Venture Capital Update - Chancellor’s ‘Leeds Reforms’ to reduce administrative burden for financial services

The VC View

Besides the traditional of flurry of getting VC deals over the line, the period as we enter summer is also a busy one for government and regulators. This year is no exception.

The Government prepared for summer by publishing an abundance of legislation and consultations, many of which have relevance to our industry. Chief among them are the Leeds reforms and further updates on the Industrial Strategy, as well as consultations on the National Security & Investment Act and the remit of the CMA.

A pre-summer flurry of legislation, known in Westminster as “L Day”, included the publishing of the draft carry legislation which reflects evidence presented by the BVCA on how to make the regime more workable. It represents a key milestone as the BVCA continues to engage with policymakers to ensure there is a clear and workable framework ahead of the new regime’s April 2026 implementation date.

The beginning of summer also marks the start of Budget speculation. Many within the industry have highlighted the potentially damaging impact of a wealth tax, especially one that would hit the unrealised gains of founders and entrepreneurs. Clearly, there are some difficult decisions to be made, but pragmatism and long-term thinking is key, as our Chief Executive noted in a recent op-ed for City AM.

We are building up for a busy period after the holidays, with our flagship BVCA Summit on ​9​-​10​ ​September​ (confirm your tickets now if you have not yet done so), followed by the Party Conferences ahead of the Autumn Budget. If you want to understand any of the work going into this, do get in touch with the team.

Hope you have a fabulous summer break and see you on the other side

Chris Elphick, Head of Venture Capital, BVCA

Insight

Backing female fund managers is the pathway to growth

Authored by Leandros Kalisperas, Chief Investment Officer, British Business Bank

Leandros Kalisperas, Chief Investment Officer at British Business Bank, highlights a critical opportunity for the UK economy - increasing support for female fund managers. With just a fraction of venture capital currently reaching women-led businesses, he argues that backing diverse investors is key to unlocking growth.

Unlocking Founder Potential: Why It’s Time to Rethink Liquidity at Series A

Authored by Dan Perkins, Commercial Director, Founder Liquidity Fund

Dan Perkins, Commercial Director at the Founder Liquidity Fund, explores founder liquidity at Series A - an often-overlooked pressure point in the startup journey. As the UK tech ecosystem matures, he argues that providing limited early liquidity can provide much-needed stability for founders - many of whom have spent years operating under intense financial strain.

BVCA Round-Up

POLICY:

Chancellor’s ‘Leeds Reforms’ to reduce administrative burden for financial services

The BVCA has welcomed the Chancellor’s Mansion House speech in which she promised to streamline regulations and ensure the UK continues to attract international investment.

The speech was accompanied by the Government publishing its Financial Services Growth and Competitiveness Strategy, which includes a number of measures known as the ‘Leeds Reforms’ that are designed to bolster the UK’s position as a global hub for financial services.

This includes several pro-growth measures that the BVCA has previously advocated for, including:

• An FCA commitment to review its remuneration rules for asset managers.
• A range of regulatory reforms, including shorter deadlines for determining regulatory applications.
• A commitment from the FCA to publish an engagement paper on reforms to the market risk framework for the Investment Firms Prudential Regime.
• A new concierge service within the Office for Investment to help attract international capital.
• A decision not to implement a UK-specific Green Taxonomy.
• A commitment to review regulations for venture capital firms next year.

The Government also launched several consultations on areas including the Senior Managers & Certification Regime and the Financial Ombudsman Service. The BVCA will formulate its response to these consultations in the coming weeks.

For more information on the BVCA’s work with government, please contact Head of Public Affairs, Juliette Gerstein.

POLICY:

New BVCA report highlights £190bn of dry powder could be unlocked to boost UK growth

A new report from the BVCA has identified a series of solutions to unlock billions in additional investment by the private capital industry into sectors that are 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.

