UK-based venture capital (VC) funds have been quietly outperforming equivalents in the US and Europe since 2020, according to a new report.
Research from the British Business Bank has found the UK VC market has performed well compared to counterparts in other regions.
The report looked at VC funds launched between 2020 and 2023 and found that UK-based vehicles generated a pooled total value to paid0in capital (TVPI) multiple of 1.22, outperforming the US at 1.14.
Essentially revealing that British funds in that time represent a 22% estimated capital appreciation so far, compared with 14% in the US.
The report notes that public perception generally views American VC returns as substantially higher than in the UK, however, recent years have proven the UK VC market is resilient to macroeconomic challenges.
The UK and wider VC market saw a particularly strong performance in 2021, followed by a notable downturn from 2022. After this steady decline, this year’s report has found that the median valuation for UK company level VC deals has increased by 5% in the year to 2025 Q1.
“It is encouraging to see signs that UK VC returns have stabilised over the past year and that valuations have increased,” said Matt Adey, chief economist at the British Business Bank.
“Despite the challenging environment, recent UK funds have been fairly resilient, outperforming recent US funds, whilst long term performance has been in line with the Rest of Europe.”
Adey said the bank’s survey also found that more than three-quarters of general partners see the quality of the UK market as either good or very good.
“Venture capital plays a key role in supporting exciting and ambitious businesses across the country and it is encouraging to see UK VC delivering returns that outperform the US since 2020,” said British Private Equity and Venture Capital Association chief executive Michael Moore.
“The opportunity in UK VC is significant, with returns significantly outperforming public markets over a 10-year time horizon and venture capital’s backing of ambitious SMEs supporting economic growth across the UK’s nations and regions.”
