U.K. Competitiveness Faces Concerns Amid £3 Billion Pledge by BGF
The Business Growth Fund (BGF) has pledged a £3 billion investment in British businesses over the next five years, dedicating £500 million for early-stage start-ups in deep tech and life sciences. This announcement comes at a critical juncture for the UK's tech sector, which has been under scrutiny due to high-profile acquisitions, IPO snubs, and rising foreign interest.
Speaking about the commitment, Tim Rea, co-head of early-stage investments at BGF, stated, "Backing businesses from their earliest stages is essential to developing a robust and dynamic scale-up economy." He further added that the £500 million would allow them to bolster their efforts in supporting ambitious founders.
Managing assets valued at over $3.3 billion, according to Dealroom, BGF has backed more than 600 businesses, including well-known names such as Gousto and autonomous vehicle firm Oxa.
However, BGF's renewed commitment arrives amid concerns about the UK's ability to scale and retain its most promising startups. A recent example is Deliveroo's $3 billion acquisition by US delivery giant Doordash, which highlighted the familiar issue of the UK losing its homegrown tech champions.
The move aligns closely with the government's Mansion House reforms, a suite of financial policy initiatives designed to unlock UK pension capital for private market investments. If implemented, these reforms, signed by 17 major pension funds, could unlock up to £50bn for scaling firms, according to the Treasury.
Despite the positive news, the broader startup landscape remains fragile. New research from Cynergy Bank shows the average number of employees at new firms has dropped to 2.64, down from 3.5 in 2018, reflecting rising cost pressures, regulatory headwinds, and macroeconomic uncertainty.
Despite these challenges, optimism remains. British Patient Capital recently committed £20m to 'Cambridge innovation capital's £100m opportunity fund', aimed at helping deep tech and life sciences firms cross the 'valley of death' – the stage between research and commercialisation.
However, concerns about talent retention and the ability to retain homegrown tech champions persist. Baroness Stowell, chair of the House of Lords communications and digital committee, remarked, "Too often it's a case of 'UK begins and other countries cash in.'" She proposed consolidating fragmented schemes, accelerating reforms, and building a coherent industrial strategy for scale-ups to address these concerns.
Andy Gregory, BGF's chief executive, acknowledged the challenging environment but emphasized that the group's £3 billion commitment sends a clear message of support for British businesses. He said, "Our £3 billion commitment is about backing British business through the cycle and helping drive their success. We believe in the potential of this country's entrepreneurs, and we're ready to go further."
- The announcement from the Business Growth Fund (BGF) to invest £3 billion in British businesses over the next five years, with £500 million dedicated for early-stage start-ups in deep tech and life sciences, conincides with concerns about the UK's ability to scale and retain its most promising startups, particularly in light of high-profile acquisitions by foreign entities.
- The renewed commitment by BGF comes at a time when the government's Mansion House reforms, a suite of financial policy initiatives, are being proposed to unlock UK pension capital for private market investments, potentially unlocking up to £50bn for scaling firms.
- Andy Gregory, BGF's chief executive, emphasized that the group's £3 billion commitment is a clear sign of support for British businesses, despite the challenging environment and concerns about talent retention and the ability to retain homegrown tech champions.