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, including:

• Life Sciences - 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.
• Digital Technology - The BVCA is calling for the Government to adopt all recommendations made in the 2023 independent review of spin-out companies, which are yet to be fully implemented.
• Defence - The BVCA is calling for procurement reform and wider access to government contracts, especially for mid-market and scale-up investors to 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.

For more information, please contact Head of Public Affairs Juliette Gerstein.

RESEARCH:

Unlocking opportunity: the 2025 Investing in Women Code report

BVCA has welcomed the publication of the latest Investing in Women Code report earlier this month at an event attended by the Chancellor. The paper sets out both the progress made, and the work still required to ensure women entrepreneurs have equal access to investment and support.

It outlines encouraging signs of momentum. 5% of equity deals by Code signatories went to all-female founder teams, more than double the wider market rate of just 2%. The report also charts rising approval rates for women-led businesses and increased diversity among angel investors.

The BVCA has been a Code Partner since the Code began and led on the LP chapter. LPs are encouraged to sign up and play an active role in accelerating change to help create a more inclusive investment environment for the future.

For more information, contact the BVCA’s Head of Research, Suzi Gillespie.

POLICY:

BVCA pushes the Government for Enterprise Management Incentive options

The BVCA is calling for reform of the Enterprise Management Incentive (EMI) as part of engagement with officials ahead of the Autumn Budget.

The association will reiterate the importance of EMI options to small and medium-sized enterprises in the UK and suggest ways the Government can improve the EMI option regime to foster greater uptake. Concerns from members that will be raised include issues with HMRC’s online services and EMI valuations for VC backed businesses. This currently adds unnecessary cost, complexity and uncertainty to the operation and tax status of EMI option plans.

The BVCA will also discuss the possibility of relaxing the current EMI qualifying criteria that can prevent PE-backed companies from using EMI options to incentivise management in their portfolio companies. Alongside additional discussions on potentially extending the statutory expiry dates for individual EMI option grants to reflect the longer investment-to-exit timelines that are seen in the current economic climate.

If you have any feedback or would like to discuss EMI policy, please contact Chris Elphick, Head of Venture Capital.

RESEARCH:

Four in 10 of the UK’s fastest growing companies are backed by private capital

New analysis conducted by the BVCA shows that 40 per cent of The Sunday Times' top 100 fastest-growing companies in the UK are backed by private capital.

Overall, the list includes 14 companies scaling with venture capital, 6 companies backed in seed rounds, 3 companies supported through angel investment as well as 17 businesses backed by private equity.

Companies listed include Peppy Health backed by Felix Capital, CMR Surgical backed by Cambridge Innovation Capital, and Apprentify, backed by BGF. Altogether, the 100 firms have driven an average revenue growth of 111%, generated 10,500 jobs over the last three years, and plan to add 5,300 more in the coming year.

The BVCA’s new Investing in a Better Economy report makes several recommendations to ensure fast-growing businesses like these can access the capital they need to scale-up. This includes calls for public policy to facilitate an ecosystem that encourages pensions investment in the growth of UK businesses, and raising the Enterprise Investment Scheme’s tax relief for knowledge-intensive companies so R&D-driven, IP-rich companies can continue to raise capital.

For further information, contact the BVCA’s Head of Research, Suzi Gillespie

BVCA thanks John Heard

We would like to extend our thanks and congratulations to John Heard, General Counsel at Abingworth, who is retiring at the end of July. John headed up the last refresh of the BVCA model documents in 2023 and served with distinction on our Legal Committee for many years. His dedication and good humour will be missed, and we wish him well.

Media Update

In a comment piece for City AM, Michael Moore argues that loose talk of a ‘wealth tax’ is hitting investor confidence and government should adopt more pragmatic, pro-growth policies to reassure investors. The article calls for reforms to a range of incentives including the Enterprise Management Incentive, Enterprise Investment Scheme, Venture Capital Trusts and Seed Enterprise Investment Scheme.

