Policy paper

Entrepreneurship in the UK

Published 26 November 2025

Foreword from the Chancellor

Across the UK there is no shortage of ideas or talent. Ambition is baked into who we are. Entrepreneurs do not wait for permission: they take risks, they build, they push the boundaries of what is possible.

When the government backs them, the results are extraordinary. According to analysis from the ScaleUp Institute, scaling firms make up just 0.8% of all businesses yet provide over half of all SME output^{[footnote 1]} That is the power of ambition put to work.

Somewhere along the way – in business and in government – we have become too focussed on managing the downside and not nearly focussed enough on maximising the upside. We have built systems around caution, not conviction. Around stasis, not momentum.

It is time for a reset.

As part of the government’s modern Industrial Strategy, we are shifting the centre of gravity back towards ambition by backing the founders and innovators who test new ideas, build new products, and create the companies that will drive the UK’s future prosperity.

That is why this government is backing these companies to start, scale, and stay in the UK.

This plan is not about cheerleading. It is about action. The government is making the UK a place where ambition is met with ambition; where groundbreaking companies find the capital, talent, support and regulatory environment they need not just to take off, but to keep growing here, at home.

When we choose ambition, we choose growth. We choose jobs. We choose national renewal.

We choose to compete, confidently, on the world stage.

But progress requires prioritisation. So, this prospectus sets out the actions this government is taking across four priority areas:

1) R&D: focussing public research firepower on the needs of scaling companies across the UK.

2) Procurement: becoming a better customer to innovative businesses.

3) Tax: doubling the eligibility of reliefs so that growing firms can accelerate their expansion.

4) Public Finance Institutions: strengthening investment at Series B and beyond.

Prioritisation also means doubling down on what we are good at.

Innovation is one of our core strengths; the UK is ranked sixth out of 139 economies in the Global Innovation Index.^{[footnote 2]} Backing entrepreneurs is how this government will ensure we convert these strengths – and our investment in R&D – into new products, businesses, and jobs.

Innovation and entrepreneurship must be treated as a single agenda.

We know that not every idea will succeed, and not every investment will pay off. That is inherent in backing innovation. If every company succeeded, we would not be taking bold enough risks. Our focus is on capturing upside, not eliminating uncertainty.

This is just the beginning. Over the next year, as a government we will continue to examine how best to incentivise investment into high-growth firms. This includes simplifying and strengthening tax support for entrepreneurs and ensuring the founders who take risks are properly recognised for the value they create. The government is publishing a Call for Evidence on tax policies alongside this prospectus^{[footnote 3]}

Our goal is clear: frontier technologies developed here by the companies of the future, choosing to start here, scale here, and stay here.

To achieve this we will ensure that ambition is rewarded, not restrained; that risk-taking is backed, not second-guessed; and that the UK is a country where ideas grow into industries, where innovation translates into jobs, prosperity and national strength.

This is British business ambition: confident, outward-looking, and grounded in the knowledge that we can design, invent, build and lead. It is the ambition we see every day in our founders, is what we expect from investors, and it is what we must demand of ourselves.

Rt Hon Rachel Reeves MP

Chancellor of the Exchequer

1. Starting in the UK

The UK is a great place to start a company. We have a mature early-stage financing ecosystem, underpinned by generous tax reliefs (Seed Enterprise Investment Scheme, Enterprise Investment Scheme, Venture Capital Trusts). The UK’s venture capital market is the third largest in the world, behind the US and China, with £9 billion invested in innovative UK companies last year.^{[footnote 4]} This is complemented by a deep start-up talent pool.

To support this start-up ecosystem, the government is investing in the ideas and research which are foundational to the world-leading companies of tomorrow. This includes a record R&D budget which will rise to £22.6 billion a year by 2029-30.^{[footnote 5]}

We have strong foundations to build on. The UK is home to four of the world’s top ten universities and is an international leader in frontier technologies such as quantum and engineering biology. UK universities are more effective than ever at backing these breakthroughs and bringing these frontier technologies to market.

