UK venture capital matches US performance for first time, British Business Bank reports
UK venture capital has reached a new milestone in its development, matching the United States and outperforming the rest of Europe on long-term returns, according to new analysis from the British Business Bank.
The Bank’s latest UK Venture Capital Financial Returns report finds UK venture capital funds generated a pooled Total Value to Paid-In Capital (TVPI) return of 1.78x for 2002-2021 vintages, matching the US at 1.78x and outperforming the rest of Europe at 1.67x.
On distributions back to investors, the UK’s pooled Distributions to Paid-In Capital (DPI) measure is below the US but in line with the rest of Europe.
The strongest relative performance came from more recent UK funds, which are outperforming both US and European peers. UK venture capital funds launched between 2020 and 2024 delivered pooled TVPI returns of 1.40x, ahead of both the US at 1.24x and the rest of Europe at 1.27x.
The findings suggest the UK venture capital market has been resilient, despite a challenging global fundraising and exit environment.
The UK has traditionally shown strength in the early stages of company growth, but more recently UK funds have delivered stronger results later in the funding lifecycle.
Between 2014 and 2019, UK late-stage funds trailed the US by 0.78x on a pooled TVPI basis. In 2020-2024, that gap narrowed to just 0.05x. During the same period, UK generalist funds generated pooled TVPI returns of 1.91x compared with 1.20x in the US.
The UK continues to produce the highest returns at the earliest stages of company growth. Across the full dataset, covering funds launched between 2002 and 2024, UK early-stage venture funds generated pooled TVPI returns of 1.85x, in line with the US at 1.81x and the rest of Europe at 1.84x.
Leandros Kalisperas, Chief Investment Officer, British Business Bank, said: “For many years, US venture capital has been seen as the world leader. This research shows the UK is increasingly closing the gap, matching US returns overall and outperforming among the latest generation of funds.”
He added: “It underlines the quality of the UK’s venture sector, and its ability to support innovative businesses from startup through to scale-up.”
UK Private Capital Chief Executive Michael Moore said: “Strong returns from British venture capital should be celebrated, but they also highlight an opportunity that domestic institutional investors are missing by underinvesting in this asset class. UK pension funds have real scope to seize more of this opportunity, enabling British pension savers to benefit from a world-class VC industry that scales ambitious startups into internationally competitive businesses.”
The report examined performance persistence in venture capital, looking at over 800 fund progressions globally across 390 fund managers. 39% of successors to top-quartile funds also achieved top-quartile performance, around one-and-a-half times the level expected by chance.
More than 70% remained above the median, highlighting the importance of track record in venture investing.
The Bank’s Enterprise Capital Funds (ECF) programme continued to perform strongly against the wider market. ECF-backed funds generated a pooled Distribution to Paid-In Capital (DPI) of 0.67x compared with 0.50x across the wider UK venture capital market, while also delivering slightly higher pooled TVPI returns. A number of funds across the Bank’s portfolio have produced DPI returns of over 2x.
ECF-supported funds generated a pooled TVPI of 1.73x compared with 1.71x across the wider UK market, even while ECF focuses on supporting emerging fund managers and investing in more challenging areas of the venture market.
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