- UK’s most promising high-growth companies to benefit from new
investment vehicles tailored to the needs of pension funds
- Latest step in delivering the Chancellor’s Mansion House
Reforms unlocking £75 billion
- Expected to provide an extra £1,000 a year for the average
earner that starts saving from 18
The Chancellor has announced a £320 million plan to drive
innovation and unlock the first tranche of investment from his
Mansion House Reforms.
A raft of measures – which are expected to provide an extra
£1,000 for people’s pension pots every year – will help invest
the £75 billion made available through the Chancellor’s Mansion
House Reforms which can then be pumped into high growth,
innovative companies to deliver for savers and grow the economy.
£250 million will be committed to two successful bidders under
the Long-term Investment for Technology and Science (LIFTS)
initiative – which works with industry to establish new funds to
invest in science and tech companies. This will provide over a
billion pounds of investment from pension funds and other sources
into UK science and technology companies.
A new Growth Fund will also be established within the British
Business Bank. The Growth Fund will draw on the BBB’s strong
track record in accessing the best investment opportunities in
the UK’s most promising businesses, which has been welcomed by 8
pension schemes and fund managers.
Building on the recent BVCA Venture Capital Compact, the package
also includes support for the UK’s renowned venture capital
industry. A new Venture Capital Fellowship scheme will support
the next generation of world-leading investors in our renowned VC
funds, similar to the successful US Kauffman Fellowship.
The package will be supported by three measures which will help
drive the next generation of high-growth industries that will be
at the vanguard of UK economic prosperity:
- - At least £50m additional funding for the British Business
Bank’s successful ‘Future Fund: Breakthrough’ programme – that
will provide direct investment to support the UK’s promising
pipeline of innovative firms.
- - A £20 million investment to foster more ‘spin-out’
companies that are created using research done in universities.
The Chancellor, , said:
“Innovation is the key to our future success as a nation and its
vital that we do all we can to help companies start, scale and
grow in the UK.
“Tomorrow’s Autumn Statement will be a huge step towards
delivering our Mansion House Reforms and unleashing the full
potential of our pensions industry.
It comes as the Chancellor is convening representatives from
several universities and investors at University College London
(UCL) East where they will endorse a new set of ‘best-practice
policies’ that are recommended by the review.
Spin-out companies raised £5.3 billion in investment in 2021-22
alone. Today’s announcements are designed to increase investment
for the future and help ensure researchers in our world-leading
universities have the tools they need to start, scale, and grow
innovative new businesses in the UK.
The independent review – led by Irene Tracey, Vice-Chancellor of
Oxford University and Andrew Williamson, Managing Partner of
Cambridge Innovation Capital – recommends innovation-friendly
policies that universities and investors should adopt to make the
UK the best place in the world to start a spin out company.
In the past, many spin-outs deals were created from scratch,
which is both inefficient and sometimes fails to learn the
lessons from previous success stories. Today’s recommendations
aim to speed up the process and build on TenU’s University
Spin-out Investment Terms (USIT) Guide by recommending 10-25%
university equity for life sciences spinouts, and 10% or less for
less IP-intensive sectors, common in software.
The Chancellor has accepted all the recommendations and will set
out his full response as part of the Autumn Statement tomorrow.
This move will help deliver the Prime Minister’s pledge to grow
the economy by supporting our world-leading university research
institutions, which generate around £10 billion a year for the
economy.
Notes to editors
- The British Business Bank (BBB) has engaged widely with the
market to explore the case for government to play a greater role
in establishing investment vehicles to allow pension schemes to
invest quickly and effectively in UK unlisted growth companies,
building on the skills and expertise of the BBB’s commercial arm.
- The organisations, listed below, have confirmed that they are
supportive of the government’s ambitions to encourage additional
institutional investment into UK venture and growth assets, and
that a government established vehicle run by the BBB could be a
valuable addition to the market, alongside other vehicles that
already exist or are in development.
- They have also confirmed their availability for continued
engagement with the BBB to help design this vehicle to meet
schemes' needs, alongside the wider work of government and the
market to establish suitable vehicles.
- Aviva, L&G, M&G, Smart Pension, Aegon, Phoenix, AON
and USS
