Explore the ScaleUp Annual Review 2021

Select a section to expand and explore this year's review.


Access to funding remains a major issue for scaleup leaders – a significant concern because the UK is lagging behind a number of its international competitors in the provision of institutional growth capital to ambitious businesses. 

In the 2021 Scaleup Survey 5 in 10 told us that they do not feel they have access to the right funding for their needs and this is despite 82% using external funding as part of their growth strategy. In addition, two fifths continue to feel that the majority of funding resides in London and the South East. Such experiences are important because the majority of scaleups are planning to grow in the coming 12 months with one in four expecting their growth to be more than 50%. 

However, the Government, the ecosystem and investors are beginning to respond to this challenge. As we describe in detail in this Review, an ambitious programme of reform is underway designed to unleash patient growth capital to the UK scaleup economy with the deployment of the £375m Future Fund: Breakthrough to help scale up the most innovative, R&D intensive businesses; the launch of the £200m Life Sciences Fund; the £20m Medicines and Diagnostics Manufacturing Transformation Fund, and a wider range of initiatives to unlock deeper pools of institutional capital. These include the Kalifa Review of UK Fintech; the Listings Review conducted by Lord Hill, and related follow on consultations such as the Primary Markets Review by the FCA, the Wholesale Markets and Prospectus Regime Reviews by HM Treasury, as well as the ongoing work of the Bank of England’s Productive Finance Working Group and the introduction of the Long Term Asset Fund model. All of which the ScaleUp Institute is contributing to. 

Scaleups use a range of forms of external finance. Equity investment remains a key feature of the scaleup ecosystem, with Business Angels and Venture Capital investors the most significant early stage equity investors, half the scaleups responding to our survey either currently using such investment or looking for such investors going into 2022. 

This year, we have added to the number of case studies of equity, debt and mezzanine investors who have been active in supporting scaleups between 2014 to 2021. Four institutions have been added – Cambridge Innovation Capital, Frog Capital, MMC Ventures and Scottish Enterprise Growth Investment Team. They represent the growing breadth of financiers having impact with our scaleup community and in the case of the Scottish Enterprise Growth Investment Team exemplifies, as the British Business Bank and Innovate UK also do, the role that government and its support ecosystem can play in helping scaleups to leverage public and private capital.

All newly endorsed institutions have financed scaleups through successive rounds and provide support tailored to their needs or sectors. Cambridge Innovation Capital – founded in 2013 by Cambridge University backs locally-affiliated world-leading life sciences and technology companies. In April 2019, it announced its £275m venture fund to invest in disruptive, deep-tech businesses in sectors such as AI, quantum technologies, therapeutics and digital health. CIC has committed £170m of these funds to 30 deep tech and life sciences companies, deploying funds in 2020 into four new and 12 existing portfolio companies. 

Frog Capital has been endorsed as a fund that acts as a “a scaleup partner”, tailoring support to match the needs of each business, helping with senior-level recruitment and introducing portfolio CEOs to other investment partners from their network. It invests in companies with revenues of €3m – €30m and requiring €5m – €20m of growth capital. To date, it has invested in over 60 companies around Europe, including £128m through 11 investments into 9 visible scaleups in the UK. 

MMC, which manages funds for private individuals and institutions, has a strong track record in supporting scaleups. Its £100m Scale-Up Fund provides expansion capital to portfolio companies once they have grown beyond the limits of EIS investment, and can also participate in secondary transactions, offering liquidity to early MMC and third-party investors.  Portfolio companies benefit from a peer learning network programme, in which companies are paired with a relevant counterpart to meet for one hour a month for six months.

Scottish Enterprise Growth Investment Team (formerly known as Scottish Investment Bank) supports companies to prepare to raise and access finance, provides a financial readiness service to help companies identify and secure appropriate sources of finance, and supports investee companies on an ongoing basis through portfolio management. Since 2011, it has contributed to 23 investments in 11 scaleup companies, worth more than £50m. In addition, through its entire portfolio, the Scottish Enterprise Growth Investment Team has enabled investee companies to leverage over £1.4bn in private sector investment.

Previously endorsed institutions have continued to provide growth capital across the UK and importantly many are helping to deal with the regional disparities of growth capital provision which we highlighted in the Future of Growth Capital Report. One of our original case studies, BGF, has backed 263 UK companies to date and nearly 80 per cent of the investments are made into companies based outside of London. Nine out of ten investments made by IP Group and seven in ten made by Livingbridge have been into companies outside of London, with over half of investments by Amadeus and Envestors also being made outside of the capital. 

The VC firms that we have endorsed over the past four years – Accel, Amadeus, Balderton Capital, Draper Esprit, Eight Roads, Index Ventures, Notion, Partech, Scottish Equity Partners – have all invested in scaleups this year. 

Endorsed private equity firms such as LDC and Livingbridge have made further investments during 2021. In the first half of the year LDC has invested in businesses based in Southampton, Bristol and Rochdale. This year Livingbridge has raised its largest fund worth £1.25bn to focus on equity investments of up to £150m in high-growth, entrepreneurial businesses with enterprise values of up to £300m. Endorsed institutions such as Beringea and Octopus Titan VCT have balanced fresh investments in scaling companies while ensuring that existing businesses in their portfolio remained strong and capable of acceleration as the economy recovers. 

A key element of the mission of the British Business Bank (BBB) is to develop pools of capital for all sectors as well as enable their greater disbursement throughout the UK’s regions. It has built a model of how public sector finance can work with – and not crowd out – private sector finance in order to develop far bigger pools of capital in the UK and encourage more investors willing and able to provide ongoing rounds of follow-on or scaleup finance.

The investment capacity of BBB’s Enterprise Capital Fund (ECF) programme, which we endorsed in 2017 as a case study, stands in excess of £1.66bn. To date, 36 ECFs have been launched, supporting more than 600 innovative scaling businesses across a range of sectors – 53% of the investments made through the ECF programme are outside of London.

The BBB continues to support scaleups with other initiatives such as British Patient Capital (BPC) and a Knowledge Hub for scaleups to identify appropriate growth capital. Alongside its core £2.5bn investment programme, BPC manages the new £375m Future Fund: Breakthrough programme which aims to encourage private investors to co-invest in high-growth, innovative firms.

Recent announcements in the Budget and Spending Review have begun to lay the foundations for the future of our scaleup economy: £1.6bn has been committed to expand regional funds like the Northern Powerhouse Investment, Midlands Engine and activities in the Devolved Nations; the £1.4 billion Global Britain Investment Fund will support new investment in manufacturing industries across the UK, including offshore wind, zero emission vehicles and life sciences; while the establishment of the UK Infrastructure Bank will provide £12 billion of equity and debt capital to finance local authority and private sector infrastructure projects across the UK; and the UK Shared Prosperity Fund (UKSPF), worth over £2.6 billion, steps in to match the size of previous EU Funds. 

Elsewhere in this Review, we emphasise the importance of current efforts to unlock UK institutional funds which can provide long term patient capital for scaling UK firms. In order to close the finance gap for all scaleups across the UK we must ensure that funds are deployed at a local level, so that progress is made in a way that continues to reduce regional disparities. 

Many of these schemes will support the development of the new VC and venture debt products and ensure they remain available across all regions of the UK. We look forward to endorsing further new providers in 2022 who are responding to this challenge.

Previous – Programmes Endorsed & Ones to Watch
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