This is shown by the evidence:

• The UK is home to half of the top ten universities in Europe for spin-outs, and with UK spin-outs having a combined enterprise value of $114 billion.^{[footnote 6]}
• UK spin-outs raised a record £3.35 billion in 2024, a 44% increase from the previous year.^{[footnote 7]}
• The UK has the second highest number of quantum start-ups globally, and the sector has attracted the second highest volume of private investment compared to the US^{[footnote 8]}

Box 1.A UK Science and Technology Success Stories

The UK has many great examples of science and technology companies starting and growing in the UK, including:

• Quantexa is one of the UK’s standout tech sector growth stories, evolving from a London founded start-up into a global leader in helping enterprises and public sector agencies use data, analytics and AI for confident decision making. Built on pioneering, content driven analytics and patented knowledge graph technology, the company now serves major banks, governments and enterprises worldwide. With continued double-digit growth, a global footprint across 15+ countries, and backing from top-tier investors, Quantexa has scaled to become a $2.6bn valued company while maintaining strong innovation momentum. The British Business Bank has been a co-investor in Quantexa from Series C, to its most recent Series F round in March 2025.
• Brainomix is a global pioneer in AI medical imaging solutions, enabling precision medicine for better treatment decisions in stroke and lung fibrosis. Founded as a spin-out from the University of Oxford, Brainomix technology is now clinically adopted in more than 350 hospitals across 20+ countries. Its flagship Brainomix 360 Stroke platform, endorsed by NICE, is now integrated into the majority of NHS England stroke units, as well as nationally in Wales and in other European healthcare systems. It has been shown to significantly improve recovery rates for stroke patients, by enabling more patients to gain access to life-saving stroke treatments.

To capitalise on these strengths, the government is not just increasing R&D investment but adopting a new integrated approach to spurring innovation.

Central to this, the government will deliver a strategic reset of the UK’s largest R&D funder, UK Research and Innovation (UKRI), so that it focuses investment in the eight Industrial Strategy growth-driving sectors and makes ambitious, strategic bets aligned to national priorities.

UKRI will invest:

• £14 billion in curiosity-led research, protecting the UK’s science base while backing new innovations and ideas.
• £8 billion targeted specifically towards national priorities, such as clean energy, health resilience and national security.
• £7 billion to support innovative companies to bring technological and scientific breakthroughs to market.

Together these investments will combine to strengthen the UK’s R&D ecosystem and ensure that disruptive businesses with the most promising research ideas can benefit from public investment to commercialise their innovations.

The UK’s academic research base is a unique national asset and a key reason why innovators come to the UK and build companies here. The Department for Science, Innovation, and Technology will grow its support for universities’ core flexible research and commercialisation funding in line with expected inflation over the Spending Review 2025 period. This amounts to an additional £425 million cumulatively in funding over the period.

Attracting and nurturing the best research talent is also a core part of the UK’s innovation strategy. UKRI will invest over £1.5 billion to help the most promising research spin out into disruptive businesses, through simplified programmes that take ideas from the lab bench to market, more predictably and at scale.

This will include:

• Investing £4 million a year in new Enterprise Fellowships, which will fund up to 100 world-class researchers over the next four years to spin out or take up business secondments.
• Launching a UKRI call for organisations to develop new entrepreneurship-focused doctoral training, backed by up to £25 million. This will aim to support around 100 students over the next six years who have the potential to turn their cutting-edge research into new companies.

The government is also backing innovators through one of the most generous R&D tax reliefs in the world. By maintaining the generosity of both the merged R&D Expenditure Credit (RDEC) and the Enhanced R&D Intensive Support (ERIS) schemes, businesses investing in R&D can benefit from a cash tax credit of up to £27 for every £100 spent on R&D.

• For larger companies, the 20% RDEC rate keeps the UK at the joint highest of the G7 for uncapped R&D support.^{[footnote 9]}
• For the most research-intensive SMEs, ERIS directs over £1.3 billion a year to eligible firms^{[footnote 10]}

What matters is the impact: this support will help drive around £56 billion of business R&D investment by 2029-30^{[footnote 11]} That means more labs, more breakthroughs, and more cutting-edge companies choosing to build and grow in the UK.

To strengthen the administration of the reliefs, HMRC will pilot a targeted advance assurance service from Spring 2026. This builds on the responses from the 2025 Advanced Clearances Consultation and will enable SMEs to gain clarity on key aspects of their R&D tax relief claims before submitting them to HMRC.

Conclusion

The UK has one of the most dynamic start-up ecosystems in the world, built on deep R&D capability, world-leading innovation clusters – such as the Oxford-Cambridge Growth Corridor, the Northern Growth Corridor, the advanced materials cluster in the North West (part of the wider Northern Growth Corridor), and the semiconductor cluster in Wales – global talent and a strong foundation of government support.

Our ambition is to build on these strengths by:

• Backing industries where the UK leads.
• Giving founders the confidence to take bold decisions.
• Focussing on the upside that innovation can deliver for the whole economy.

