Venture Capital Update Spring Statement reveals Government plans to look at tax incentives for venture capital
The VC View
We are just six weeks away from the BVCA’s flagship Accelerate Conference, which will take place on 8th May in the heart of Silicon Triangle.
I am delighted to announce that we will be joined by the Technology Secretary Peter Kyle MP, who will deliver a keynote about the Government’s strategy for how venture capital can drive forward UK growth and innovation. We hope you can join us for a packed agenda focused on the key issues affecting this sector, filled with opportunities for GPs, LPs and founders to network. Tickets are free for VC members and details of the conference can be found at the end of the newsletter.
I’m thrilled that Meghan Stevenson-Krausz, Co-CEO of Diversity VC has shared her perspective on the BVCA and Level 20’s latest report which shows steady progress in improving diversity across the VC industry. The UK now ranks just behind France and Sweden for female representation in investment teams across Europe, which reflects positive momentum, however there is still more that we can do.
This month also marks the 30th anniversary of the VCT Scheme, a significant milestone for the industry. Chris Lewis of Pembroke VCT reflects on the scheme’s long-standing impact and its ongoing significance for the UK’s investment landscape.
Looking ahead, next month’s issue will take a closer look at the recommendations from our pensions report and the progress made on the Mansion House reforms.
Chris Elphick,
Head of Venture Capital, BVCA
Insight
Advancing Diversity in UK Venture Capital: Where We Are & Where We Need to Go
Authored by Meghan Stevenson-Krausz, Co-CEO, Diversity VC
Meghan shares her reflections on the newly published BVCA/Level 20 Diversity Report and takes a wider look at diversity initiatives that are needed to chart the path forward.
BVCA Round-Up
POLICY:
Spring Statement reveals Government plans to look at tax incentives for venture capital
Chancellor Rachel Reeves’ Spring Statement revealed that the Government will continue to work with entrepreneurs and venture capital firms on the role of tax incentives, including the Enterprise Management Incentives Scheme, the Enterprise Investment Scheme and the Venture Capital Trust Scheme.
The BVCA is engaging with HM Treasury officials on the plans to hold a series of roundtables with stakeholders in April on this issue. Documents published with the Spring Statement also included a consultation on R&D tax relief advance clearances. The BVCA will respond to this consultation in due course.
For more information, contact Chris Elphick, Head of Venture Capital.
RESEARCH:
New BVCA and Level 20 diversity data shows continued progress in venture capital
A new report by the BVCA and Level 20 has found that the proportion of women working in venture capital has increased over recent years. Diversity in UK Private Equity and Venture Capital 2025 finds that 31% of UK-based VC investment professionals are women, up from 29% in 2023.
The report also demonstrates that across seniorities, venture capital records better female representation than private equity, and data on ethnicity representation has shown a slight increase in the proportion of people in the industry identifying as ethnicities other than White.
Key findings from the 2025 report include:
- Women now hold 23% of senior VC investment roles, up from 19% in 2023.
- The percentage of individuals from a Black, Asian and other non-White ethnic background increased to 20%, placing the industry in line with the UK national average.
- The UK is behind only France and Sweden when looking at representation of women in investment teams across Europe.
This report marks the fourth edition of Level 20 and the BVCA’s analysis of representation across the UK private capital industry, and demonstrates the industry’s continued commitment to progress and to attracting talent, wherever it can be found. The tools set out in the latest report can be used to ensure that progress continues in fulfilling this objective, where people of all backgrounds can build careers in venture capital.
Read the full report here. For more information on the report, please contact Suzi Gillespie, Head of Research.
POLICY:
BVCA welcomes TechUK report calling on Government to support scale-ups
The BVCA welcomed a new report published by TechUK, that set out recommendations to close the investment gap often faced by many businesses wanting to scale. The Scale-Up Action Plan report aligns with many BVCA policy recommendations, including the need for ambitious pension investment reforms, the importance of building regional investment ecosystems, and expanding the remit of the British Business Bank.
Responding to the report, Michael Moore stated, “it is clear where the Government and industry must do more to ensure innovative UK businesses can continue to scale domestically. “The Government must work with industry to ensure pension reforms encourage more investment by UK pensions in venture capital and growth equity funds, fuelling the growth of Britain’s most exciting new businesses.”
For more information on the BVCA’s work on scale-ups, contact Chris Elphick, Head of Venture Capital.
RESEARCH:
New research shows decline in smaller businesses accessing external finance
A recent report from the British Business Bank reveals a decline in smaller businesses accessing external finance, falling from 50% in Q3 2023 to 43% in Q2 2024. The Small Business Finance Markets 2024/25 report explains that this is driven by a strong reluctance to borrow, with 77% of businesses preferring slower growth over taking on debt.
