Research shows that pension funds from Scandinavia are pumping more capital into British start-ups than their British counterparts.
Pension funds from the Nordic countries: Denmark, Finland, Iceland, Norway and Sweden have invested a total of $88 million (£70 million) so far this year, compared to $49 million (£39 million) that British pension funds have invested, according to London deployed established venture capital firm Atomico.
In July, Chancellor Jeremy Hunt unveiled pension reforms to allow capital from Britain’s pension pots to be channeled into the country’s early-stage start-ups. Some pension funds, such as Aviva and Legal & General, agreed to put five percent of their investments into private equity and start-up companies, potentially freeing up £50 billion by 2030.
Despite an unstable venture capital market, Britain remains Europe’s venture capital hotspot, attracting more investment than all other EMEA countries combined and ranking second globally behind only the US and China. However, much of this is due to foreign investors, especially from the US.
However, in recent months it has become clear that many American investors are turning their backs on European startups, which will collectively receive just $45 billion this year, compared to $82 billion in 2022. The tech companies bucking the trend are the ones specialize in AI.
Last week, Hunt unveiled plans to boost domestic investors specializing in AI, robotics and vaccines with a plan similar to the Kauffman Foundation in the US.
The VC decline is also impacting VC firms, with Forward Partners being bought by rival Molten Ventures in a £41m deal. Molten Ventures, a technology investor formerly known as Draper Esprit that backed the likes of Thought Machine and Crowdcube, posted a net loss of £243 million in the last financial year.
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