UK pension funds back £200m VC fund in landmark first close

European pension funds invest only a minuscule amount of their money in venture – but that's slowly changing.

A new £200m fund launched by the British Business Bank has secured commitments from three UK pension funds: Aegon UK, NatWest Cushon, and M&G. For Aegon UK and Cushon, it is the first time either has invested in venture capital.

Aegon UK's Lorna Blyth called its investment in venture "an important step in the evolution" of the fund's largest workplace default, noting that VC assets have typically been "out of reach for DC pension savers."

DC pension funds – defined contribution schemes where savers bear the investment risk themselves – have long been structurally locked out of venture. The British Business Bank launched the British Growth Partnership Fund I specifically to change that.

For instance, to get NatWest Cushon over the line, the Bank partnered with UK life insurance firm Mobius, whose unit-linked structure made the investment legally workable for the scheme, it said.

Alex Seddon, a prominent impact investor and head of impact and private equity at M&G Investments, said the new fund marked a “significant step forward” in connecting UK pension savings with venture-backed companies.

Where the fund will invest

The Bank’s fund co-invests alongside its network of more than 150 fund managers.

Target sectors include clean energy, advanced manufacturing, and life sciences.

The fund’s first investment is an £8m cheque into Wayve, part of the Bank’s broader £25m commitment to the British autonomous EV unicorn, announced earlier this year.

“Unlocking pension capital into high-growth technology companies is critical if the UK wants to lead in AI,” said Alex Kendall, co-founder and CEO of Wayve, which reached a $1bn valuation in 2024.

The Bank has also launched Venture Link – a portal giving institutional investors direct visibility into its open venture and venture growth capital funds.

Why it matters

European pension funds manage over €3 trillion in assets, but only 0.018% of that reaches venture capital firms, compared to 1.9% in the US.

Meanwhile, European climate tech startups are consistently running out of cash when it’s time to scale, according to a recent report by climate tech investment firm World Fund.

“Europe is not short of capital,” World Fund’s Craig Douglas told Impact Loop in January, when that report was published. “But not enough institutional money is being funnelled into VC for more risky bets.”

Douglas, and many other VCs, are calling on pension funds and insurers to help fill Europe’s scale-up funding gap. Some, though, already are.

In a previous analysis, we tracked 10 pension funds in Europe that are actively allocating capital into impact-focused venture firms and startups.

One of them is PGGM Investments from the Netherlands which recently launched a €1bn impact investing fund.