Analysis of UK VC Financial Returns October 2019 2 BRITISH BUSINESS BANK ANALYSIS of UK VC FINANCIAL RETURNS 3
Analysis of UK VC Financial Returns October 2019 2 BRITISH BUSINESS BANK ANALYSIS OF UK VC FINANCIAL RETURNS 3 CONTENTS FOREWORD 3 FOREWORD 4 EXECUTIVE SUMMARY 8 INTRODUCTION 10 SECTION 1: VC FUND FINANCIAL RETURN METRICS 13 SECTION 2: SOURCES OF VC FUND FINANCIAL RETURNS INFORMATION 16 SECTION 3: KEITH MORGAN, CEO OF BRITISH BUSINESS BANK VC FINANCIAL RETURNS ACROSS DIFFERENT DATA SOURCES 22 SECTION 4: LONG RUN VC FINANCIAL RETURNS The British Business Bank is the UK government’s business development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those 25 SECTION 5: businesses to prosper, grow and build UK economic activity. VC FINANCIAL RETURNS ACROSS GEOGRAPHY 32 SECTION 6: For these markets to work efficiently, information needs • that UK VC funds share a similar distribution of BENCHMARKING BBB AND BPC VC FUND PERFORMANCE to be made available that is both transparent and accessible. returns compared to US funds, apart from a small TO THE WIDER MARKET That’s why the British Business Bank undertakes an number of top US funds that outperform significantly. extensive programme of research and analysis throughout 34 SECTION 7: the year, looking at both finance markets overall and, DRAWING FROM OUR OWN EXPERIENCE CONCLUSIONS when required, specific asset classes. The British Business Bank is the largest UK based LP 36 APPENDIX: A lack of evidence demonstrating a strong track record investing in UK VC, having committed, since 2006, £1.5bn of an asset class can restrict institutional investors from METHODOLOGY of investment into 67 funds through the Enterprise Capital investing, reducing supply.
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