The British Business Bank is a partner for the scale-up economy
As the British Business Bank celebrates 10 years of impact, its chair, Stephen Welton, looks ahead to a new decade bridging the gap between the public and private sectors
Business is inherently risky which is why you very quickly learn not to take success for granted.
When it comes, celebrate, reflect on what you did well, but crucially take stock and look to the future. That’s why it’s important to take a moment to mark the tenth anniversary of the British Business Bank.
I was one of the advisors appointed by the coalition government in 2013 to help establish Britain’s first economic development bank.
Back then its mission was simple: to improve access to finance for smaller businesses wanting to grow.
On that measure it has been a clear success.
Our shows the Bank has supported more than 200,000 smaller businesses and entrepreneurs in the last ten years. We estimate their growth will boost UK economic output by around £43bn over the lifetime of the finance.
The Bank has also supported more than 2m jobs alongside an expected 250,000 additional jobs.
When the then Business Secretary Sir Vince Cable launched the Bank a decade ago, I doubt even he envisaged the impact it would have.
Standing the test of time
But back then Sir Vince did say that it was ‘vital’ the Bank should stand the test of time. Now six Prime Ministers, eight Chancellors and ten Business Secretaries later the Bank is still bridging the gap between the public and private sector.
We’ve increased our scale and capabilities by designing, delivering and managing finance programmes, both debt and equity, that address gaps in the market for smaller businesses looking to grow and innovative entrepreneurs to scale.
Our Start Up Loans programme has delivered more than £1.1bn of loans to over 100,000 entrepreneurs, of those 40 per cent are women and 21 per cent from Black, Asian or Other Ethnic Minority backgrounds.
We’ve also created six new Nations and Regions Investment Funds channelling £1.6bn of finance across Scotland, Wales, Northern Ireland, the North, Midlands and South West.
It means that 84 per cent of the businesses supported by the Bank are located outside of London, ensuring equitable access to finance and opportunities for growth.
One of the most significant moments for the Bank was in 2018 when it launched British Patient Capital, a commercial subsidiary investing in UK venture funds and growth companies.
This directly followed the HMT Patient Capital industry panel chaired by Sir Damon Buffini which I was a member of. We warned that the UK’s rich pipeline of start-ups was being stifled by a lack of long term patient finance.
It meant exciting companies were looking abroad for funding meaning the UK was losing out on the jobs, skills development, talent, technological know-how and other economic benefits they could provide.
The intervention of an initial £2.5bn investment from government created British Patient Capital which today is the largest domestic investor in UK venture and venture growth capital.
The Bank has backed 363 university spin outs to start and scale in the UK and 56 per cent of the UK’s current unicorn businesses have received investment from funds supported by the Bank.
The Bank has backed 363 university spin outs to start and scale in the UK and 56 per cent of the UK’s current unicorn businesses have received investment from funds supported by the Bank
These are tangible and important illustrations of the Bank successfully at work across the country.
Now, as the Bank enters its second decade with a significant capability, we have taken stock, and we have new challenges to address.
At last year’s International Investment Summit, it was confirmed the Bank would seek to establish a regulated entity, British Growth Partnership, to catalyse and encourage more UK pension funds and other institutional investment into the UK’s fastest growing, most innovative companies. This has been a long held ambition of many in the City, government and entrepreneurs but progress has been slow.
This is why we are delighted that already Aegon UK and NatWest Cushon have agreed to work with us, with a view to making investments in the initial fund in 2025, subject to regulatory approval.
Greater institutional investment into innovative high potential firms can drive economic growth further and faster and enable UK pension savers access to an exciting new asset class.
The future economy is going to be built on solutions that are either not discovered yet or are in the process of being discovered. We want to help find them.
When I became chair of the Bank in 2023, I warned the UK risked becoming an ‘incubator economy’ that builds up new companies only for them to be sold off to overseas buyers or left to wither on the vine.
We cannot take our start-up ecosystem for granted. We really want to galvanise greater investment which will drive future growth.
With the support of the British Business Bank, working alongside the private sector, we can nurture and help entrepreneurs see their start-ups scale and smaller companies access a wider range of funding. This is how to build the momentum that will drive the economy.
Stephen Welton is chair of the British Business Bank