When it comes to investment in startups and innovative early-stage companies, the UK has a self-sufficiency issue.
Over the last decade, a shortage of funding from domestic investors – particularly for innovative tech companies at the mid to late stages – has forced many to seek overseas financial support to sustain growth.
This decline in domestic investment has been particularly marked in UK pension funds – last year, only 20% of Defined Contribution assets were invested, compared to more than 50% in 2012.
That’s why the Chancellor’s plans for £25bn pension megafunds – announced on Thursday – came as music to the ears of the UK tech and innovation sector.
Set to be finalised by 2030, the megafunds (essentially large, consolidated pension investment vehicles) have huge potential to boost the economy by supporting high growth, early stage companies, while at the same time addressing the UK’s lack of self sufficiency when it comes to its investment capabilities....