The report highlights the UK’s persistent issue of low business investment, which has lagged behind other G7 nations since the mid-1990s, contributing to weak productivity. In 2024, SMEs invested an estimated £12.3 billion, while larger firms invested 2.25 times more, despite contributing only slightly more to the economy in terms of turnover. Despite these challenges, the report shows that entrepreneurship remains strong, with 830,000 new businesses launched in 2024, up from 500,000 in 2019. The report further emphasises the need to boost business investment to drive economic growth, improve wages, and raise living standards.
The full report can be found here and please contact Suzi Gillespie, Head of Research, for more details.
POLICY:
BVCA supports Baltic VC ecosystem
The BVCA was proud to play a key role in enhancing collaboration between the UK and Baltics venture capital ecosystems through two significant events. On 4th March, the BVCA, in partnership with the City of London Corporation, co-hosted a session at the Guildhall with a visiting Venture Capital delegation from the Baltics.
The session focused on identifying areas for mutual collaboration and shared challenges within the VC landscape. The BVCA presented insights into the UK VC ecosystem, providing detail on the Mansion House Compact initiative to increase pension fund investment in private capital.
Additionally, the BVCA met the Estonian Deputy Minister for Economy and Innovation, to explore avenues for collaboration between the UK and Estonia. Discussions centred on emerging trends and innovative opportunities for joint ventures. The meeting highlighted the dynamic synergies between the UK and Estonian VC landscapes, reinforcing a shared commitment to fostering innovation and growth in both regions.
For more information on the BVCA’s stakeholder engagement, contact Baderin Tejuoso, Senior Venture Capital Executive.
Spotlight
Celebrating 30 Years of VCTs
The Venture Capital Trust (VCT) scheme was first announced by then Chancellor Ken Clarke in the Autumn Budget in 1994, with the first VCT issuing shares to investors in 1995. It has since become one of the most dynamic and consistent sources of capital for the UK’s most ambitious founders, passing over £1bn of funds raised in the year 2000 and record deployments of £705m in 2022.
The BVCA is a proud supporter of VCT fund managers through its EIS-VCT Subcommittee, which works to increase awareness of the scheme and improve the rules so more companies can access this type of finance.
Subcommittee member and Chair of the Venture Capital Trust Association, Chris Lewis of Pembroke VCT, highlighted the impact of the scheme:
“For three decades, VCTs have been a driving force behind the success of UK small and medium-sized businesses. By unlocking vital funding for ambitious entrepreneurs, VCTs have fuelled growth, created jobs, and built a lasting legacy of innovation.”
For more information about our engagement on VCTs, please contact, Olivia Green, Senior Policy Executive.
Research Update
Wilson Sonsini | The Entrepreneurs Report – Full-Year 2024
Wilson Sonsini’s 2024 Entrepreneurs Report delivers a comprehensive overview of U.S. venture capital trends, highlighting shifts in deal activity and valuation levels across Venture, convertible note, and SAFE financing transactions. Drawing on detailed transaction data from 2024, the report captures evolving funding dynamics that are increasingly relevant for investors worldwide. For UK VCs, these insights provide a benchmark for understanding emerging deal structures and valuation standards in a competitive global market.
Furthermore, the report features a forward-looking “Market Perspective” by Wilson Sonsini partner Amy Caiazza, who examines the recent crypto boom and anticipates a transformative regulatory landscape in 2025. Her analysis offers critical context for navigating market uncertainties and identifying innovative investment opportunities. This report serves as an essential resource, encouraging UK investors to consider how disruptive trends in the U.S. startup ecosystem might translate into strategic advantages across Europe’s thriving tech scene.
Media Update
Sifted:
UK universities took the lowest stake in their spinouts to date in 2024, according to a new report by the Royal Academy of Engineering and data platform Beauhurst.
City AM:
Venture capital remains overwhelmingly male-dominated, both in terms of who controls investment decisions and who receives funding.
Financial Times:
Hannah Bernard writes a comment article in the FT explaining that female-led start-ups are increasingly starved of funding, due to investment decisions in the UK following outdated patterns.
Financial Times:
There is an interesting pattern emerging across Europe. Many of the start-ups being nurtured on the continent are AI companies — or are using AI to reimagine business models for traditional industries.
The Times:
The UK risks lagging behind in the global quantum computing race. Experts have warned of insufficient government funding, despite12 quantum computers being delivered, however concerns remain.