‘British Patient Capital’s mission is to enable long-term investment into innovative companies’
British Patient Capital has helped create up to 5,000 additional jobs across the UK, driven company growth, and fueled innovation through its investments, finds an independent evaluation published recently.
Companies with investment from BPC-backed funds grew their employment by 55%, equivalent to c. 4,600-5,000 additional jobs, and demonstrated an increase in turnover of between £4.7m and £5.4m per year.
The pre-money valuations of beneficiary companies were found on average to be £60m higher than they would have been in absence of the BPC-backed funding.
BPC-backed firms are much more likely to be later-stage growth companies than those backed by the wider equity market, and 11% of the firms receiving BPC-backed investment are academic spinouts.
BPC-enabled funding has translated into increased innovation outcomes, including increased R&D investment, new product development, and commercialisation.
In a year that marks the fifth anniversary of British Patient Capital (BPC), an independent evaluation of the programme has found that investments by BPC are a driving force for innovation behind scale-up Britain.
With fund investments of £1.3bn via 61 fund commitments and co-investments into four companies since launch, a survey of BPC’s underlying portfolio companies showed 25% said growth would not have been achieved without its finance and a further 50% said growth would have taken longer to achieve.
Established in 2018 in direct response to the UK Government’s Patient Capital Review (PCR), BPC has £2.5bn to invest over 10 years in venture and venture growth capital, unlocking billions in further private investment that high growth, innovative companies need to grow.
Across its three programmes, British Patient Capital now manages assets with a total value of £3.1bn. Total commitments, including capital from other institutional investors, now total more than £10.7bn.
The British Business Bank commissioned SQW to undertake an evaluation of BPC. This included assessing the extent to which the programme was meeting its objectives and providing a net benefit to the economy. The evaluation found BPC is making good progress against both its policy and commercial objectives.
By the end of March 2022, BPC had supported 61 funds investing in more than 1,000 companies. By enabling innovative companies across frontier science, disruptive technology, and deep tech solutions to access finance more quickly and at a larger scale, BPC’s investment is having a wider economic impact: BPC-backed firms are likely to generate economic benefits of £5.1bn by 2030/31.
Catherine Lewis La Torre, CEO of British Patient Capital, said: “British Patient Capital’s mission is to enable long-term investment into innovative companies with the potential to build world-class businesses. We are delivering on that mission.
“The UK is a recognised hub for breakthrough research and development across a diversity of fields spanning deep tech to life sciences, but companies need patient capital to turn research into commercially-viable realities with the ambition to become significant players on the global stage.”
Supporting scale-up Britain
The evaluation findings demonstrate the key contribution BPC is making to supporting scale-up Britain by crowding in additional private capital to growing companies. A quarter (24%) of BPC-backed firms are identified as growth stage by Beauhurst, compared to nine percent across all equity-backed companies.
Furthermore, on average beneficiary companies grew their employment by 55%, equivalent to c. 4,600-5,000 additional jobs, demonstrated an increase in turnover between £4.7m and £5.4m per year, and saw company valuations £60m higher on average compared to other equity funded businesses.
BPC-backed investment has also been successful in ensuring that innovative companies have access to finance faster, and at a larger scale, than would otherwise have been the case: two-thirds of surveyed respondents said company-level growth would have not occurred or taken longer to achieve, been smaller in scale or of lower quality, and 83% went on to commercialise new products, processes, and practices.
92% of surveyed BPC-backed firms are also using the equity investment to fund R&D, and BPC-backed firms are using a greater proportion of the equity investment to fund R&D than other equity-backed firms.
With an ambition to help cement the UK’s position as a global science superpower, turning cutting-edge research into real-world products, 11% of BPC-backed companies are academic spinouts compared to just two percent of all equity-backed companies.
Just over half (52%) of the firms are also in the technology sector, including Artificial Intelligence and Fintech, supporting them to become the next unicorns and create an ecosystem to rival Silicon Valley. Four technology companies in the BPC portfolio achieved Unicorn status in 2021/22: Thought Machine, GoCardless, Lendable, and Wayve.
Sir Damon Buffini, Chair of the 2017 Patient Capital Review, said: “The UK’s vibrant start-up culture is one of our greatest assets, but the 2017 Patient Capital Review showed that high potential businesses face substantial challenges in accessing the long-term, patient finance they need to scale up.
“When we recommended the creation of British Patient Capital, we envisaged an independent body with the scale and longevity to address these barriers.
“In the five years since it was established, it is truly heartening to see that British Patient Capital has made great strides in delivering its mission. By catalysing billions of pounds of private sector investment, it is helping to ensure the UK’s most exciting businesses can grow, innovate, and develop into world-leading companies.”