After a challenging couple of years, the UK venture market is showing signs of stabilisation. While the sector hasn't experienced the rapid rebound some anticipated, there are encouraging indicators - both at the macro level and within our own portfolios.

Notably, the first half of the year saw nine UK listings raising approximately £183 million. Investor selectivity remains high, with a clear preference for companies demonstrating proven cash Flows rather than early-stage promise. Although primary issuance is still subdued, we are seeing improved post-listing performance for certain UK IPOs and renewed interest from trade buyers and private equity Birms in high-quality assets.

Monetary policy is also evolving. In September, the Bank of England held the Bank Rate at 4.0%, signalling that any future rate adjustments will be gradual and data-driven. Against this backdrop, Deepbridge continues to focus on controllable, prepared routes to liquidity, rather than relying solely on broader macroeconomic tailwinds.

In July, the British Business Bank (BBB) announced a landmark £500 million investment package to address structural inequities in UK equity finance. This includes the £400 million Investor Pathways Capital initiative, supporting diverse and emerging fund managers, and a £100 million commitment to female-led funds, with a target for at least 50% of new capital allocated to female fund managers.

These measures are a direct response to persistent disparities in the market. According to the BBB, only 2p of every £1 in UK VC funding goes to female-only-founded businesses, and just 13% of senior VC professionals are women. We welcome these initiatives, as they not only address gender imbalances but also support broader diversity across the venture landscape. This aligns with Deepbridge's commitment to sourcing talent and innovation from a wide range of backgrounds, reinforcing our belief that opportunity should not be limited by demographics or geography.

Within Deepbridge, we continue to prioritise proactive management and the realisation of value across our portfolios. Our Exit Readiness Programme is designed to formalise and accelerate the journey toward realisations.

This structured approach includes the early appointment of non-executive directors, comprehensive market and valuation analysis, and the preparation of key performance indicators and data rooms. In addition, we implement advisor-led processes to support a range of exit strategies, including strategic sales, secondary transactions, public listings (such as AIM and NASDAQ), management buyouts, and private equity engagements.

Several portfolio companies are now at advanced stages of preparation or active engagement under this programme, with multiple Birms currently undergoing due diligence. Beyond these, we continue to observe strong commercial momentum, including the signing of new contracts, international expansion, and the securing of non-dilutive grants. These developments are clear indicators of resilience and scale potential, even in the face of ongoing macroeconomic uncertainty.

Despite these positive developments, the UK's scale-up funding gap remains a challenge. Some promising ventures have faced external shocks this year. The BBB's newly launched British Growth Partnership may provide additional support for UK scale-ups. It's worth noting that in 2023, 94.3% of all UK venture rounds over £50 million were funded by overseas investors, underscoring the importance of robust domestic support mechanisms. Risk is an inherent feature of early-stage investing and is embedded within the design of the UK's Enterprise Investment Scheme (EIS), which aims to support innovation while acknowledging the potential for capital loss. Our approach remains consistent: hands-on, exit-Birst management, close collaboration with founders, and structured pathways to convert maturing businesses into investor outcomes, always recognising that capital is at risk.

Our progress is driven by a dedicated team, including Ian Warwick, Ben Carter, David Blake, and Andrew Round, alongside our non-executive director network. Their market connectivity and support for founders have been instrumental in advancing our Exit Readiness Programme.

Looking ahead, we anticipate selective liquidity events via trade and private equity, and a cautious but improving primary market. Policy initiatives such as the BBB package and incremental reforms should provide further support to the ecosystem. Our priority remains on controllable factors: maturing Exit Readiness Programme cohorts, closing strategic processes, and continuing to professionalise companies as they transition into scalable, investor-ready businesses.

In summary, while market conditions are tentatively improving, we remain focused on accelerating opportunities for investor liquidity and growth. Our hands-on approach is proving invaluable, and we look forward to sharing further positive developments with our investors and adviser partners over the coming months. Thank you for your continued support.

Dr Savvas Neophytou
Chief Investment Officer, Deepbridge Capital