UK Venture Capital Financial Returns 2024

The UK Venture Capital Financial Returns 2024 report provides a comprehensive assessment of the performance of UK VC funds since 2002. The report draws together data directly sourced from fund managers, from the Bank’s equity programmes, as well as from commercial data providers PitchBook and Preqin.

The report contains the following chapters:

• Chapter 1 provides an overview of UK VC financial returns in comparison to the US, and the rest of Europe (ROE), and breaks this down into different vintage year cohorts.
• Chapter 2 explores global VC fund performance in the life sciences and green technology sectors, including how industry returns have evolved over the past twenty years.
• Chapter 3 assesses the performance of VC funds the Bank has invested in through its Enterprise Capital Funds (ECF) programme and through British Patient Capital (BPC).
• Chapter 4 provides an overview of current VC market conditions, covering fund managers’ perspectives on fundraising, competition, valuations and exit opportunities using the results from our UK fund manager survey.

Key Findings

UK VC returns were above the US and the rest of Europe for older vintages, and in line with or slightly below for more recent vintages.

UK VC funds with a 2002-2019 vintage generated a pooled TVPI multiple of 1.87, compared to 2.01 in the US and 1.96 in the ROE. The UK’s pooled DPI of 0.72 is also lower than both the US (1.06) and the ROE (0.81). However, UK funds outperformed the US and the ROE on both DPI and TVPI measures across the 2002-2007 vintage period.

The share of UK funds generating very high DPI returns is on par with that in the US and the rest of Europe.

For 2002-2019 vintages, 6% of UK funds reported a DPI of 3 or more, equal to the share in both the US and the ROE. However, only 10% of UK funds have a TVPI of three or higher, while 15% of European funds and 14% of US funds fall into this category.

Company valuations continued to decline in 2023, leading to lower TVPI return multiples.

In a sample of 139 UK funds reporting data in both 2023 and 2024, the pooled UK TVPI multiple fell from 1.73 to 1.61. The pooled DPI of 0.37 remained in line with last year’s figure (0.36), suggesting that a lack of exit opportunities remains a key challenge for fund managers.

While life sciences funds report lower TVPI multiples than the market, they outperform when measuring realised returns.

The pooled TVPI for life sciences funds with 2002-2019 vintages (1.76) is below the wider market multiple of 1.99. However, life sciences funds outperform other sectors on a DPI basis – their pooled multiple of 1.14 is higher than the overall market (1.02).

As the green tech sector has recovered from its downturn in 2010, the returns of more recent vintages are closer to the wider market.

Green tech funds with 2002-2019 vintages reported a pooled TVPI of 0.99 and pooled DPI of 0.54, far lower than the wider market multiples of 1.99 and 1.02. More recently, however, for 2014-2022 vintages, green tech funds have produced a pooled TVPI multiple of 1.55, closer to the wider market (1.64).

The relative performance of BPC-backed funds has improved over the past year, while ECF-supported funds have delivered strong returns for investors.

ECF-backed VC funds with a 2006-2022 vintage reported a pooled DPI of 0.60, compared to 0.43 for the wider UK market. BPC-backed funds with a 2013-2022 vintage reported a pooled DPI multiple of 0.20, in line with those across the wider market (0.19).

Fundraising remains a key challenge for GPs, though there are some initial signs of optimism around future exit conditions and changes in valuations.

This year’s survey of 42 UK VC fund managers found that 69% view the conditions for raising a new fund as poor or very poor. While 62% of fund managers believed the availability of exit opportunities was poor or very poor, nearly three quarters of fund managers are expecting exit conditions to improve over the next year.