UK venture capital funds have matched the returns of their US counterparts and outperformed the rest of Europe over the long term, according to a report published today by the British Business Bank.

The state-owned bank’s UK Venture Capital Financial Returns report found that UK funds from the 2002 to 2021 vintages generated a pooled total value to paid-in capital (TVPI) multiple of 1.78x. That was level with the US at 1.78x and ahead of the rest of Europe at 1.67x.

On cash actually returned to investors, the UK remains behind. The report puts the UK’s pooled distributions to paid-in capital (DPI) multiple at 0.62x, compared with 0.83x in the US and 0.65x in the rest of Europe. The bank said this partly reflects UK funds being more than a year and a half younger on average, giving them less time to exit investments.

The report draws on data up to December 2025 from around 2,200 funds globally, including more than 230 in the UK.

Recent funds ahead of international peers

The strongest relative performance came from the most recent funds. UK funds launched between 2020 and 2024 delivered a pooled TVPI of 1.40x, against 1.24x in the US and 1.27x in the rest of Europe, according to the bank. The same UK cohort recorded a pooled TVPI of 1.22x in last year’s report.

The bank said returns for these younger funds are largely driven by unrealised value rather than cash distributions.

The report found the UK’s historical gap at the later stages of company growth has narrowed. Among 2014 to 2019 vintages, UK late-stage funds trailed the US by 0.78x on a pooled TVPI basis. For 2020 to 2024 vintages, that gap was 0.05x, with UK late-stage funds at 1.18x against 1.23x in the US.

Over the same period, UK generalist funds generated a pooled TVPI of 1.91x, compared with 1.20x in the US.

At the earliest stages, UK funds launched between 2002 and 2024 produced a pooled TVPI of 1.85x, against 1.81x in the US and 1.84x in the rest of Europe.

Leandros Kalisperas, chief investment officer at the British Business Bank, said: “For many years, US venture capital has been seen as the world-leader. This research shows the UK is increasingly closing the gap, matching US returns overall and outperforming among the latest generation of funds.

“It underlines the quality of the UK’s venture sector, and its ability to support innovative businesses from startup through to scale-up.”

Pension funds urged to invest

Michael Moore, chief executive of UK Private Capital, said: “Strong returns from British venture capital should be celebrated, but they also highlight an opportunity that domestic institutional investors are missing by underinvesting in this asset class,” he said. “UK pension funds have real scope to seize more of this opportunity, enabling British pension savers to benefit from a world-class VC industry that scales ambitious startups into internationally competitive businesses.

“We hope Mansion House signatories see this and act to make sure they don’t miss out on backing the next generation of British unicorns.”

Under the Mansion House Accord signed in May 2025, 17 workplace pension providers pledged to invest 10 per cent of their workplace portfolios in private markets by 2030, with at least 5 per cent ringfenced for the UK, according to the Treasury. Investors have previously urged UK pension funds to back domestic tech scale-ups.

Track record and the bank’s own funds

For the first time, the report examined performance persistence, analysing more than 800 fund progressions across 390 managers globally. It found that 39 per cent of successors to top-quartile funds also reached the top quartile, compared with the 25 per cent that would be expected by chance. More than 70 per cent stayed above the median.

The bank’s Enterprise Capital Funds programme, which backs emerging managers, generated a pooled DPI of 0.67x against 0.50x across the wider UK market, and a pooled TVPI of 1.73x against 1.71x. The bank said a number of funds in its portfolio had produced DPI returns of more than 2x.

The findings come as the bank, which is operating under a five-year strategy to expand its investment in scale-ups, continues to commit capital to venture managers, including a £50m commitment to Phoenix Court funds alongside NatWest, HSBC and M&G announced last week.

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