Box 1.B Targeting Innovation

The government is committed to being bolder and more targeted, by backing the best ideas and most promising businesses.

Here are just a few examples:

• The Advanced Research and Invention Agency (ARIA) has a budget of £1.2 billion to fund high-risk, high-reward scientific research. ARIA is working with a coalition of Activation Partners to translate research breakthroughs into economic impact. This programme has led to two of the world’s top deep-tech VC funds establishing UK operations to take advantage of cutting-edge UK research.
• The Regulatory Innovation Office (RIO) is working with science and technology companies to tackle regulatory barriers, giving innovative businesses the certainty they need to attract investment, scale up, and develop the next generation of products and services here in the UK. For example, RIO worked with the Civil Aviation Authority to deliver its atypical airspace policy, allowing one UK company to secure four high-value contracts with National Grid. RIO’s work with the Health and Safety Executive has enabled agricultural drones to apply pesticides and create markets for a new sub-sector of crop protection drones^{[footnote 12]}
• The National Security Strategic Investment Fund (NSSIF) backs pioneering dual-use technologies with commercial and strategic potential, accelerating their development to strengthen the UK’s security and prosperity. Portfolio companies that NSSIF has invested in include: Kraken Technology Group, which develops high-performance, modular, and optionally autonomous maritime platforms, and Quantum Motion, a spin-out from UCL and Oxford University, which develops scalable quantum processors using industrial-grade silicon chips. At Spending Review 2025, the government increased the investment capacity of NSSIF to up to £330 million over the next four years.

2. Scaling in the UK

The UK is successful at developing start-ups, but UK companies are not scaling at the same rate as their US competitors. US equity-backed companies raise up to 2.6x more than UK companies in later funding rounds.^{[footnote 13]}

UK unicorns – companies that have been valued at over $1 billion – have rightly been celebrated. However, we have a relatively small share of unicorns compared to the size of the UK VC market^{[footnote 14]} with only three new unicorns ‘minted’ in 2024.^{[footnote 15]}

As such, many UK companies are either acquired or choose to go abroad to raise investment.

Some commentators describe the UK as an incubator economy^{[footnote 16]} – with a strong R&D base powering company growth in other countries. Global appetite for British R&D is a British success story – but further action is needed so that the UK also realises the benefits.

Backing the best doesn’t mean shielding companies from competition. Not all products will fit the market, not all ideas will turn into tech, and not all companies will succeed.

But it does mean ensuring UK companies can attract top talent and have access to high quality infrastructure. It means making sure the UK has the right business environment for ambitious founders to succeed.

In the immediate term, to tackle the shortfall in domestic scale-up capital, the government is taking action in four areas:

• R&D: investing £7 billion through UKRI in innovative companies complementing support for the top talent, ideas and infrastructure which facilitates innovation.
• Procurement: reforming government processes, including fast-tracking innovative solutions and launching Advance Market Commitments.
• Tax: doubling the eligibility for the Enterprise Investment Scheme (EIS), Venture Capital Trust scheme (VCT) and the Enterprise Management Incentive (EMI) scheme so that scale-ups can attract capital and talent as they grow.
• Public Finance Institutions: supporting at least ten new-to-market growth-stage funds over the next five years via the British Business Bank. This should result in a 100% increase in the current number of such funds in the market. This will be complemented by the National Wealth Fund’s new mandate which includes a focus on the digital and technology sector.

Research and Development

To turn the UK’s research strengths into commercial strengths, the government is reshaping the UK R&D system so it can make bigger, more confident bets on breakthrough technologies – doing so with less bureaucracy and faster delivery.

UKRI is realigning its multi-billion investment portfolio so it drives innovation in the sectors where the UK can lead globally. As part of this, UKRI will direct £7 billion into innovative UK companies, giving high-potential firms the backing they need to turn breakthrough research ideas into world-class industries.

As a first step, Innovate UK will launch a new Growth Catalyst programme worth £130 million, offering grants and tailored support to frontier companies that have already attracted investment. This gives them the capital to accelerate growth while protecting founder ownership.

Supporting regional clusters – ecosystems that attract talent, enable the diffusion of ideas, and that de-risk investments – is a key part of the government’s strategy. The £500 million Local Innovation Partnership Fund will bring together research organisations with local firms and investors to grow these ecosystems, supported by UKRI, for example in the Northern Growth Corridor. The ambition is to leverage an additional £1.5 billion in private sector capital into these clusters through the fund.

