British Business Bank (BBB) and NatWest have committed £50m (€58m) to multi-stage investment company Phoenix Court as part of a long-term partnership to support fast-growing British science and technology companies from seed through to scale-up, alongside the continued backing from M&G and HSBC.
BBB’s investment is “part of a multi-hundred-million-pound” commitment into Phoenix Court’s funds, providing the patient capital UK companies need to grow into global businesses, while giving domestic institutions and their beneficiaries greater exposure to the value created by the innovation economy.
The partnership comes as the UK seeks to increase domestic institutional investment in private markets. The UK is the world’s third-largest innovation economy, behind the US and China, but Phoenix Court said most scale-up capital currently comes from overseas investors.
Its analysis identified 1,800 venture-backed UK businesses generating more than £20m in annual revenue around the country, yet fewer than 1% have received backing from the major UK asset managers associated with the Mansion House Compact.
Under the Mansion House initiative, 11 major pension providers have committed to allocate at least 5% of their defined contribution default funds to unlisted equities, such as venture capital and growth equity, by 2030.
For NatWest, the investment marks its first commitment to Phoenix Court’s funds – LocalGlobe, Latitude and Solar – and extends its support for the UK innovation ecosystem through its innovation bank.
M&G is also building on its £50m investment in Phoenix Court’s Solar pilot fund, a three-year proof of concept focused on scale-up capital. Solar has backed 18 high-growth businesses across sectors including artificial intelligence, automotive, energy, financial services and advanced computing.
HSBC meanwhile has invested across the funds, in addition to being a limited partner via HSBC Asset Management.
The portfolio includes Tide, Motorway, Monzo, Raspberry Pi and CuspAI. Phoenix Court said the companies have generated £5bn in annual revenue and more than 8,500 high-value jobs across the UK, with 14 of the 18 generating more than £100m in annual revenue.
Leandros Kalisperas, CIO of the BBB, said, “The opportunity in closing the scale-up gap cannot be overstated. The UK already produces some of the best companies in the world, but increasing the flow of domestic long-term capital will be transformative – allowing companies to grow faster, keeping jobs and growth here, as opposed to trickling overseas.”
Saul Klein, co-founder and chair of Phoenix Court, said the partnership would help back more companies from seed to scale while allowing British savers to benefit from the innovation economy.
