One of the UK’s leading tech investors has urged pension funds to increase backing for British scale-ups, warning that too much of the upside from high-growth firms is flowing overseas.
Saul Klein, co-founder of venture capital firm Phoenix Court, said that the UK has become Europe’s leading hub for “thoroughbreds” — fast-growing tech firms with revenues above $100 million — but suffers from a chronic lack of domestic growth capital.
According to Dealroom data, the UK now has 191 venture-backed thoroughbreds and more than 600 companies generating revenues above $25 million. By contrast, only 20 per cent of the funding for these businesses comes from UK investors, leaving 80 per cent of the returns to overseas backers.
“For over a decade, venture capital has been gripped by unicorns,” Klein said, referring to start-ups valued at over $1 billion. “But the real test of a company is not valuation, it is fundamentals. The UK now has more than 800 scale-ups generating over £25 million in revenues — more than France, Germany and the Netherlands combined — making us second only to Silicon Valley.”
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