Innovate UK will also launch a new round of the Women in Innovation Awards to continue to build an inclusive approach to supporting the highest potential companies This £4.5 million investment will recognise innovators with the potential to be global industry leaders of the future.

More broadly, the government’s public finance institutions are working to create a joined-up investment pipeline, connecting Innovate UK’s deal flow to the British Business Bank, NSSIF and the National Wealth Fund. This will simplify and accelerate government investment into high-growth businesses.

This will build on the 700+ companies who have received investment from the BBB and Innovate UK. Where these businesses face regulatory hurdles to innovation, the Regulatory Innovation Office will help them to navigate the regulatory process and work with regulators to speed up decision-making on new business models.

The aim is simple: more breakthroughs built in the UK, scaled in the UK, and staying in the UK.

Box 2.A Entrepreneurial Ecosystems

The government is delivering long-term schemes such as the Oxford to Cambridge and Northern Growth Corridors that will enhance innovation and support entrepreneurship in all parts of the country.

The Oxford to Cambridge Growth Corridor is already a world-leading innovation cluster in the UK, positioned as Europe’s answer to Silicon Valley. It spans the region between Oxford and Cambridge, anchored by two globally renowned universities, and is already a vibrant hub for world leading science and technology firms and internationally successful start-ups and scale-ups. It is home to over 8,000 high-tech firms, including major companies like AstraZeneca, GSK, and Arm Holdings and notable scaling businesses such as Oxford Nanopore and Nu Quantum in Cambridge. Through the government’s significant investment into foundational infrastructure like East West Rail, a region of 3.5 million people will be better connected – highly skilled, highly employable, and highly mobile. Entrepreneurs and investors can seize the opportunity to be part of the Golden Triangle, bringing together the Corridor and London as one of the world’s top innovation clusters.

The government has also appointed Tom Riordan as its envoy for the Northern Growth Corridor, working in partnership with local leaders, universities and businesses to maximise the valuable assets in the Corridor and wider North, attract inward investment and ensure that the benefits of a thriving economy are felt beyond London and the South East. The government will deliver an investment strategy for the Corridor and wider North by early 2026 and make it quicker and easier for businesses to scale up and invest in the North, building on major investments like the £11 billion TransPennine Route Upgrade and the infrastructure being delivered via £15.6 billion Transport for City Regions funding. The Government is also headquartering the new National Housing Bank in Leeds, as part of a cluster of financial institutions in the city, alongside the National Wealth Fund, Bank of England and Financial Conduct Authority.

Procurement

Procurement is a major lever where government can go further to support innovation. Time and again, entrepreneurs say what they really need most is revenue rather than investment.

For deep-tech companies in particular, breaking through can be difficult. They need investment to build at scale, but without scale it is hard to prove commercial potential to investors. It is a classic catch-22 scenario.

A committed, early customer can break that cycle. An anchor contract gives frontier firms the revenue, credibility and stability they need to raise growth capital and expand operations – turning promising technologies into globally competitive businesses.

Government spends almost £400 billion every year on procurement. Not only could this be used to provide a revenue stream for innovative companies, but government demand can also act as powerful signal to other potential customers.

That is why the government will:

• Establish a new Innovation Marketplace accessible to strategically important firms that will fast-track innovative solutions.
• Expand the use of Advance Market Commitments to act as an early buyer for the best new technologies to de-risk investment, create demand, and pave the way to market. We will start with up to £100 million for novel AI inference chips, subject to due diligence, and an Advance Market Commitment for clean concrete, backed by Scottish Water, Ramboll, Derwent London, Atkins Realis UK and Heathrow.
• Appoint Procurement Innovation Champions in all departments to identify the department’s innovation opportunities, work with government’s research and investment agencies to align their funding, and make sure innovation is at the heart of government’s procurement decisions.
• Review the government’s internal controls to remove common barriers to buying from innovative scaling companies, and make a concrete list of recommendations in early 2026 on how these will change.
• Explore changes to the procurement system to make it more friendly to innovative companies – considering where there is scope for direct awards to support sectors that align with the government’s goals and expanding the scope of where mid-contract variations are allowed.

Box 2.B Access to Talent

The UK’s economic future relies on backing the cutting-edge innovation in key sectors, as set out in the government’s modern Industrial Strategy. The government has therefore taken action to reform the high-skill visa system, making it easier for the world’s brightest and best to start, scale, and stay in the UK within a controlled migration system: fewer people, each with outsized impact.

