development of a public VC ESG reporting template to reduce the administrative burden on VCs and portfolio companies through increased convergence in investor reporting requirements.
The project which launched today at the BVCA’s annual sustainability conference, aims to co-create a reporting template specific for venture capital. It is hoped that the project will help LPs and GPs to come to a consensus on reporting requirements, ensuring that investors get the information they need and small firms and managers are not unduly burdened with disproportionate reporting requirements.
The project will coordinate with Invest Europe/VentureESG’s existing harmonisation project, which released the third edition of its template in November 2024.
To learn more, contact Head of Sustainability, Harriet Assem.
PUBLIC AFFAIRS:
BVCA congratulates Anne Glover on recent Damehood
The BVCA celebrates its former Chair, Anne Glover, co-founder and Chief Executive of Amadeus Capital Partners being awarded a DBE in the King’s Birthday honours. Dame Anne was recognised for her outstanding contributions to science, engineering and innovation in the UK.
Her contributions to venture capital span over three decades and are focused in advancing science and engineering-based startups in the UK. Since being founded in 1997, Amadeus Capital Partners has raised over $1bn for investment in over 190 transformational technology companies.
For more information, please contact Juliette Gerstein, Head of Public Affairs.
Research Update
The Entrepreneurs Report: Private Company Financing Trends - Q1 2025
Venture activity in Q1 2025 revealed a steady early-stage environment alongside growing uncertainty at later stages – according to a new report from Wilson Sonsini, using US data. Seed valuations dipped slightly from the previous quarter but remain strong by historical standards, while Series A valuations rose to a median of $49m, nearing record highs and signalling continued investor confidence.
Later-stage performance was mixed. Series B valuations rebounded after a disappointing Q4 2024, while Series C and beyond saw sharp declines, reflecting investor hesitation amid limited exit options. Fundraising trends followed suit. Seed and Series A round sizes fell slightly to $4m and $12m respectively, while Series B rounds jumped to $26.2m. Series C and later rounds dropped significantly to $49.1m, though still above historic averages seen in recent quarters.
The report reveals that convertible notes have largely disappeared from the pre-Seed stage, with SAFEs now dominant. Post-Seed bridge rounds, however, continue to rely on notes at steady levels.
In climate tech and clean energy, founders face capital-intensive development cycles and shifting regulation, whilst investor caution remains high.
Media Update
In the news this month, UKTN reported on the Government’s new 10 year Industrial Strategy and the uplift in funding for the BBB. On top of the additional money contained in the Spending Review, the Government announced a new £4bn initiative, called British Business Bank Industrial Strategy Growth Capital.
London Tech Week garnered a range of headlines this month. The FT reported on the Prime Minister’s announcement of £1bn of investment into expanding Britain’s AI computing power.
Sifted reported that Par Equity and Praetura Ventures are merging to create PXN Group, a £670m investment firm focused on the north of England, Scotland and Northern Ireland as the two firms seek to address the regional funding gap across the UK.
The FT also published comment articles relevant to the industry. First, John Thornhill questions if VC quant funds will be able to overtake traditional VC funds due to advancements in technology and efficiency. And Anjli Raval argues that medium sized businesses are being left out of the ability to scale up due to both a lack of funding and the need for competitive regulatory reforms.
UK Tech News:
British Business Bank handed £6.6bn of growth capital
Financial Times:
Nvidia chief says UK lacks digital infrastructure as Keir Starmer pledges £1bn for AI
Sifted:
Two British VC firms merge, bringing together £670m in funds
Financial Times:
Are machines smarter than venture capitalists?
Financial Times:
The UK has a problem with corporate scaling