British Patient Capital enjoys VC bumper year and boosts startup portfolio by almost a third
British Patient Capital (BPC), the venture capital subsidiary of UK government-owned British Business Bank (BBB), today announced it committed almost £300m to investing in the growth of British startups in the year to March 2021.
During the pandemic-defined year, its underlying portfolio of companies increased by almost a third from 503 to 676, with three more achieving unicorn status.
While BPC has a sector-agnostic strategy, its portfolio of startups and scaleups leans towards sectors that played a central role in driving the UK’s wider economic recovery from Covid – and thus reaped the investment rewards.
It has now made £1.3bn worth of commitments since its inception in 2018, a total that jumps to £7.3bn when including third party commitments made by other institutional investors alongside it.
As of March this year, BPC had 51 fund investments in its portfolio – nine of which it backed during the last year.
These include a $75m commitment to Balderton Capital’s inaugural $680m “early growth” venture fund; a $35m commitment to Evolution Equity Partners’ $400m cybersecurity-focused Evolution Technology Fund 2; and an undisclosed cornerstone investment in UCL’s £100m Technology Fund 2.
“More than half of our portfolio – 26 of the 51 fund investments – are now in the venture growth stage, which we define as funds that invest at Series B onwards. This is in line with our investment strategy and is a key milestone in the evolution of British Patient Capital’s portfolio,” said Judith Hartley, British Patient Capital CEO.
“By strengthening the UK market for later stage venture capital, we help our ambitious growth stage founders to scale up while remaining anchored in the UK,” she added.
BPC is the UK’s largest domestic investor in startups, as well as the biggest UK LP – and the total amount raised by funds it’s invested in now stands at £7.3bn.
Currently, BPC’s underlying portfolio of investments is comprised of startups tackling: the future of work and education (24 per cent); marketplaces and consumer (13 per cent); digital health and life sciences (18 per cent); big data and AI (12 per cent); future of finance (12 per cent); clean growth, sustainability and mobility (7 per cent); cybersecurity (6 per cent) and Frontier tech (5 per cent).
“From enabling many of us to remain productive from our homes to developing and delivering Covid-19 vaccines, innovative companies have helped sustain the economy and our future wellbeing,” said BPC Chair Russ Cummings.
“It is the long-term patient capital that we, and others, provide that will enable the continued growth of these exceptional businesses,” he added.
A very good sign for UK tech
While the very nature of its 10-year investment model means returns are expected further down the line – and turning a profit at the three-year mark is certainly not expected – BPC has enjoyed a bumper year when it comes to financial performance.
In the year to March 2021, it saw its annual profit before tax surge a mammoth 4500 per cent from £4m to £183.9m.
This profit is yet to be realised, having been driven by a massive uplift in the valuations of its underlying portfolio companies. But it’s great news for UK tech as a whole and reflects the health of the homegrown startup ecosystem – a result that will no doubt make the Chancellor Rishi Sunak happy.
Investors will be keeping a close eye on its total value to paid-in (TVPI) multiple, which now stands at 1.51 – meaning in the three years since its inception, the value of BPC’s winning investment picks has appreciated more than 50 per cent.