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Pension Funds Set to Fuel UK’s High-Growth Firms with Tailored Investment Vehicles


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, Jeremy Hunt, 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.

Business News Wales