Our investment strategy
We take a patient capital approach to investing in innovation
We’re building a diversified portfolio of funds by stage, sector and vintage. All these funds have a strong UK focus and pursue domestic, pan-European or global investment strategies.
Through our investments, we enable the best managers to execute their planned investment strategy more effectively, and often to a greater scale. There are several ways we do this – including through anchoring a fundraise, enabling a first close, or boosting a fund to achieve optimal size. British Patient Capital can commit up to 49.9% of a fund.
All prospective fund managers must be able to demonstrate a strong and capable management team with a verifiable track record. They should have a clear strategy, be offering competitive terms and have evidence of a significant fundraising pipeline.
Our portfolio falls into two broad categories:
Venture capital for early stage businesses
These investments are made into start-up businesses going through early funding stages – typically encompassing rounds termed pre-seed, seed and Series A – as they develop their product and seek product market fit.
Venture growth capital for later stage businesses
These investments are for businesses raising further funding rounds to accelerate their growth – Series B and upwards.
Currently most of our portfolio falls under the first of these, as the seed portfolio we inherited from British Business Investments was skewed towards early-stage funds.
We will continue to make some investments to funds focused at the earlier stage, however, to help build a future pipeline and opportunities for later-stage investments.
The types of vehicles we invest in
Most of our investments are in fixed term funds, which reflects the availability of these in the market.
We are, however, open to more innovative structures and during the year invested in our first evergreen listed entity, Draper Esprit.
Analysis of UK Venture Capital Financial Returns
In October 2019, the British Business Bank published its latest research into the performance of UK Venture Capital.
Its Analysis of UK Venture Capital Financial Returns report provides the most comprehensive and robust approach to date for assessing the comparative performance of UK VC funds compared to US VC funds since 2002.
The report draws together data from existing data sources including PitchBook and Preqin, and from the British Business Bank’s own programmes, to provide as comprehensive a picture as possible of the Venture Capital asset class and its performance, and makes a specific case for UK VC within global VC allocations.
The commitment from British Patient Capital gave us the firepower we needed to fund the entrepreneurs of the future and continue to plug the UK’s growth capital gap.
£30m investment – May 2018
Draper Esprit is one of the most active venture capital firms in Europe, helping to build and invest in disruptive, high growth technology companies. Sector agnostic, it invests in multiple industries.
Draper Esprit, which publicly listed in 2016, is not restricted by the traditional fixed-term fund cycle, allowing it to invest directly from its balance sheet and support businesses to IPO or acquisition.
Since then, it has scaled its capital base and resources. Draper Esprit has backed businesses from across the UK throughout its investment history, including investing in five home-grown unicorns.
British Patient Capital has a £30m evergreen investment into Draper Esprit, the cornerstone for that year’s fundraising, helping to close
the growth stage funding gap for technology in the UK.
Draper Esprit considers British Patient Capital pivotal to its ambition of providing the best entrepreneurs with access to the capital they need to scale their businesses to an international level.
“The commitment from British Patient Capital gave us the firepower we needed to fund the entrepreneurs of the future and continue to plug the UK’s growth capital gap”.
Graphcore is a semiconductor company that develops accelerators for AI and machine learning. From autonomous vehicles, personalised medicine, intelligent mobile devices, to collaborative robots, machine intelligence applications have the ability to impact a vast number of industries. However, training complex deep neural networks takes a long time and many new machine-learning approaches need 100x to 1000x more compute power.
To solve this problem, Graphcore developed a new kind of processor and software specifically designed for machine intelligence. Its IPU (Intelligence Processing Unit) and IPU-Pod enable massive machine intelligence training tasks that can support huge deployments with thousands of users. In 2018 the company generated its first revenues, two years after it was founded.
A Series D $200m funding round in 2018 was supported by British Patient Capital partner Draper Esprit, with an investment of a further $12m in the company. Having backed previous companies created by the same founders, Draper Esprit has supported Graphcore from seed stage through to unicorn status, and $1.7bn valuation.
Headquartered in Bristol, Graphcore has offices in Palo Alto, London, Oslo and Beijing, with plans to open another in Cambridge.