Investment from Private Equity and Venture Capital in the UK On A Downward Trend Since 2021

May 8, 2024

Investment from Private Equity and Venture Capital in the UK Plummets Since 2021 Private equity and venture capital investment into UK businesses have experienced a significant decline, with a drop of over 30 per cent to £20.1bn in 2023, as reported by the British Private Equity and Venture Capital Association (BVCA).

This downturn follows a trend of reduced investment seen in the previous years, attributed in part to tighter monetary policies and higher interest rates affecting riskier investments.

Despite the decline, the UK remains a leading destination for private capital in Europe, surpassing other major European countries in total funds raised. The country’s strong university sector and technological innovation continue to attract investment, particularly in tech-focused businesses, which accounted for a substantial portion of total private capital investment in 2023.

However, the BVCA emphasizes the need for a supportive policy environment to stimulate further investment growth. They call for a long-term R&D strategy, an action plan on pension investment, an industrial strategy for investor certainty, and a stable tax framework to bolster the sector’s resilience and competitiveness.

The report highlights the impact on different stages of investment, with buyout investments being particularly affected, seeing a decrease of 44 per cent. Growth capital and venture capital investments also experienced declines, signalling a broader trend across the industry.

As the next government prepares to address these challenges, the BVCA underscores the importance of fostering an environment conducive to private capital investment, which plays a vital role in driving economic growth across the UK.