Venture Capital Update - Rachel Reeves: "We're backing you" on NOVA proposal
The VC View
Over the past two years, the BVCA has undertaken a significant plan of work to help unlock greater levels of pension fund investment in venture and growth capital. From our Investment Compact to the work of the Pensions & Private Capital Expert Panel, we have been working to bring two industries together for the benefit of ambitious SMEs and the pension savers who can benefit from their growth.
It was therefore hugely encouraging to hear the Chancellor Rachel Reeves give her backing to the BVCA's NOVA proposal which is designed to make it easier for UK pension funds to invest in the industry.
Speaking on the main stage at Summit, she said “in that review about how to make Britain the best place to start up and scale up a business, one of the recommendations made was having a Tibi style scheme, what the French have, and I think your NOVA scheme very much builds on that. So again, you're knocking on an open door there, you know, we're looking at your proposals…We’re backing you.”
We’ve continued to press the case for government getting the detail of its pension reforms right at the Labour Party conference in Liverpool. At the Conference, Michael asked the chancellor how her plans to pool local government pension funds won't result in ticket sizes that are too large for local investments. The Chancellor replied, stating that from her perspective "that’s not what we want. The point of bigger funds is to diversify investments through economies of scale and through better management of funds."
In the run up to the Budget in November, the BVCA will continue to engage with Ministers and officials to make the case for increasing momentum in getting UK pension funds investing in our industry.
Chris Elphick, Head of Venture Capital, BVCA
Insight
More Than Money: VC due diligence drives innovation and business dynamism
Authored by Dr Juanita Gonzalez Uribe, LSE and Dr Robyn Klingler-Vidra, King’s Business School, King’s College London
Dr Juanita Gonzalez Uribe, Associate Professor of Finance at the London School of Economics and Dr Robyn Klingler-Vidra, Associate Professor in Political Economy & Entrepreneurship and Vice Dean of Global Engagement at King’s Business School share their research which on how the venture capital due diligence process itself has significant upsides for the businesses applying for support.
The authors outline how their research, now published in the Journal of Financial Studies, found that startups selected for due diligence do not just grow faster; they also adopt new digital tools and website technologies before raising external funding.
BVCA Round-Up
BVCA SUMMIT:
Chancellor backs role of venture capital in boosting business growth
Speaking at the BVCA Summit on 10 September, Chancellor of the Exchequer Rachel Reeves recognised the importance of the private capital industry to the UK economy, and set out her priorities for attracting investment into the UK.
During a conversation with BVCA chief executive Michael Moore, Reeves said “Government alone is not going to get economic growth – that’s where the private equity and venture capital industry comes in. Some of the fastest-growing businesses are PE and VC-backed,” and gave her backing to the BVCA’s NOVA scheme.
Michael finished his conversation with the Chancellor by pressing her on the Government’s approach to taxing business. Replying, Reeves said “I think I got balance right in the Budget last year… Keir’s been really clear: growth is our number one mission. I do recognise that tax policy does impact economic growth.”
Elsewhere at the Summit, Sarah Cardell, chief executive of the CMA used her keynote speech to announce a scale-up review, reflecting the regulator’s increased efforts to understand the industry and make competition policy support investment and growth.
On the dedicated VC stage, speakers from across the ecosystem discussed how the UK can convert its strengths in science, technology and talent to create scaled, globally competitive businesses, but noting they require regulatory and policy clarity to give investors’ confidence to act. Increases to EIS and VCT investment limits and unlocking pensions capital being among the key policy levers the government can pull.
REPORT:
Latest Will Hutton report outlines how the BBB can better support domestic IPOs
A new report by the political economist and journalist Will Hutton has recommended that the British Business Bank (BBB) should better support domestic IPOs and the importance of signatories meeting their Mansion House Accord commitments in order to accelerate the delivery of the necessary financing to support high growth British companies.
The report which included contributions from the BVCA is the latest in a series by Hutton that examines the relative strengths of the UK tech and investment landscape.
Speaking at the launch event at the London Stock Exchange, BVCA Chief Executive Michael Moore emphasised the importance of high potential businesses accessing the capital needed to accelerate growth, and highlighted the potential role of the BVCA’s NOVA proposal in unlocking pension capital for UK scale ups and VC funds. The full series of reports can be found here.
For further information please contact the BVCA’s Head of Venture Capital, Chris Elphick.
PENSIONS:
Industries collaborate to increase momentum of pension investment
Increasing the pace of UK pension fund investment into private capital was the main theme at the BVCA Pensions Summit on 9 September.
During the event, over 100 attendees discussed the attractiveness of the UK capital markets and the cross-industry collaboration required to deliver the commitments set out in the Mansion House Accord.
