Boosting Investment in UK Tech Scaleups Through Pension Funds

The UK is being urged to channel more domestic pension fund investment into its strongest technology scale-ups, with leading industry voices highlighting the substantial opportunity for long-term growth and national value creation. Saul Klein, veteran tech investor and managing partner of Phoenix Court, has emphasised the need for British pension funds to back home-grown technology firms that are scaling rapidly and demonstrating robust annual revenues exceeding 100 million dollars.

Data from Dealroom indicates that the UK currently leads Europe in this field, boasting 191 venture capital-backed technology and software companies that have crossed this significant revenue threshold. In total, there are over 600 firms generating more than 25 million dollars each year. Notable examples of these so-called thoroughbreds include Revolut, Monzo, Tide and Multiverse.

Klein points out that unlike previous years, businesses such as Monzo and Revolut have opted to remain private rather than listing on public markets. He argues that the measure of a company’s success has shifted, with institutional investors needing to focus on strong business fundamentals over inflated hype-driven valuations if they are to create sustainable value for savers. The UK, he notes, has more than 800 scale-ups with revenues over 25 million pounds—a figure that outpaces France, Germany and the Netherlands combined, second only to Silicon Valley in scale-up density.

A critical challenge has emerged, however: a shortage of domestic growth capital available for later-stage funding rounds. Dealroom estimates a 57 billion dollar shortfall in European scale-up funding compared to the United States. To address this gap, the government is encouraging pension funds to support private companies via the Mansion House Accord. Rachel Reeves, Chancellor, has highlighted how sweeping reforms could unlock up to 200 billion pounds of committed capital for UK innovators.

Klein underscores that although institutional support is growing, currently only 20 per cent of funding for British scale-ups originates from domestic sources. The majority of the financial returns generated by these firms are ultimately benefiting overseas investors and foreign pension schemes. By redirecting more British pension capital into domestic technology businesses, Klein believes Britain can ensure that jobs, productivity gains and future economic power remain within the country. Phoenix Court today backs 54 such scale-ups, but for Klein and others across the industry, the potential is far greater if the right capital is deployed.

This call for a recalibration of the UK’s investment landscape comes at a time when pension funds and government-backed institutions are being asked to back the businesses creating tomorrow’s wealth and opportunity. Recent government reforms and increased commitments from the Mansion House Group and the British Business Bank are already shifting the balance, yet the full transformative effect will rely on a broader embrace by all local authority and institutional funds across Britain.