UK venture capital hits parity with US on returns, closes late-stage gap
What's the deal? UK venture capital has matched the US and beaten the rest of Europe on long-term performance, according to new analysis from the British Business Bank. Its latest UK Venture Capital Financial Returns report found UK funds generated a pooled Total Value to Paid-In Capital (TVPI) of 1.78x for 2002-2021 vintages — level with the US at 1.78x and ahead of Europe at 1.67x.
The details: Recent UK funds pulled ahead. Those launched between 2020 and 2024 delivered pooled TVPI of 1.40x, beating the US at 1.24x and Europe at 1.27x.
The late-stage story: The UK has long been strongest at early stages, but it is now catching up later in the lifecycle. Among 2014-2019 vintages, UK late-stage funds trailed the US by 0.78x on pooled TVPI; for 2020-2024 vintages, that gap shrank to 0.05x.
UK generalist funds also generated pooled TVPI of 1.91x over the same period, against 1.20x in the US. Early-stage funds remain competitive too, at 1.85x across 2002-2024, in line with the US at 1.81x.
Why it matters: "For many years, US venture capital has been seen as the world-leader," said Leandros Kalisperas, chief investment officer at the British Business Bank. "This research shows the UK is increasingly closing the gap, matching US returns overall and outperforming among the latest generation of funds."
The track-record finding: For the first time, the report examined performance persistence, reviewing more than 800 fund progressions across 390 managers globally. It found 39% of successors to top-quartile funds also hit top quartile — about 1.5 times the level expected by chance — and more than 70% stayed above the median.
What could go wrong? Michael Moore, chief executive of UK Private CapitalDealroom has a profile for this one. Try Dealroom →, warned that domestic institutions are underinvesting in the asset class. "UK pension funds have real scope to seize more of this opportunity," he said, urging Mansion House signatories to act so they "don't miss out on backing the next generation of British unicorns."
The signal: The findings point to a UK venture market becoming competitive across the funding lifecycle, not just at the seed stage. The gap now is less about performance than about whether domestic capital backs it.
Read more: british-business-bank.co.uk
Image credit: davidgsteadman