In October 2025, the Home Office laid new Immigration Rules before Parliament, introducing pro-talent reforms to the High Potential Individual, Innovator Founder, and Global Talent visas. Taking effect from November 2025, these changes aim to streamline access to top-tier talent.

The High Potential Individual route will expand to graduates from the world’s top 100 universities, while international students will be able to transition seamlessly from study to entrepreneurship through the Innovator Founder route. Updates to the Global Talent visa include reforms to make it simpler and easier for top science and design talent to access the visa and expanding the list of eligible prizes.

The new Global Talent Taskforce (GTT) will also help attract leading professionals in priority sectors and provide tailored support for relocation. The GTT will focus on building a strong pipeline and account management of high profile, highly talented individuals who are considering laying down roots and investing in the UK.

To ensure that non-competes work for founders and entrepreneurs, the Department for Business and Trade is publishing a working paper with options to reform non-compete clauses. This will support greater labour market flexibility, with particular benefit to entrepreneurs and those companies who are looking to start, scale and stay in the UK.

Tax Reliefs

Recognising the immediate fundraising challenge faced by scaling firms, the government will use tax levers to incentivise greater investment and support companies to attract talent.

To help address the scale-up finance challenge, the government is doubling the investment thresholds and gross assets test of our Venture Capital Schemes (EIS, VCT) to reflect that companies are raising increasingly larger rounds at an early stage.

Table 2.A New Limits of the Venture Capital Schemes

	Current rate	New limit from April 2026
Annual company investment limit	£5 million (£10 million for knowledge intensive companies)	£10 million (£20 million for knowledge intensive companies)
Lifetime company limit	£12 million (£20 million for knowledge intensive companies)	£24 million (£40 million for knowledge intensive companies)
Gross assets tests	£15 million before share issue; £16 million after share issue	£30 million before share issue; £35 million after share issue

The VCT upfront income tax relief will also decrease from 30% to 20%, to better balance the amount of upfront tax relief offered compared to EIS, where dividend relief isn’t available. This will incentivise funds to seek out higher returns and ensure they are targeting the highest growth companies.

The EIS and VCT increases will support around £100 million per year of extra investment into the most successful UK scaling companies, supporting their further growth and development.

The government is also significantly expanding EMI company eligibility to increase access to talent support for scaling companies, enabling them to offer competitive remuneration packages. The employee limit and the company share option limit will both double to 500 employees and £6 million respectively, and the gross assets test will quadruple to £120 million. The maximum holding period will also be increased to 15 years, and this can be applied to existing as well as new EMI contracts.

The EMI expansion will cement its status as a world-leading scheme, with it expected to support around 1,800 of the highest growth scale-up companies over the next five years, allowing them to reward an estimated 70,000 employees.^{[footnote 17]}

Box 2.C Incentivising Greater Investment

Seed Enterprise Investment Scheme (SEIS), and the Enterprise Investment Scheme (EIS) are a recognised success – and have been copied around the world. They provide a range of tax reliefs for investors to encourage investment in higher-risk, early-stage companies. These investors often take significant risks by funding new companies which may lack a track-record and therefore face the biggest challenges in accessing growth capital. These ‘Angels’ - many of whom are former entrepreneurs - are valuable not just for the capital they provide but for the advice and mentorship they give to these new companies. By doubling the EIS investment limits, the government will enable these key investors to provide follow-on investment to the most successful growth companies in their portfolio.

Venture Capital Trusts are investment funds that offer tax-advantaged investment into high-risk scaling companies. The VCT scheme works alongside EIS to support the development of high-risk companies as they go through the start-up process and begin to scale. By doubling the investment limits, we will enable them to invest further in scaling firms and, in particular, provide follow-on investment to the most successful growth companies in their portfolio. Over £40 billion has been raised through the VCTs, EIS and SEIS schemes since the launch of EIS in 1994^{[footnote 18]}

Enterprise Management Incentives (EMI) is a tax-advantaged share scheme designed to support scaling companies to recruit, retain and reward key employees. The scheme allows eligible companies to offer their employees options to acquire tax-advantaged shares at a future date at a price agreed when the option is granted. It is considered world-leading in its design and the incentives it offers. This government has introduced a significant expansion to the company eligibility limits, with the employee limit and company share option limit doubled, and the gross assets test quadrupled. This will maintain the competitive nature of this scheme, and expand access for scale-up companies, supporting them to recruit and retain the key employees they need to grow and develop.

