A busier business bank

As 2025 came to a close, the British Business Bank published its inaugural Five-Year Strategic Plan. Although the bank, established in November 2014, had not exactly been rudderless for the previous 11 years, there was now a renewed purpose to everything it was doing.

“The UK’s highest-performing companies are in need of greater funding, especially at the growth stage, and we are ramping up our investment activity to meet this demand,” Leandros Kalisperas, chief investment officer at the bank, said at the launch of the plan.

The bank promptly committed $100m to transatlantic specialist life sciences investor SV Health Investors’ latest fund, the SV8 Biotech Fund, in December. SV has a 30-year UK life sciences venture investment track record; its investee companies have launched 30 novel drugs and six new drug classes.

Sprint start

“SV was our largest commitment to a fund to date,” says Kalisperas. “We’ve had a relationship with them for many years, so some would say this is just more of the same. But the sheer size of our investment speaks to the fact that we want funds to become bigger. If UK pension funds are becoming bigger and they want to invest in UK venture, they need bigger funds to invest in. Showing we believe in a fund sends a message to the domestic pension fund ecosystem.”

Kalisperas became the bank’s first chief investment officer in January 2025. He is responsible for all the bank’s investments including those across its equity funds, debt funds, Nations and Regions investment funds, plus its direct and co-investment activity.

Perennial issues

So, what of the new plan? What is its overarching mission? Kalisperas points out that the UK venture ecosystem is the third-largest in the world, after the US and China. “There is the talent to invest in – in early-stage quantum computing and deep tech, for instance,” he says. “The problem is in the later-stage rounds of Series C and above, where there’s insufficient pools of capital available. One of the main focuses of our fund investments is to crowd in capital and shape an ecosystem, where frontier technologies are moved further along the chain by new asset management companies, or adapted by existing asset managers in the UK.”

That funding gap is neither a new issue nor a trivial one. But government attempts to address it have perhaps never been so explicit.

“We will be looking at a ratio of at least 60-40 in growth versus venture. Our push towards scale-up and growth will also require more funds to be created in that space,” says Kalisperas. “If we cornerstone funds that meet our investment criteria and pass due diligence, that will act as a positive signal that the fund, its team, and strategy are of high quality. The intention is that this draws in other investors.”

In February, the bank announced a cornerstone commitment of £60m to NorthEdge IV. NorthEdge is a well-established regional private equity firm headquartered in Manchester with a focus on lower mid-market businesses. For larger deals, NorthEdge IV will utilise co-investments and follow-on investments, which the bank will have the opportunity to participate in.

Straight to source

The bank also plans to increase direct investing into companies, both to boost the company itself and to encourage pension money to take more interest in venture-backed businesses and their stories.

The bank’s existing book of business is mainly (90%-95%) invested in funds. But it is entirely possible that in five years’ time direct investing will take up a greater portion of its investment activity. “There is a sense that there might be more direct investing in companies, but it will be a balancing act around how much we allocate to the direct team and how much to funds,” says Kalisperas. “Allocation will be a dynamic process under regular review.”

Although the bank’s main activity will continue to be co-investing, he says that in exceptional circumstances, “for very specific types of companies, where it is difficult for others to price the round”, it may lead the investment.

Investment momentum has been gathering since the turn of the year. The bank made its largest direct investment to date – £25m into Kraken Technologies, an AI-powered operating system for energy and utility companies – as part of its $1bn demerger from its backer Octopus Energy Group. It also invested £10.5m in EpilepsyGTx, a biotech company focused on gene therapies R&D for epilepsy treatments, as part of its $33m Series A financing round. In addition, Stream, a financial wellbeing platform and workplace finance provider, received £15m from the bank as part of a $90m Series D funding round, and it announced a £15m investment into PolyAI, as part of an $86m Series D funding round.

“For the UK to realise its AI ambitions, we must support fast-growing AI companies like PolyAI by providing them with the capital they need to succeed and grow here in the UK,” says Kalisperas. “This will help to ensure we benefit from their growth and success.”

In February, the bank invested £5m into SatVu, a UK-based satellite thermal intelligence company, as part of a £30m funding round, and £2.3m into digital healthcare platform Evaro, as part of its $25m Series A funding round.

Despite the focus on scale-ups, early stage is also a priority. In January, the bank announced a commitment of up to £10m, through its Regional Angels Programme, to Ascension Ventures, one of the UK and Europe’s leading pre-seed and seed funds focused on helping high-growth technology companies scale.

Open encouragement

The bank’s five-year plan also announced the launch of Venture Link, whereby it would publish enhanced information on its commitments to venture funds, in an effort to support pension funds developing their own venture strategies. The aim is to remove barriers to investment.

“We are going to help show pension funds in the UK what live venture investment opportunities there are,” says Kalisperas. “The capital base in this country say they don’t know where the shovel-ready projects are. This should help answer that.”

And there will be more flexibility in the choice of funds the bank will invest in, because the bank will no longer assess its commitment to the UK on an individual fund basis. Instead, a looser UK-committed capital multiple will be applied on a portfolio basis. “This will attract some of the best funds who need flexibility to manage the geographical diversification how they want,” says Kalisperas. “We want to help pension funds understand and invest in venture.”

So, what about exits and returning money effectively to the taxpayer? As a balance-sheet investor, does the bank feel the same liquidity or redemption pressures as other investors? “The reality is that as part of a syndicate we have an aligned interest with GPs who do have to return capital, which absolutely includes exit,” says Kalisperas.

“We’re always investing with others whose capital may be a little bit less patient and so we are subject to the same market disciplines.”