Enterprise Capital Funds are helping to close the ‘equity gap’ by increasing the availability of early-stage equity finance to high potential UK companies, British Business Bank interim evaluation report reveals

Press release 30 November 2021

The latest Enterprise Capital Funds (ECF) programme Interim Evaluation Report reveals:

  • 63% of companies invested in by an ECF supported fund were either seed or start-up, and 25% were early-stage – helping to close the early-stage ‘equity’ gap.
  • 388 UK-based companies funded by the programme between 2011-2019 created almost 8,000 jobs and generated £2.2bn in additional sales.
  • Companies backed by ECFs grew very quickly, with annual rates of turnover and employment increasing by 76% and 48% respectively.
  • The programme has helped create many success stories including Graphcore, GoCardless, Marshmallow, Tractable, Thought Machine, Grapeshot and Mimecast.

An independent evaluation of the British Business Bank Enterprise Capital Funds (ECF) programme has found that the programme is helping to close the early-stage ‘equity gap’ by increasing the supply of equity capital to high-potential, early-stage UK companies as well as lowering barriers to entry for fund managers looking to operate in the VC market.

The British Business Bank commissioned Ipsos MORI to conduct an independent evaluation of the ECF programme to assess the extent to which the programme was meeting its objectives and providing a net benefit to the economy. Established in 2006, the ECF programme has supported 28 fund managers to raise 36 funds, with total investment capacity of £1.72bn and £984.4m of commitments supporting 665 companies across 701 equity deals.

The evaluation report estimated that the 388 UK-based firms funded by the ECF programme between 2011 and 2019 created almost 8,000 jobs and generated £2.2bn in additional sales by March 2019. Those companies funded by ECFs saw their annual rates of turnover and employment grow by 76% and 48% respectively.

Some of the success stories from the programme include Graphcore, GoCardless, Marshmallow, Tractable and Thought Machine, as well as successful exits in Grapeshot and Mimecast. In all these cases, ECFs were early investors into the companies.

Examining the impact on salaries of those jobs created, the report found that the programme helped to create highly skilled jobs with an average salary of £56,000. Moreover, at least 51% of those jobs created paid wages or salaries of £37,000, which is in the top quartile of UK income levels.

The British Business Bank welcomes the evaluation report findings. The Enterprise Capital Funds programme was set up with the aim to address the equity funding gap for early stage UK businesses that have long-term growth potential. The evidence is clear that it is meeting its objectives; by enabling UK focussed fund managers to raise funds, scale up their operations and get more early-stage venture capital funding to innovative UK businesses.

Early stage venture capital requires long-term, patient investment, and although many of the funds we have supported are yet to mature, there are clear signs the programme is delivering on its goals and is now an established and important part of the UK’s venture capital eco-system.

Ken Cooper Managing Director, Venture Solutions, British Business Bank

UK venture capital ecosystem has been strengthened

The evaluation found that the UK’s VC ecosystem has been strengthened by porting emerging fund managers to raise funds and become more established investors. Examining 14 ECF funds that started investing between 2011 and 2017, the report found they had raised a total of £651m with an average fund size of £47m. Forty five percent of the total investments came from private sector investors, with each fund comprised of at least a third of private capital.

Fund managers interviewed for the evaluation reported that the British Business Bank’s role as an investor was the most critical factor in the success of their fund raise.

‘Equity gap’ being tackled with increased VC investment into UK early-stage companies

The evaluation found that 63% of ECF recipient businesses were either at the seed or start-up stage, 25% were early-stage and only 13% were later stage companies.

Furthermore, when looking at the wider UK equity market, ECF ported funds were found to invest at earlier stages than other VC investors with 35% of ECF-backed deals at the accelerator/incubator stage, compared to 22% of overall market, and 28% at seed stage, compared to 22% of overall market.

By the end of 2019, those companies being ported by the ECF programme raised an estimated £4.5bn in equity funding (including follow-on investments), with £480m of this total coming from ECFs, showing the programme is helping to unlock increased equity funding for these companies.

Further Information

Notes to editors


This independent evaluation of the Enterprise Capital Funds (ECF) programme was undertaken by Ipsos Mori on behalf of the British Business Bank to assess the extent the programme is meeting its objectives and providing a net benefit to the economy.

This evaluation, which was an interim assessment, looked at 14 ECF funds (13 fund managers) supported between 2011 and 2017 and conducted a series of in-depth interviews with 12 supported fund managers and 7 HMG and market stakeholders. Researchers also conducted a telephone survey of 80 firms receiving equity investment from an ECF supported fund.

About the British Business Bank

The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to drive sustainable growth and prosperity across the UK, and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

The British Business Bank’s core programmes support over £8.5bn1  of finance to almost 95,000 smaller businesses2 . The British Business Bank is responsible for running the government’s Coronavirus business loan schemes and Future Fund, together responsible for delivering £80.4 bn of finance to 1.67m businesses. The schemes are now closed to new applications.

As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses. The British Business Bank Finance Hub provides independent and impartial information to businesses about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. In light of the coronavirus pandemic and EU Exit, the Finance Hub has expanded and it now targets a wider business audience. It continues to provide information and support for scale-up, high growth and potential high growth businesses, but now provides increased content, information and products for businesses in survival and recovery mindsets. The Finance Hub has been redesigned and repositioned to reflect this, during this period of economic uncertainty.

British Business Bank plc is a public limited company registered in England and Wales, registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ. It is a development bank wholly owned by HM Government. British Business Bank plc and its subsidiaries are not banking institutions and do not operate as such. They are not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). A complete legal structure chart for the group can be found at british-business-bank.co.uk.

  • 1

    Figures as at 31 March 2021

  • 2

    Figures as at 31 March 2021