This goes alongside the government’s previous announcement, legislated for in the 2025-26 Finance Bill, allowing companies to update existing EMI and Company Share Option Plans (CSOP) contracts so employees can exercise their options at a PISCES trading event to retain access to the EMI tax advantages (as set out in Chapter 3). This represents a key step in the successful launch of PISCES, and will support scaling companies to achieve liquidity, and allow their key employees to more easily reap the benefits of EMI and CSOP.

EMI and CSOP contracts agreed before April 2028 can be amended at any time to include PISCES as an exercisable event – after that it must be written in to all new contracts from the start.

Public Finance Institutions - British Business Bank

The British Business Bank backs innovative companies through its fund investment and co-investment programmes, crowding in private capital to the venture and growth markets that fuel innovative companies’ growth. This helps the globally competitive businesses of the future to access the scale-up capital they need to grow in the UK, and delivers a return to the UK taxpayer. The Bank has invested in 59% of the UK’s current unicorns, either directly or indirectly, including ElevenLabs, Revolut and GoCardless.

As part of wider reforms announced at Spending Review 2025, the government has scaled the permanent financial capacity of the Bank to £25.6 billion and is removing programme constraints, so the Bank can respond quickly and flexibly to new market opportunities.^{[footnote 19]} This increased capacity will begin from April 2026. To support this shift to operating with more fungible capital, the Bank has also restructured into a banking business (focused on debt products and guarantees) and an investment business.

The government has provided the Bank with a new mandate, with a strong focus on backing our most promising business in the Industrial Strategy sectors.

Investing in companies with novel technologies, particularly if they are pre-revenue, is challenging and high-risk. The Bank will take a portfolio-wide approach to risk across its investment arm, whilst continuing to operate on a commercial basis, allowing it to both invest in higher-risk propositions, whilst crowding private capital into this part of the market. The Bank will also cornerstone new specialist fund managers and support larger specialist funds with novel investment strategies, focused on emerging sectors.

In response to its new strategic mandate, set by government, the Bank will double down its focus on scaling companies. This is set out in the Bank’s Five-Year Strategic Plan^{[footnote 20]}

The fact that the UK’s top founders are attracting capital from across the world is a great signal of the quality of UK companies. But this can create a pull for companies to relocate and list abroad. In some cases, this may be the best option for company growth – but there should also be a strong domestic alternative, so that scaling abroad is not the only option for ambitious UK founders.

To address this challenge, the Bank will target over 60% of its venture and growth investment flow on scale-ups, investing at least £5 billion in growth-stage funds and scale-up companies. The Bank will support at least ten new to market growth-stage fundraisings over the next five years.

This will potentially result in a 100% increase in the current number of such funds in the market, increasing support for the next generation of UK unicorns at the critical stage when access to scale-up capital is most challenging.

IP lending

Equity finance isn’t the only game in town for scaling firms. Debt finance is an important complementary funding source and potential alternative for entrepreneurs as they scale their businesses. The British Business Bank has played a key role in supporting the development of debt funding options, committing £1.1 billion since 2013 through their Debt Funds programme which has supported the creation of new and larger debt funds, over 1,400 additional jobs and strong returns for the taxpayers^{[footnote 21]}

To further support the provision of debt funding to the wave of new innovative businesses that lack physical assets, the government has asked the Bank to explore using its existing financial guarantee capacity to support IP-backed lending.

National Wealth Fund

The National Wealth Fund (NWF) is at the forefront of investing public money in our future, aiming to mobilise over £70 billion in private investment for growth and clean energy. The government introduced specific reforms to ensure that the NWF can more effectively address access to finance issues for capital-intensive businesses and projects. This included increasing the NWF’s capitalisation by £5.8 billion, taking the total capitalisation to £27.8 billion, and increasing the NWF’s risk appetite, giving it capacity to take up to five times more risk than commercial banks.

NWF will aim to invest in first-of-a-kind technologies or to cornerstone projects involving novel business models, supporting government’s priorities to enable the next generation of companies to scale up their operations in the UK. The NWF can invest across both equity and debt (including mezzanine debt) supporting companies at the later stages of their commercialisation and scale up journey

Mobilising Pension Capital for the Future

Complementing the focus on scale-up finance, the government has given the British Business Bank a new objective to mobilise institutional capital at scale.

The role of domestic pension capital in the domestic economy has drastically declined in recent decades. The government is determined to help turn this around. International pension funds benefit from the ideas, innovation and returns our entrepreneurs generate, and so should ours.

