www.british-business-bank.co.uk
@britishbbank
High risk investment Funding after Brexit
HEFCE Conference
12th of October 2017
British Business Bank (BBB) is the UK’s domestic development bank
A plc – 100% owned by UK Government
Wholesale –work with 90+
partners
• Established 1st November 2014
• Focused on financial products
• Focused on smaller companies (<250 staff)
• Market led, commercially minded
Increase the supply of equity finance to UK businesses with high
growth potential
Sustain and build the capacity of the VC market
to address the equity financing needs of growing
companies
Increase the economic performance of recipient businesses: employment,
turnover (GVA), productivity, R&D and
innovation, export performance
The BBB supports venture capital and ambitious scale-up businesses
We do this to address a market failure – often due to insufficient scale – and proving that strong returns can be made is key to breaking cycle
5. Poor performance /
insufficient positive exits
3. Small, inefficientfund sizes
1. Low financial returns
2. Investors allocate little to
asset class
4. Fewer, smaller deals leading to under funded
companies
The BBB is already one of the largest investors (LPs) in UK VC today and could be scaled to replace the EIF in the UK
0
200
400
600
W Midland Pension
ATPBBBPFA Pension
EIF
European LPs commitment to VC (2010 - Feb 2017)
0
200
400
600
Local Pensions
PI
W Midland Pension
BBBEIF Temasek
LPs commitment to UK VC (2010 - Feb 2017)
Sum
of
Co
mm
itm
ent
Am
ou
nt
(£m
)
Source: Pitchbook
Sum
of
Co
mm
itm
ent
Am
ou
nt
(£m
)
The BBB’s programmes address multiple parts of the ‘equity gap’…
Value of investment
Angel Co Invest (Individual firms)
Stage of development
Seed Early stage Venture Growth
£100K-£1m
£1m-£5m
£1m-£10m
£5m-30m
Source: Bank analysis. Note: VC Catalyst investments can vary and will allow seed stage investment when other criteria are met
ECF(Funds)
VC Catalyst(Funds)
£150m
£200m
£100m
£80m
£40m
£20m
£10m
£5m
£2.5m
Inve
stm
ent
size
(m
edia
n in
vest
men
t)
Younger
Pre IPO (£200m) PE (£200m)Fu
nd
ing
pro
vid
ers
Grants
Angels
VC funds PE funds
Licencing funds
Older
ECF VCC LMM
Age ofcompany
VC early stage (£2m)VC later stage (£10m)
Lower mid-market (£15m)
Segment in whichBBB operates with live programmes
… and fit within a broader set of funding options for higher risk growth businesses
This approach may not fully address a regional gap in access to equity – working with local institutions such as HEIs could be a way forward
Seed / Early stage investors by region
Sources: 1. ONS (2014 for HGF), 2. Includes London and the South East - ERC (2014 A Nation of Angels) 3. Pitchbook June 2017, this does not take into account the regional offices of London HQ based VC funds- so provides an underestimate of supply of VC in areas outside of London
20%
67% 69%
80%
33% 31%
361100%
Non London
Angels2
403
London
High Growth Firms1
14,190
VC HQs3
• Sustainable risk capital ecosystems need a critical mass of quality deal flow and people within a region
• Universities are regional institutions that could ‘anchor’ people, capabilities, and deal flow
• However, collaboration is key – no single institution can achieve critical mass alone, including the BBB
• Way forward…..?
The copyright in this presentation is held by the British Business Bank plc.
British Business Bank plc is a public limited company registered in England and Wales registration number
08616013, registered office at Foundry House, 3 Millsands, Sheffield, S3 8NH. As the holding company of the
group operating under the trading name of British Business Bank, it is a development bank wholly owned by HM
Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial
Conduct Authority (FCA). British Business Bank operates under its own trading name through a number of
subsidiaries, one of which is authorised and regulated by the FCA.
British Business Finance Ltd (registration number 09091928), British Business Bank Investments Ltd (registration
number 09091930) and British Business Financial Services Ltd (registration number 09174621) are wholly owned
subsidiaries of British Business Bank plc. These companies are all registered in England and Wales, with their
registered office at Foundry House, 3 Millsands, Sheffield, S3 8NH. They are not authorised or regulated by the
PRA or FCA.
Capital for Enterprise Fund Managers Limited is a wholly owned subsidiary of British Business Bank plc, registered
in England and Wales, registration number 06826072, registered office at Foundry House, 3 Millsands, Sheffield,
S3 8NH. It is authorised and regulated by the FCA (FRN: 496977).
British Business Bank plc and its subsidiary entities are not banking institutions
and do not operate as such.
A complete legal structure chart for British Business Bank plc and its
subsidiaries can be found at www.british-business-bank.co.uk.
BB
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www.british-business-bank.co.uk
@britishbbank