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Strategic report

Funding the scale up

British Patient Capital has £2.5bn to invest into venture and venture growth capital funds over the next 10 years.

Although it was set up relatively recently, British Patient Capital’s predecessor organisations have been investing in funds for well over a decade, and we are drawing on and benefiting from this rich experience as we build the business.

These resources enable us to do two things:

  • Increase the amount of long-term investment available for innovative UK companies wanting to scale up.
  • Demonstrate that a long-term patient capital investment strategy can produce commercially attractive financial returns so that more investors will be encouraged into making allocations to this type of investment.


How we increase investment

To increase investment, we are working alongside institutional investors to unlock an additional £5bn of patient capital investment. This means we expect a total of £7.5bn to back the continued development of innovative firms that need access to longer-term funding.

We will allocate £300m–£350m each year for the first three years to commit to fund managers specialising in venture and venture growth capital, generally investing in funds over £50m in size. Our cheque size can be up to £100m in any one fund with our sweet spot being £20m–£40m.

Our portfolio is seeded by 19 investments with commitments of £266m made by British Business Investments.

In 2018/19 we made a further £334m of commitments into 12 funds.

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£7.5bn

£2.5bn of capital from British Patient Capital and £5bn unlocked from institutional investors

Our fund managers

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What does ambition look like?

British Patient Capital is invested in 322 businesses though our portfolio of fund managers.

Our capital helps build the next generation of innovative companies which harness the leading edge of technology.

Although we’re not prescriptive about sectors
for our investment, from our vantage point we see trends emerging across the portfolios of our venture and venture growth capital fund partners.

By looking at the number of businesses and the total capital invested by fund managers in our portfolio, and by other investors, we’ve identified seven key themes outlined below.

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British Patient Capital is invested in 322 businesses though our portfolio of fund managers.

How we will demonstrate returns, and the future

We will achieve our returns target by a consistent execution of a balanced investment strategy and the construction of a diversified portfolio, taking a long-term approach.

Once we have established a track record and demonstrated the return potential of the asset class, our intention is that British Patient Capital will be privatised and continue to support ambitious UK businesses.

Underlying companies by theme – 31 March 2019 (%)

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Our key portfolio themes – 31 March 2019

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AI and big data

The UK has significant expertise in this field. Companies that can use large datasets intelligently, making decisions and improving processes, are well-placed to compete globally.

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Digitisation

As software has become more sophisticated, companies that can leverage these new ways of working can capture huge increases in productivity. Our investments are bringing these benefits to traditionally low-tech industries, enabling the whole economy to grow.

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Life sciences and digital health

Our portfolio reflects the UK’s research strength in life sciences and digital health. Within this complex and fast-moving landscape, we are working with an array of leading venture partners to support and grow exciting UK companies.

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The future of finance

The UK has a strong heritage in financial services. We see that reflected in our portfolio: this is our 4th largest category, with over 40 investments. These companies offer new alternatives to traditional financial services, as well as working with established providers to increase their efficiency.

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The future of retail

The retail sector is currently experiencing huge disruption. We believe that the future of retail is bright, but that new ways of working will change the industry. More than 10% of our portfolio companies operate in this sector, connecting businesses with consumers and changing the way people shop.

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Clean growth, mobility and transportation

Recently we’ve seen significant growth in the number of companies working towards sustainable goals. Whether that’s revolutionising mobility through autonomous driving or creating new ways to grow fresh food sustainably, this is an exciting area and one we think will continue to develop in the future.

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Frontier technology

We invest in a small number of companies that we think have the potential to revolutionise industries across a host of sectors. We can’t wait to see how the innovations they develop will go on to shape our world.

Case study

Nauta Capital– BeMyEye Holdings Ltd

BeMyEye offers mobile crowdsourcing to its clients, as an effective solution for collecting images and data at points of sale and street-level for consumer goods.

The company works with more than 150 leading fast-moving consumer goods companies, consumer durables and pharmaceutical companies, such as Ferrero, Samsung, Henkel and Reckitt Benckiser. Headquartered in London, it has officers in Italy, France, Spain, Germany, Russia and provides data collection services in 21 countries.

BeMyEye leverages a crowd of more than 1.5 million “Eyes”, private citizens rewarded for collecting information through an app, from local supermarkets and independent shops. Information can include the presence of a promotion, the availability and visibility of a product, share of shelf space and brand recommendation levels from store assistants or pharmacists.

This is designed to empower brands to “see”, through online analytics and picture galleries, what is happening in thousands of locations allowing them to measure and optimise, in real time, their in-store execution.

Since 2011 BeMyEye has raised more than €18m in five venture-backed rounds, including from British Patient Capital fund manager Nauta Capital.

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