Mobilising and facilitating long-term, patient capital from pension funds into UK VC is key to creating a larger ecosystem, and one where scaling companies can access domestic capital at all stages of the capital pathway. Britain should back British innovation – and benefit from the rewards.

Together with industry, the government is already taking action through voluntary commitments like the Mansion House Accord and through the major market reforms the Pension Schemes Bill will put into place.

The British Business Bank is also central to this mission. The Bank has already created one entry point through the British Growth Partnership (BGP) – an investment vehicle designed specifically to encourage more UK pension fund and other institutional investment into the UK’s fastest growing, most innovative companies.

The Bank has announced they are targeting a projected £200 million first close of the British Growth Partnership Fund I by the end of the 2025-26 financial year, which will be supported by Aegon UK, NatWest Cushon and M&G, who are in the final stages of approvals, terms and structuring^{[footnote 22]} The fund will invest in cutting-edge British businesses – building on UK strengths as identified in the UK’s modern Industrial Strategy such as clean energy, fintech and life-changing medical technology. This will help them scale-up and create skilled jobs across the country. Reaching first close will mean capital will be deployed into high-growth UK companies in early 2026.

Building on this progress, the Bank will launch Venture Link — a new initiative to help pension funds invest more confidently in UK venture capital. As part of this, the Bank will publish enhanced information on the venture funds it supports and those under consideration, increasing transparency and helping pension schemes identify opportunities. This forms part of a wider package of measures to boost investment capability, cut barriers to entry, and unlock billions in long-term capital for UK science and technology firms. The Bank will now consult stakeholders on the design of the initiative.

Conclusion

The UK’s scale-up ecosystem has lots of potential – but fundraising from Series B (approximately raising over £20 million investment) can be tough. To address this, the government is taking action in four areas – across R&D, procurement, tax and public finance – to incentivise investment in these scaling firms and to help boost their working capital.

But this is only the beginning. Realising the UK’s full potential means giving our most innovative companies the confidence, and the capital, to grow here, hire here, and succeed here. The government is committed to delivering the long-term changes that will make the UK a permanent home for the next generation of global companies.

3. Staying in the UK

The government’s ambition is for the UK to be an attractive destination to grow a company at all stages, from idea-to-IPO.

Science and technology companies account for around 16% of the value of UK main market listed companies, compared to approximately 50% in the US. ^{[footnote 23]} In line with the Industrial Strategy, the government wants to go further in realising the growth benefits of frontier technologies in high-growth sectors, creating the conditions for more companies to stay, and list in the UK.

The UK has strong foundations to build on, including a successful start-up ecosystem. Recognising the immediate challenges faced by scaling firms the government is taking action to incentivise private investment and target public investment towards these companies.

Whilst the size of the US market is often a key draw to listing in the US, the data shows that it’s not the right option for many companies. In fact, UK firms often perform better when they list in the UK.^{[footnote 24]}

London remains a leading hub for investment and the largest equity capital market in Europe – raising more equity capital than the next three European exchanges combined in 2024.^{[footnote 25]} This world-leading position also ensures UK markets provide firms with access to deep and international pools of capital.

The government is prioritising an ambitious programme of reforms to ensure UK markets support high-growth firms to raise the capital they need to grow and invest. Significant strides have already been taken with:

• An ambitious modernisation of the UK’s listing rules in July 2024, bringing the UK into line with international best practice.
• A significant simplification and improvement of the UK’s approach to the information firms need to publish for capital raising, to take effect from January 2026.
• The establishment of the Private Intermittent Securities and Capital Exchange System. PISCES is a new type of stock exchange that supports private companies to scale and grow, providing a stepping stone to public markets.

At Budget 2025, the government is going even further, introducing the UK Listing Relief. This will mean that for the first three years of a company’s listing on the UK market, its shares will be exempt from Stamp Duty Reserve Tax. This will enable newly-listed companies to secure higher share prices, boost trading volumes and improve their access to capital – supporting their long-term growth prospects.

The government has also taken action to ensure savers have more opportunities to benefit from the success of homegrown businesses through ISA reforms, incentivising investment and driving better returns.

Together these actions are making the UK a far more attractive option for companies considering where to list – allowing us to anchor more companies in the UK.

4. Conclusion

Founders are clear; words are cheap and action is what counts. And they are right.

