Investment in UK tech start-ups urged, as potential earnings leave the country
The UK is home to more than 800 scale-ups, generating over £25 million in revenues, making it the second-largest hub for fast-growing tech firms after Silicon Valley. However, a significant portion of the capital backing these businesses is foreign, with only 20% coming from domestic investors.
To address this issue, Chancellor Rachel Reeves is encouraging pension schemes to invest in private companies, as part of her Mansion House accord. Saul Klein, co-founder of venture capital firm Phoenix Court, has joined the call, urging UK pension funds to increase their backing for British scale-ups.
Klein, who is also a co-founder of the European investment firm Seedcamp, argues that investors must view long-term growth as the true benchmark of success. He believes that local authority funds reaching equivalent levels of commitment could provide significant upside.
The UK has become Europe's leading hub for "thoroughbreds" - fast-growing tech firms with revenues above $100 million. Companies such as Revolut, Monzo, Tide, and Multiverse are among those highlighted as UK thoroughbreds. However, only 20% of the funding for these businesses comes from UK investors, leaving 80% of the returns to overseas backers.
Unlocking domestic capital for UK scale-ups is seen as critical to ensuring Britain remains globally competitive in technology and innovation. Europe is estimated to lag the US by $57 billion in later-stage growth funding, according to Dealroom. UK pension funds have a unique opportunity to fill this gap, both to boost domestic returns and to build long-term value for savers.
Reforms could unlock up to £200 billion of committed capital for scale-ups. The British Business Bank is now operating at the scale of a sovereign wealth fund. Britain must back the very businesses that are creating jobs, driving productivity, and powering its future.
It is implied that Saul Klein is urging major UK pension funds, such as those he is associated with through Seedcamp, to boost funding for scaling British startups. The pension funds that he has called upon to increase support for British scale-ups are not explicitly named in the available search results.
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