UK venture capital (VC) has matched US long-term returns and outperformed the rest of Europe, according to new analysis from the British Business Bank.

The bank’s UK Venture Capital Financial Returns 2026 report found that UK VC funds generated a pooled total value to paid-in capital (TVPI) multiple of 1.78x across 2002-2021 vintages, matching the US at 1.78x and ahead of the rest of Europe at 1.67x.

However, realised returns remained lower than in the US, with UK funds producing a pooled distributions-to-paid-in capital (DPI) multiple of 0.62x, compared with 0.83x in the US and 0.65x across the rest of Europe.

The bank noted that UK funds in the dataset were, on average, 21 months younger than their US counterparts, giving them less time to realise investments and distribute capital.

More recent UK VC funds performed particularly strongly, with 2020-2024 vintages generating a pooled TVPI of 1.40x, compared with 1.24x in the US and 1.27x in the rest of Europe.

The report showed the UK’s median and upper-quartile returns for these vintages were also higher than the equivalent US and European measures, although it cautioned that returns for younger funds remained largely driven by unrealised value rather than cash distributions.

British Business Bank chief investment officer, Leandros Kalisperas, said: “For many years, US venture capital has been seen as the world leader. This research shows the UK is increasingly closing the gap, matching US returns overall and outperforming among the latest generation of funds.

“It underlines the quality of the UK's venture sector, and its ability to support innovative businesses from startup through to scale-up.”

Meanwhile, the report also found that the UK’s historic performance gap at later stages of the VC market had narrowed significantly.

Among 2014-2019 vintages, UK late-stage funds delivered a pooled TVPI of 1.62x compared with 2.40x in the US, a gap of 0.78x.

For 2020-2024 vintages, UK late-stage funds generated 1.18x compared with 1.23x in the US, narrowing the gap to 0.05x.

UK generalist funds in the latest cohort also outperformed their US counterparts, recording pooled TVPI returns of 1.91x compared with 1.20x.

At the early stage, UK funds continued to perform competitively, delivering pooled TVPI of 1.85x across 2002-2024 vintages, compared with 1.81x in the US and 1.84x in the rest of Europe.

UK Private Capital chief executive, Michael Moore, argued that the findings strengthened the case for greater domestic institutional investment in VC.

“Strong returns from British venture capital should be celebrated, but they also highlight an opportunity that domestic institutional investors are missing by underinvesting in this asset class.

“UK pension funds have real scope to seize more of this opportunity, enabling British pension savers to benefit from a world-class VC industry that scales ambitious startups into internationally competitive businesses.

“We hope Mansion House signatories see this and act to make sure they don't miss out on backing the next generation of British unicorns."

The British Business Bank added that institutional investors needed effective routes to access VC at scale, highlighting initiatives including Venture Link and the British Growth Partnership, whose first fund reached a £200m first close this year.

This article originally appeared in our sister publication Pensions Age.

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