UK VC reserves of GBP8.4bn could provide crucial funding as country emerges from crisis, says British Patient Capital

British Patient Capital comments on the British Business Bank’s Small Business Equity Tracker which reveals UK VCs currently have a record amount of dry powder ready to deploy.

Catherine Lewis La Torre says: “According to the British Business Bank’s Small Business Equity Tracker, venture capital dry powder - capital yet to be invested - is collectively worth GBP8.4 billion. equating to 12 to 15 months of investment based on 2018 and 2019 investment level. While clearly this isn’t all down to British Patient Capital, at 31 December 2019, British Patient Capital has already committed more than GBP1 billion to venture capital and venture growth managers, and just as importantly were joined by other institutional investors committing a further GBP4 billion alongside us. That’s GBP5 billion of capital, with GBP3 billion still to be invested in high-growth innovative companies.

“Ultimately this gives venture capital funds the firepower they need to continue to support UK innovative companies now and power the innovation economy as we emerge from the crisis.
“Further good news is that the Small Business Equity Tracker reveals that UK scale-ups are better capitalised now, with British Patient Capital supported funds almost doubling their deal count in 2019. Addressing the funding gap that has affected later-stage businesses, by enabling larger funding rounds, is central to our long-term vision for more home-grown fully funded, high growth companies to fulfil their potential to be players on the global stage.

“In addition to the record amounts of venture dry powder, I’m pleased to see that for the first time that follow on funding – investment in companies that had already received equity finance – outstripped first-time deals, which shows our innovative companies are able to raise multiple funding rounds. This, together with the significant amounts of institutional capital invested alongside British Patient Capital demonstrates the increasing importance of the private markets for institutional investors.
"Given negative bond-yields, asset owners are continuing to seek out higher returns from private markets. The Equity Tracker published today demonstrates a maturing of the market, as investors seek returns from unlisted companies in the UK technology sector, which accounted for 47% of investment by value in 2019.”