BVCA Investment Compact for VC and Growth Equity

The British Venture Capital Association (BVCA) are working with VC and growth equity funds on the Investment Compact for VC and Growth Equity (the “Investment Compact”) to strengthen the UK’s VC industry by boosting pension fund investment.

The Investment Compact builds upon the Chancellor of the Exchequers’ Mansion House Compact which aims to unlock capital in the UK’s most promising industries and increase returns for savers. The UK’s £2.5 trillion pension market invests far less in private markets than comparable schemes in other jurisdictions. Eleven of the UK’s largest defined contribution pension providers signed up to the Mansion House Compact, agreeing to allocate 5% of their assets in their default funds to unlisted equities by 2030. The UK Government advocates that the Mansion House Compact has the potential to unlock £50 billion of capital and increase funding into high-growth UK businesses. This also ties in with the UK Government’s Long-term Investment for Technology and Science (LIFTS) initiative which focuses on encouraging investment from UK pension funds into research-based science and technology companies.

The Investment Compact was set up by the BVCA to complement the Mansion House Compact and is open to VC and growth equity fund managers to work with pension advisors to encourage pension funds into UK start-ups. There have been over 80 signatories to the Investment Compact so far which represents over £100 billion global assets under management.(https://www.bvca.co.uk/Policy/Investment-Compact)

The Investment Compact is designed to encourage diversified portfolios which result in higher net returns for UK pension schemes. The signatories commit to progressing these goals in 2024 by collaborating with pension funds to reach fund structures that facilitate the needs of defined contribution pensions. This includes commitments such as attracting UK pension funds as limited partners, working with pension investors on productive investment structures and sharing best practices for working in markets with defined contribution teams. As part of the Investment Compact, the BVCA will also create an expert panel and run training and events.

The objective of the Mansion House Compact and the Investment House Compact is to increase pension pots for savers while streamlining investment into UK businesses, encouraging growth and the creation of new jobs.

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