The British Business Bank applies a robust, comprehensive and commercially‑focused due diligence process leveraging its depth of experience and market knowledge as the UK’s largest domestic investor in UK venture capital funds. The process is designed to ensure that public capital is deployed responsibly and aligns with private‑sector standards of institutional investment.
Scope of due diligence
The Bank undertakes a comprehensive review covering; investment strategy, team, performance, fund terms, governance, and operations. This includes:
- A detailed review of the materials prepared by the fund manager for investors in the data room such as the information memorandum, and the Bank’s proprietary due diligence questionnaire.
- Analysis and assessment of the proposed investment strategy in the context of the market opportunity and investment landscape.
- Performance benchmarking and in depth track record analysis of the realised and unrealised portfolio down to company level, portfolio construction and alignment with the stated strategy.
- In‑depth assessment of the investment team, including experience, roles and responsibilities, breadth of perspective, succession planning, resourcing, and alignment of incentives.
- Validation of investment strategy, value add and team credibility through comprehensive referencing from portfolio company founders, co‑investors and other market participants.
- A review of the fund manager’s operational infrastructure and compliance framework.
- Integration of responsible investment considerations into investment activities, noting that that managers are at different stages of maturity in this area the Bank will consider credibility, proportionality and trajectory, not just current state.
- Detailed consideration and negotiation of legal documentation and proposed fund terms, including fees, carried interest, GP commitment, conflicts, and investor protections.
Due diligence involves a combination of onsite in person meetings with the fund manager, desk evaluation, internal and external market knowledge and data. Applicants are generally expected to warrant the accuracy and completeness of information provided during the due diligence process.
Investment Governance
At the end of due diligence, the team prepares a detailed investment memorandum covering findings, proposed terms, valuation, risks, and returns. The memorandum includes input from Legal, Finance, Risk, and Sustainability specialists. The Investment Committee, chaired by the CEO, considers the opportunity. Decisions are made by majority, with the Chair holding a casting vote if needed.
Ongoing engagement
Due diligence is not treated as a one‑off exercise. The Bank maintains high standards of ongoing reporting, transparency and engagement throughout the life of the investment, reflecting its role as a long‑term, institutional investor.