The Secretary of State for the Department for Business and Trade, Jonathan Reynolds MP, announced that £6.6bn of new capital is being committed by the British Business Bank to boost growth, marking a major step change in financing to support smaller businesses to start and scale in the UK.

As part of this announcement, £2.6bn of capital will be committed to the UK’s nations and regions to help drive the growth of smaller businesses.

This additional funding will allow for a targeted £100m investment into the existing Nations and Regions Investment Funds and embedding dedicated Cluster Champions, using the Bank’s expertise and investment capital to help businesses grow. Individuals with deep expertise and local knowledge will help strengthen financial networks and connect high-potential firms in the eight Industrial Strategy sectors to investors within ten clusters, including the Belfast City region working with Innovate UK.

It will also see the expansion of the British Business Bank’s Regional Angels Programme and the creation of new Angel Syndicate Support and Embracing Diversity programmes.

This follows the recent announcement at the Spending Review of the increase in the British Business Bank’s total financial capacity to £25.6bn, which will enable a two-thirds increase in investments to around £2.5bn each year.

This investment is expected to crowd in tens of billions of pounds of additional private capital and will support the most innovative UK businesses to access the capital they need to start, scale and stay in the UK.

A new £4bn initiative, British Business Bank Industrial Strategy Growth Capital, will be invested through the Bank’s existing capabilities across the eight growth-driving sectors – advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services – crowding in another c.£12bn of private capital.

British Business Bank Industrial Strategy Growth Capital will therefore deliver around £16.0bn of capital to invest in smaller businesses and innovation across the eight Industrial Strategy sectors over the next four years.

Also confirmed were reforms to the British Business Bank’s governance and financial arrangements which will be implemented by the end of this financial year. These will place the Bank in a position to successfully deliver the increased level of investment activity and will mean the Bank has a newly permanent and more fungible capital base, with greater flexibility to re-invest returns over the long term to increase growth and prosperity across the UK. This £16.0bn of permanent capital[1], which will be invested through economic cycles, will help underpin investment and confidence in the UK’s growth and innovation economy.

Louis Taylor, CEO, British Business Bank, said: “We welcome today’s announcement by the Secretary of State to deliver British Business Bank Industrial Strategy Growth Capital, as well as the reforms to the Bank’s governance and financial framework. Using our market expertise and reach, we have a critical role to play in supporting smaller businesses in the eight growth-driving sectors to grow and stay in the UK.

“To deliver the government’s growth mission it is also critical that our most promising entrepreneurs can access the finance they need to grow their businesses, no matter what their background or where they are located across the Nations and regions of the UK.

“This is a strong endorsement of the Bank’s 10-year track record, market access and capabilities, including our position as the largest investor in UK venture and venture growth capital funds and the most active late-stage investor in UK life sciences and deeptech.”

The new £4bn modern Industrial Strategy capital initiative will include more flexible and customised approaches to the market to tailor support to the needs of each sector.

The British Business Bank Industrial Strategy Growth Capital will:

Tackle the scale-up financing gap for priority sectors by investing greater amounts in companies through our direct investments, leading future investment rounds and making strategic large investments of up to £60m in UK companies that are at the forefront of driving innovation and growth.
Build a long-term funding ecosystem by cornerstoning specialist venture capital funds investing in modern Industrial Strategy sectors and doubling our support for emerging fund managers.
Work with industry to actively develop new products and solutions to support priority sectors and subsectors, for example by making early-stage direct investments into UK AI companies in areas of high potential with a view to keeping them in the UK longer term, or creating new specialist debt funds to leverage private investment into supply chains of priority sectors.

These measures are expected to deliver around £30bn of additional Gross Value Add (GVA) to the UK economy through incremental company growth over the life of the investments.

[1] Fungible funded financial capacity

[1] Figures as at end March 2024

[2] Figures as at end March 2024