The government is taking action to unlock the investment which is critical to growth. This includes reforms to UKRI and increased capital for public finance institutions. The government is also implementing the reforms set out in the Pensions Investment Review through the Pension Schemes Bill. Together with Mansion House Accord commitments from industry, these measures will secure over £50 billion for UK infrastructure, new homes and fast-growing businesses^{[footnote 26]}

As a nation, we’re rightly ambitious for our companies and our economy. To meet this ambition, government is determined to mobilise more investment across the system. This means more founders exiting and reinvesting here in Britain; more corporate venture capital; more institutional investment, and more people sharing in the returns created by great British companies. Ambition deserves reward and contribution deserves recognition.

The UK does not lack capital; what we face is a capital allocation problem. Funding needs to flow, at scale, from 2026 — from institutional investors to VC, and from VC to the businesses powering our growth. The government will play its part in making that happen.

In the short term, government will issue a Call for Evidence on Tax Support for Entrepreneurs. This will gather evidence on tax policy support for investment in high-growth companies in order to assess the impact, accessibility and generosity of existing schemes and explore the potential policy options to go further. This will be open for views until 28 February^{[footnote 27]}

But the challenge goes beyond tax. Government will take a holistic approach, looking at how tax, spend and regulatory levers work together to support scaling companies.

Again, prioritisation is critical. So, over the next year, and ahead of the next Budget the government’s priorities on this agenda are to:

• First, explore options beyond current government reforms to unlock further sources of capital. This includes corporate venture capital and venture debt. This will also include options to further facilitate domestic institutional capital investment into UK VC, building on the British Business Bank’s Venture Link initiative.
• Second, push forward changes to government procurement, so innovation and innovative companies are placed at the centre of what the public sector buys.
• Third, change how government works with founders and scaling firms, with closer engagement and direct support to unblock barriers and help strategically important companies realise their full potential.

This is what ambition looks like in practice. The government backing founders. Backing risk takers. Backing the people who build and create.

The aim is simple. Start here. Scale here. Stay here.

And government will stand shoulder to shoulder with our risk takers, matching their ambition with our own.

1. ScaleUp Annual Review 2025, ScaleUp Institute . Sourced from ONS Inter-Departmental Business Register datasets 2010- 2023 and DBT Business Population Estimates 2023, November 2025 ↩

2. Global Innovation Index 2025, WIPO ↩

3. https://www.smartsurvey.co.uk/s/taxsupportforentrepreneurs/. ↩

4. Venture Capital in the UK, BVCA, May 2025 ↩

5. Spending Review 2025 ↩

6. European Spinouts Report, Dealroom, November 2025 ↩

7. Equity Investment into Spin-outs, Beahurst with Parkwalk, 2025 ↩

8. National Quantum Strategy, Department for Science, Innovation and Technology, March 2023 ↩

9. HM Treasury Corporate Tax Roadmap, October 2024 ↩

10. DSIT written evidence to the House of Commons Science, Innovation and Technology Committee Inquiry, ‘Innovation, growth and the regions’, January 2025 ↩

11. HMRC analysis, 2024 ↩

12. Regulatory Innovation Office: One Year On, Regulatory Innovation Office, October 2025 ↩

13. Small Business Equity Tracker 2024 – British Business Bank ↩

14. Small Business Equity Tracker 2024 – British Business Bank ↩

15. UK Unicorn Companies, Beauhurst, February 2025 ↩

16. Bleeding to Death: the science and technology growth emergency, House of Lords, November 2025 ↩

17. Rewarding Talent Country by country review, High Ranking – Index Ventures ↩

18. EIS, SEIS and Social Investment Tax Relief: May 2025 ↩

19. Spending Review 2025 ↩

20. Five-year Strategic Plan, British Business Bank, November 2025 ↩

21. Debt Funds Evaluation Report 2025 – British Business Bank ↩

22. Press release - 20 November, 2025, Business Bank ↩

23. UK figure is based on the combined market capitalisation value of technology (3.32%), telecommunications (1.18%), and health care (11.61%) sectors in the FTSE All-Share Index, as at 31 October 2025. US figure is based on the combined market capitalisation value of technology (39.17%), telecommunications (1.91%), and health care (9.01%) sectors in the Russell 3000 Index, as at 31 October 2025. All figures use the ICB industry classification. Sources: FTSE Russell, Russell 3000 and FTSE All-Share factsheets. ↩

24. A reality check on international listings – New Financial, April 2025 ↩

25. Equity Capital Markets Update – London Stock Exchange, Q4 2024 ↩

26. Pensions Investment Review: Final Report ↩

27. https://www.gov.uk/government/calls-for-evidence/tax-support-for-entrepreneurs-call-for-evidence. ↩