British Patient Capital Interim Evaluation report

The British Business Bank commissioned SQW to undertake an interim evaluation of British Patient Capital (BPC). The evaluation covers the rationale for BPC, the design and delivery of the programme, the impact it has on firms, funds and the wider finance market, and the overall economic value for money it provides.

BPC was established in 2018 in direct response to the UK Government’s Patient Capital Review. It 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, and doing this in a way that delivers value for money for the UK taxpayer.

Overall, the evidence suggests that BPC has made good progress against its objectives. It has increased the supply of additional capital and enabled funds of greater scale, with a greater UK focus and that have been able to close more quickly. Companies are better capitalised than they would have otherwise been and used BPC-backed finance to support innovation and growth. The findings suggest that BPC-backed investments are providing value for money for the taxpayer so far.

The evaluation’s main findings include:

• 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 additional 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.