UK Scale-Up Fund talks target £1bn from pension providers
Railpen, Nest and other pension providers are discussing a £1bn fund with the British Business Bank to back UK tech scaleups.
By Marcus Adeyemi · Startups Editor
· 3 min read
The UK Scale-Up Fund is being discussed as a £1bn investment vehicle backed by major pension providers to finance British tech scaleups. Railpen and Nest are among the providers working with the British Business Bank on the proposal, which is aimed at increasing the amount of domestic growth capital available to UK startups.
The fund has not been announced as a completed vehicle. The participants have not disclosed its legal structure, launch date, committed capital, target returns, management fees or the companies it might back. The stated ambition is to support UK startups as they commercialise products, expand abroad and hire.
What is the UK Scale-Up Fund?
The UK Scale-Up Fund is a proposed investment fund that would use pension capital to invest in successful UK companies at the scaleup stage. The plan is being presented as a way to seek long-term returns for pension members while also directing more capital into domestic technology businesses.
A consortium of pension providers, including Railpen and Nest, is in talks with the British Business Bank, the state-owned economic development bank that already plays a central role in UK startup finance. The proposal has been described as a first-of-its-kind vehicle for the UK, although the details needed to compare it with existing public-private venture programmes have not been released.
Prime minister Andy Burnham called the proposal “a vote of confidence in British business, British talent and British ambition” in a statement issued on Monday. He said the fund would connect pension investment with entrepreneurs and technologies that could “reindustrialise Britain” and create future jobs.
Railpen CEO Andy Bord said the pension fund’s priority remained delivering strong long-term outcomes for members. He said the proposed vehicle represented “a compelling investment opportunity” where patient capital could help growing companies scale.
Nest chief Ian Cornelius said the pension provider saw “an important role for pension capital” in helping successful UK businesses secure funding for growth.
Why UK pension capital is back in focus
The talks follow a long-running argument in UK tech policy: Britain has a large venture capital market, but many of its better-known startups still rely on foreign investors when they raise later-stage rounds. Founders, investors and policymakers have repeatedly pushed for UK pension funds to take a larger role in growth-stage financing.
The timing is also political. Sifted reported weeks earlier that France was seeking to block British participation in the EU’s proposed €5bn Scaleup Europe Fund. That effort raised questions about whether UK startups would have access to one of Europe’s larger planned pools of late-stage capital.
A £1bn domestic fund would not solve the UK’s growth-capital gap on its own, especially if it is spread across many companies and years. It would, however, signal that large pension providers are prepared to discuss more direct exposure to scaleup equity, a shift UK policymakers have sought for years.
For founders, the unanswered questions matter more than the headline number. Until the fund’s mandate, stage focus, ticket sizes and governance are disclosed, it is unclear whether it would compete with existing growth investors, co-invest alongside them or act mostly as a policy-backed anchor for later-stage UK rounds.
This story draws on original reporting from Sifted.
