The UK Financing Gap report, published today by a leading European venture capital firm, Lakestar, reveals the £1.5 trillion financing gap needed to triple the UK’s GDP growth.

The research shows that by investing £75bn annually, by 2040 into new and emerging industries from digital to biotech, space and decarbonisation, the UK can unlock new sources of growth, and avoid the risk of falling behind.  

The report finds that while the UK is one of the world’s leading economies, and underwent an economic transformation in the 1980s enabled by deregulation and privatisation, that financed new growth companies, the next wave of economic growth cannot replicate the formula of the past.

New sources of growth are required, and scaling up 10,000 new growth businesses by 2040 would create £5-7trn of value and triple GDP growth to 2-3%.  

While the UK has the highest number of unicorns, none of today’s top ten UK companies was founded or scaled in the last 20 years. Whereas in the US, seven of the top ten companies were created in the last twenty years. Plugging the funding gap facing the UK by attracting and unlocking new private capital investment is essential for making sure new British businesses scale into globally competitive businesses, and tripling GDP growth.

Lakestar has invested in and helped scale, some of the UK and Europe’s most successful and emerging technology companies such as Spotify, Revolut, Eigen, Blockchain.com, Accuryx, Sennder and Yapily. With banks unable to provide the growth financing needed for regulatory reasons, Lakestar believes a new wave of private capital must be unlocked not only to scale the companies of the future but also to make sure the UK retains governance and control of strategic companies in the UK. 

Klaus Hommels, founder and chairman of Lakestar said:

“The UK has a vibrant startup ecosystem already.  With world-class institutions and incredible entrepreneurs, the next phase of growth can be achieved with an ambitious strategy for scaling the companies of the future.”

“Scaling up growth companies over the next two decades would help the UK win in battleground sectors, and retain digital sovereignty.”

Sam Gyimah, venture partner at Lakestar and former Minister for Universities, Science and Innovation added:

“Solving the UK financing gap would put a rocket under GDP growth and usher in a new generation of globally competitive British businesses.”

“High growth businesses are the backbone of a successful economy, scaling investment in new industries could create value similar to the US over the last twenty years.”