The withdrawal of the EIF would leave a glaring hole in UK VC fundraising, as it is by far the biggest backer of UK venture capital, per the PitchBook Platform. What’s more, it would come at a time when overall backing is on the decline. The seven vehicles closed so far this year are on pace for the slowest 1H since 2012.
UK-based VC funds closed since 2010
While the declining numbers and the EIF news are undoubtedly worrying to industry players, they have also caught the eye of politicians in the midst of the UK's general election campaign. In its manifesto, the Conservative Party has vowed to invest in the British Business Bank using funds repatriated from the EIF. Elsewhere, the opposition Labour Party has promised a new national investment bank, as well as regional development banks, to help finance SMEs in the country.
Yet, with scarce details, pledges such as these are merely paying lip service to British VCs looking to seal funds amid an uncertain future. And empty promises will do little to soothe them if they see historically active LPs slip away.
Learn more about Europe's VC industry in testing times: Download our 1Q European Venture Report.