UK Venture Capital fund performance increased sharply over the last year, finds latest research by the British Business Bank

  • Performance of UK VC funds has increased sharply over the last 12 months
  • UK VC funds continue to perform well compared to their US counterparts
  • UK has an increased proportion of top performing VC funds reporting very high returns
  • British Business Bank’s Enterprise Capital Funds programme performing in line with wider market

Latest British Business Bank market research finds that higher company valuations, combined with strong exit activity in 2020 and 2021, has contributed to a material uplift in venture capital (VC) financial returns since the Bank’s last published report.

According to the Bank’s latest report, UK Venture Capital Financial Returns 2021, UK VC funds with a 2008 to 2013 vintage have seen an increase in their pooled Distributions to Paid In Capital (DPI)1 multiples of 0.26 points, from 0.79 in 2020 to 1.05 in 2021. Over the same time period, their pooled Total Value to Paid In Capital (TVPI)2 multiple has increased by 0.28 points, from 1.81 to 2.09 in 2021. UK venture capital has also performed strongly over the longer term, with pooled TVPI multiples above 2 for most two-year periods since 2002.

The overall improvement in UK fund performance was confirmed by the Bank’s fund manager survey which shows fund managers have positive views on VC market conditions. Nearly all surveyed fund managers reported positive views on the quality of investments available (97%) and current exit conditions (93%), with the majority (59% and 72% respectively) reporting an improvement on these measures over the last year. However, a high proportion of fund managers (59%) reported high levels of competition for deals, which may suggest these high valuations might not be sustained until exit.

UK VC funds continue to perform well compared to their US counterparts

Historically, US VC financial returns were considered by many in the VC industry to be substantially higher than the returns of UK and European funds. Analysis of data within this report suggests that this is not the case, and returns are very similar since 2002.

Overall fund returns for UK VC funds with 2002-2016 vintage years show a pooled DPI multiple of 1.01 and a pooled TVPI multiple of 2.08. US funds of the same vintage generated higher pooled DPI multiples of 1.12, but the US pooled TVPI is 0.11 points lower than the UK’s.

In particular, the UK performs well across the earlier 2002-2007 post-dotcom bubble vintage years where UK pooled DPI and TVPI returns are, respectively, 0.20 points and 0.35 points higher than in the US.

UK’s top performing VC funds reporting very high returns

Overall VC market returns are driven by the performance of outlier funds. The top one percentile of UK VC funds with 2002-2019 vintage generate TVPI multiples of 11, an improvement from multiples of around six a year ago, although this still lags similar US funds, which have TVPI multiples of 26.

While the US still outperforms the UK for the top 3% of its funds, the UK has made a substantial improvement since 2019, when the top 8% of US funds had higher TVPIs than UK funds. The UK’s distribution of TVPI multiples follows an almost identical shape to that of the US, up to the third percentile. The improved performance of these top UK funds suggests that UK VC could be an attractive asset class for those LPs currently investing or considering investing in US VC.

British Business Bank funds performance

British Business Bank-supported funds are largely performing in line with the wider VC market. Pooled TVPI multiples for private sector LPs in the Bank’s Enterprise Capital Funds programme is 1.99, are comparable to the 2.01 generated by funds in the wider UK VC market. This provides strong evidence of the effectiveness of this policy intervention which aims to increase the supply of equity capital to high-potential, early stage UK companies and lower barriers to entry for fund managers looking to operate in the VC market.

Matt Adey, Director of Economics at the British Business Bank, said: “This report provides as comprehensive a view as possible of the performance of the UK venture capital market. The report shows that UK VC continues to have good performance relative to the US and has the potential to be an attractive asset class for LPs. It’s encouraging that fund managers are overwhelmingly positive about market conditions with a sharp increase in performance in the last year.”

UK Venture Capital Financial Returns 2021 is the British Business Bank’s third annual report examining the financial performance of UK VC funds. The report covers 154 UK VC funds with a 2002-19 vintage and draws on data from both the British Business Bank and commercial data providers including PitchBook and Preqin, as well as a survey of UK VC fund managers. This provides a robust and thorough view of the asset class and its performance, covering 38% of the UK VC market.

Further Information

Scott Shearer
Senior Communications Manager
0203 772 1351 / 07770 704 761

The British Business Bank Team at MHP Communications
020 3128 8589

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 £8.5bn[1] of finance to almost 95,000 smaller businesses[2]. 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

1 Distribution to Paid-In (DPI) is a measure of the cumulative distributions returned to the investor from portfolio company exits relative to the total amount of capital paid into the fund to date
2 Total Value to Paid In (TVPI) is the ratio of the current value of remaining portfolio investments within a fund, plus the total value of all distributions from exits to date, relative to the total amount of capital paid into the fund to date

[1] Figures as at 31 March 2021
[2] Figures as at 31 March 2021