Sifted reported that, according to their own new data, VCs invested €6.7bn into UK startups up to the end of June this year, down from €8.7bn across the same six months in 2024. Whilst Funds Europe reported on a new Kearny study which showed Europe continues to lag behind the US and Asia in venture capital investment for high-tech and digital industries.

Meanwhile, The Entrepreneurs Network calls for reforms to upgrade the UK’s start-up support ecosystem including the creation of a UK taxonomy and accreditation scheme and the adoption of a dual-track assessment that captures company performance and entrepreneurs’ development.

Finally, Kate Bingham wrote in the FT about the importance of the UK’s Life Sciences sector and how the global trend, especially in China and the United States, towards increased R&D spending risks leaving the UK lagging behind.

• City AM:
  Here's what private equity and venture capital need from Rachel Reeves
• Sifted:
  UK startup funding drops almost a quarter in H1 2025
• Funds Europe:
  Europe lags in high-tech venture investment
• The Entrepreneurs Network:
  Need for Speed: Four reforms to upgrade Britain’s startup support
• Financial Times:
  The UK needs to pick up the pace on life sciences

Research Update

HIB Venture Healthcare Report 2025

HSBC released an in-depth analysis of the healthcare venture ecosystem in a new edition of their mid-year Venture Healthcare report.

The results show that Q1 2025 was the biggest investment quarter in the last two years due to a surge in $100m+ mega deals. This reflects an investor shift from early-stage risk towards later stage businesses. Investment in Q2 dropped 20% amid increased economic and geopolitical uncertainty which the report suggests is likely to persist into Q3.

Sector-wise, Biopharma accounted for over 40% of the amount invested with oncology, autoimmune and metabolic indications driving mega round deal flow. Healthtech investment was on par with Q2 of last year, with investor activity concentrated around AI driven workflow automation. Medical devices were the only subsector with growth in capital deployed between Q1 and Q2. This was driven by large later-stage investment rounds, while seed & series A investment dropped significantly amid FDA layoffs and grant uncertainty.

The report predicts overall investment in H2 2025 to decline compared to H1 amid continued consolidation of deal flow towards more mature businesses with significant revenue scaleup potential. First-time financing is expected to remain muted.

Spotlight

BVCA supports Women’s Venture Capital Summit

The Women’s Venture Capital Summit Europe will take place at Fairmont Windsor Park on ​16​ ​September​ ​2025​, building on the success of last year’s event.

Supported by the BVCA, the event aims to foster collaboration, networking and dealmaking with over 300 of Europe’s senior women in private equity. A packed conference agenda will explore innovative strategies, portfolio performance and key sector trends including AI, enterprise software, healthcare, and defence.

Attendees can engage in focused discussions on VC before an evening of networking with the broader private capital community, providing opportunities for LPs and firms with crossover strategies to share insights and build relationships.

The BVCA has been a proud supporter of these events since their inception and is pleased to offer BVCA members exclusive discounted rates.

For further information, contact the BVCA’s Director of Industry Development, Amy Abbott.

SaaStock Europe: Backing the next generation of AI & SaaS leaders

SaaStock Europe returns to Dublin on ​14​–​15​ ​October​ ​2025​, bringing together 4,500+ founders, investors, and AI & SaaS leaders for two days of high-impact content, networking, and deal-making. The BVCA are proud to be an official partner of this event.

In its biggest year yet, the event will host the Global Pitch Competition, awarding a €1 million investment to one standout early-stage AI or SaaS startup. The live pitch takes place in front of top-tier VCs, press, and global tech decision-makers.

BVCA members and their portfolio companies are invited to apply for the chance to pitch live on stage and gain exposure to a world-class audience.

BVCA members can also access 30% off tickets to SaaStock Europe using this exclusive link: Get your 30% discount.

For more on BVCA’s ecosystem engagement, please contact Baderin Tejuoso, Senior Venture Capital Executive.