Speaking at the Summit, Dame Anne Glover, Chief Executive and Co-Founder of Amadeus Capital Partners and Deputy Chair of Policy at the City of London Corporation James Thomson reiterated the importance of investing in high-growth businesses to the wider pensions reform agenda to ensure investment drives innovation, job creation and growth.
The BVCA’s NOVA proposal was another key area of focus, with discussions centred around how it could help increase the pace of UK pension funds investing in venture and growth capital.
Looking ahead, the BVCA will continue to lead discussions on the pensions agenda and will launch two new Pensions & Private Capital Expert Panel's focused on Defined Contribution (DC) and Local Government Pension Schemes (LGPS) respectively. The Expert Panel’s will convene in the Autumn to continue the cross-industry collaboration on this agenda.
For further information please contact Senior Policy Executive, Olivia Green.
POLICY
BVCA continues calls for expanded EIS and VCT investment limits
The BVCA has added its name to an open letter from the Venture Capital Trust Association as part of the BVCA’s ongoing work to advocate for raising the limits of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT). The letter calls for the Government to prioritise raising the lifetime and annual investment limits for the schemes.
The EIS and VCT schemes play a vital role in supporting early-stage companies. However, since the schemes were last updated in 2016, the typical size of early-stage funding rounds has risen sharply, particularly in capital-intensive sectors such as deeptech and life sciences. Inflation and wage growth have eroded the real value of existing limits, while rules that were once appropriate now create unintended barriers and are increasingly less effective in supporting the UK’s high-potential companies.
The BVCA has also written directly to HM Treasury to reinforce these points. With many competitor jurisdictions including the US, Canada, France and Germany introducing similar schemes, the BVCA has called for the lifetime company limit to rise to £24 million (£30 million for knowledge intensive companies) and the annual company limit to £10 million (£25 million for knowledge intensive companies).
You can read the VCTA’s open letter here.
For more information, please contact the BVCA’s Head of Venture Capital, Chris Elphick.
Spotlight
BVCA & Mountside Ventures LP Dinner & Conference (27-28 October)
Mountside Ventures and the BVCA are hosting an LP Dinner on Monday 27 October and the BVCA will also be speaking at Mountside Ventures' LP conference at the Ham Yard in London on Wednesday 28 October. Attendees include over 100 Family Offices and Limited Partners, alongside a curated group of VCs and speakers including Harry Stebbings. Attendance is open to LPs, but VCs are specifically selected to participate.
You can register to attend the dinner here and find more details about the conference here.
Research Update
Defence technology exits rebound in 2024
PitchBook has published a new Defence Tech analysis, noting that defence tech global exits rebounded in 2024 driven by strategic demand and the geopolitical environment.
M&A activity accounted for almost 72% of total exit activity over the last decade, followed by 16% for buyout activity and only 7% for IPOs. The analysis notes that public listings have been limited due to businesses strong commercial pipeline alongside government revenue.
Median post-exit valuations have been more volatile than in traditional venture sectors, fluctuating due to macro cycles and sector-specific sentiment. The report found that liquidity has concentrated in segments with faster adoption cycles and strong dual-use relevance such as sensing, connectivity & security, while higher capital intensity segments with longer commercialisation timelines such as space technology lagged behind. The analysis expects M&A to remain a dominant exit path going forward with the sector likely to remain cyclical and influenced by policy changes.
Media Update
Bloomberg have reported on Nvidia’s plans to invest £2 billion to support the UK’s artificial intelligence industry, comprising funding to startups and partnerships with venture capital firms.
The Times reported that the UK has slipped to 6th in the global innovation rankings, having been overtaken by South Korea which jumped from 11th last year to 4th this year.
Sifted reported on the UK Diversity Data Alliance’s new framework (reported above) to make it easier for UK based start-ups to monitor diversity.
In the FT, Martin Sandbu argues that European start-ups are currently unable to benefit from the continents single market and vast amount of saved capital. To rectify this, Sandbu argues for a pan-European corporate code to help achieve the scale and funding that many businesses are currently struggling to achieve.
In other news, City AM reported that UK fintech maintained a heavy level of activity in the first half of 2025, with over 70 significant acquisitions reported in the UK and Europe representing a 50 per cent increase on acquisitions compared to the previous 12 months.
Finally, the FT reported that, according to data from PitchBook, European defence technology start-ups have raised €2.4bn since the start of 2022 including €1.4bn in the first seven months of this year alone, up from just €30mn in 2020 and €150mn in 2021, showcasing the increasing appetite of venture capital firms for the defence industry.
- Bloomberg:
Nvidia to Invest £2 Billion to Boost UK’s AI Startups - The Times:
Britain slips to sixth place in global innovation rankings - Sifted:
UK startups and VCs team up to better track industry diversity | Sifted - Financial Times:
The EU’s secret weapon for economic success - City AM:
UK fintech holds European crown but UAE threat looms - Financial Times:
Europe’s defence tech start-ups attract investment surge