Half of Britain’s best startups end up owned abroad
Key Points
- Buyers acquire 94% of UK scale-ups before maturity, half from overseas
- Almost 30% of European-founded unicorns have moved their headquarters abroad
- The UK's SME finance gap sits between £1.6 billion and £4.1 billion a year
- The British Business Bank can now write cheques above £100 million, up from £10 to £15 million
- The Resolution Foundation wants further BBB expansion to fix regional imbalances
A new briefing from think tank the Resolution Foundation shows that around 94% of UK scale-ups sell to acquirers before reaching maturity, with overseas buyers taking roughly half of them. This in turn drains Britain of the technology companies its universities and investors work hardest to create.
The group’s report on the UK’s public financial institutions argues the country builds promising startups at a healthy rate but consistently fails to fund them through the expensive scale-up phase. When growth capital runs out at home, founders sell, and increasingly they sell abroad.
The pattern mirrors a wider European problem. The report cites the Draghi report on EU competitiveness, which found that almost 30% of European-founded unicorns, startups valued over $1 billion, chose to relocate their headquarters abroad because the continent could not supply the higher-risk scale-up finance they needed.
A massive funding gap
Official estimates put the gap between SME demand for finance and its supply at between £1.6 billion and £4.1 billion per year.
Equity investment also clusters heavily in London, the South East, the North West and the East of England, leaving founders elsewhere with even fewer routes to growth capital.
Before Brexit, the European Investment Fund acted as the single largest investor in the UK venture capital market, supplying over a third of all capital raised between 2011 and 2015. Its UK financing peaked at around £0.9 billion in 2016 before evaporating after the referendum.
The British Business Bank has now stepped in to fill that hole. It out-invested the EIF’s peak every year since 2019, committing £2.5 billion in 2023/24 and £1.3 billion in 2024/25, and over its first decade it supported 11% of UK equity deals which accounted for 15% of all UK equity investment.
Bigger cheques for bigger companies
The government has now effectively rebuilt the BBB to write far larger cheques.
Governance reforms following the 2025 Spending Review authorised the bank to invest more than £100 million per deal, up from a previous practical limit of £10 to £15 million, a ceiling its CEO Louis Taylor told Parliament left growing firms stranded between BBB support and National Wealth Fund territory.
The BBB now holds £25.6 billion in operational capacity, including £17.6 billion for loans and equity, and plans to raise annual commitments from £1.4 billion to around £2.4 billion between 2026/27 and 2030/31. It has also launched the British Growth Partnership Fund to pull pension money into UK venture capital.
The Resolution Foundation argues the bank’s record justifies going further.
Its equity investments account for 48% of additional Gross Value Added generated from just 1% of businesses supported, and regional funds such as Northern Gritstone, which backs university spinouts in the North of England, push capital outside the dominant four regions.
Whether bigger cheques arrive fast enough to change founders’ calculations remains the open question, the Foundation warns.
Until scale-up capital matches ambition, Britain’s best technology companies will keep maturing under someone elsewhere.
