Following a turbulent year, the future of UK startups appears optimistic as Britain’s leading asset managers are in potential talks to provide a multi-billion pound, ‘Future Growth Fund’ to back startups. The funding comes at a pivotal time for the UK’s tech ecosystem, which continue to battle the consequences of rising interest rates and the collapse of Silicon Valley Bank (SVB). Claire Trachet, CEO and founder of business advisory, Trachet, comments on the potential new fund and the impact it will have on Britain’s startup sector.
Veteran banker and current lord mayor of London, Nicholas Lyons, has cited the Canada Pension Plan Investment Board and AustraliaSuper funds that the plan aims to emulate, with the hope it will act as a ‘giant UK-focused venture capital fund specialising in backing unlisted start-ups before they hit public markets’. The fund intends to arrange £50bn from British pension pots to invest in biotech firms and technology that is rapidly growing. Lyons concluded stating that his advancing discussions with FTSE100 asset managers could lead to the plan being finalised by the end of the year.
According to DealRoom, the UK remains Europe’s leading startup ecosystem, having raised $30B in 2022, double the funding of any other European country. Further data from DealRoom shows that the UK’s tech industry is projected to reach a value of $2.6 trillion over the next decade based on its current trajectory, and with increased support, research finds that the industry could quadruple in value to $4 trillion. In the coming year, a report by Tech Nation suggests UK tech startups and scaleups will be valued at over $1.3 trillion, a significant increase from $53.6 billion ten years ago.
The proposed funding plan acts as a step in the right direction, as the need to invest in startups and scaleups is more critical than ever, following the slowdown the sector has endured as a result of the current economic climate.
Claire Trachet, tech expert and CEO and founder of Trachet, comments on the potential new fund and the impact it will have on Britain’s startup sector:
“The UK tech sector has such great potential; it was only recently named one of the top three countries in the world for tech investment. This, combined with the projections we have seen for the next ten years, tells us that the sector has a promising future. Now, this proposed fund could be the real action needed to allow UK startups to flourish.
“The uncertainty of the economic climate has had a drastic impact on startups, we have seen the collapse of SVB, Tech Nation, and Britishvolt – to name a few – which has caused anxiety amongst startups but also for investors, who have become much more risk-averse decisions during these times.
“The funding that is being proposed is necessary to help get these startups off the ground and secure the UK’s title not only as the top contender with Europe, but as one of the top three contenders in the world. In addition to this, we need to start seeing the government supporting the sector through investment schemes to help startups reach their potential.
