The UK’s leading venture capital (VC) and growth equity firms have signed up to Venture Capital Investment Compact, where they pledged to support efforts to unlock British pension investment in high-growth companies.
This pledge marks the start of larger changes that are set to take place to boost investment in UK science and technology startups.
Chancellor of the exchequer Jeremy Hunt said: “This compact is a huge win – demonstrating that our world-renowned Venture Capital firms stand ready to help our pension providers allocate funding to our high-growth companies. This could boost British pension pots to the tune of £1k.”
Quantum Motion’s CEO and CTO, James Palles-Dimmock, recently attended a Downing Street meeting, where experts and government officials discussed how UK startup businesses can be supported.
Attendees at the meeting included George Freeman, minister of state for Department for Science, Innovation and Technology (DSIT), and members of his team; the minister of state for investment, Dominc Johnson; as well as representatives from Bosch Ventures and other investment firms.
Palles-Dimmock believes more needs to be done to support the development of quantum computing, saying: “The UK’s National Quantum Strategy and £2.5bn investment helps put us at the forefront globally for governmental investment into quantum technologies.
“It is a big signal that the UK wants to build on the ‘unfair advantage’ that we already have thanks to our world-leading universities and the work of the National Quantum Technologies Programme [NQTP]. While we have an advantage in this area, we still need to look at how the UK can do more to enable cross-border collaboration in manufacturing and welcoming talent to the UK.”
He said that among the areas discussed was the appointment of capital from either UK venture capital firms or from overseas into science and tech, and how to shift the focus of the UK economy away from services and into science and technology.
By releasing or liberalising pensions, fund managers will be able to invest in UK high-growth companies, which Palles-Dimmock believes will help UK startups to raise quite a lot more capital, adding: “This is something we’ve been discussing with the government over a number of years, so it’s actually good to see some of these things happen.”
In February, Quantum Motion raised £42m in equity funding led by Bosch Ventures (RBVC), Porsche Automobil Holding SE (Porsche SE) and British Patient Capital.
Discussing the challenges in raising capital, Palles-Dimmock said: “Two to three years ago, before this last round of funding, if we wanted to raise £100m as a UK business, we would have had to go abroad. Is that a good thing or is that a bad thing? I don’t really mind, but if our government has an opinion on that and they’d rather funding came from here in the UK, then they need to take steps to enable that.”
Last month, Jeremy Silver, CEO of Digital Catapult, gave evidence to the House of Lords Communications Committee on the government’s plans for AI in the UK. Looking at investment across UK tech, he said: “There is a desire here to make a quick return.” Silver urged MPs to consider how the UK can encourage investors to stay longer, adding: “We should also try to create a greater culture in UK industry to make the kind of investments that US tech makes.”
Beyond the Venture Capital Investment Compact, the government is set to make more changes to encourage UK pension fund to invest in the UK tech sector. The Financial Times reported that Jeremy Hunt is looking to drive growth opportunities in UK innovation through pension funds supported by the state-owned British Business Bank, which supports small businesses. The chancellor is expected to announce his plans during his Autumn Statement on November 22.