Natwest makes first VC fund bet in push to back British tech
Natwest has made its first direct investment into an independently managed venture capital fund, joining a push by some of Britain’s biggest financial institutions to funnel more domestic money into UK tech companies.
The banking giant is investing across top venture capital firm Phoenix Court’s Localglobe, Latitude and Solar funds, which back companies from their earliest funding rounds through to scale-up, as part of a partnership set to bring several hundred million pounds of institutional capital onto the platform.
The British Business Bank has separately committed £50m, while M&G and HSBC are also backing Phoenix Court’s funds.
The move marks a step up in Natwest’s push into Britain’s venture capital market after launching its dedicated Venture Banking business earlier this year.
“If Britain wants to compete for the industries and jobs of the future, we need to get better at backing our most promising companies with the capital, connections and confidence to scale here in the UK”, said Paul Thwaite, chief executive of Natwest. “Banks can be part of the solution”.
The size of NatWest’s investment was not disclosed.
Its move comes amid a wider push by government and the City to unlock Britain’s vast pools of domestic savings for fast-growing private companies.
The UK is the world’s third-largest venture capital market behind the US and China, but more than 80 per cent of the scale-up funding raised by its most successful companies still comes from overseas investors, according to the British Business Bank.
Phoenix Court estimates there are around 1,800 venture-backed British companies generating more than £20m of annual revenue, yet fewer than one per cent have received backing from the major UK asset managers associated with the Mansion House initiative.
The shortage has long raised concerns that British pension funds, insurers and other institutions are missing out on the returns generated by companies founded at home, while start-ups increasingly turn to deeper pools of US and international capital as they grow.
Natwest steps up tech push
The investment builds on Natwest’s expansion into venture banking, through which it is targeting founders, venture capital firms and high-growth businesses with specialist lending and banking services.
The bank said earlier this year that the UK’s shortage of scale-up capital remained a “salient and persistent challenge”, despite signs of recovery in venture investment.
Natwest will now become an investor in the funds themselves, giving it exposure to companies across Phoenix Court’s portfolio as well as providing banking services to the sector.
Phoenix Court is home to early-stage investor Localglobe, growth fund Latitude and scale-up vehicle Solar. Its portfolio has included British tech names such as Monzo, Raspberry Pi, Tide and Motorway.
M&G previously put £50m into a pilot of the Solar fund, which now backs 18 companies generating a combined £5bn in annual revenue and employing more than 8,500 people in the UK.
M&G is increasing its backing across Phoenix Court’s strategies, while HSBC has also committed capital across the funds.
The British Business Bank’s £50m investment comes just weeks after it committed £75m as a cornerstone investor in a new Molten Ventures growth fund, another attempt to increase the pool of capital available to later-stage British companies.
The government-owned bank said it supported smaller UK businesses in accessing £9.4bn of finance during the 2025/26 financial year, including £4.3bn of private capital brought in alongside its own funding.
The latest deal comes as the government prepares a separate £1bn UK Scale-up Fund, backed by major pension schemes including Nest, Railpen, Border to Coast and Local Pensions Partnership Investments.
Saul Klein, co-founder and chair of Phoenix Court, said Britain had built a world-leading innovation economy but “too many companies still lack the domestic capital to scale here”.
“Working with these British institutions we can make sure that British savers benefit from our innovation, not just nurses in Denmark, teachers in Ontario and the Singapore metro system,” he said.