British Business Bank commits £40m to FPE Capital Fund IV to support UK scale-ups

The British Business Bank has made a £40 million cornerstone commitment to FPE Capital’s Fund IV, providing further support for high-growth smaller businesses across the UK.

The investment forms part of the Bank’s growth equity strategy and follows its previous £20 million commitment to FPE Capital’s Fund II in 2017. The latest commitment contributes to a first close for Fund IV that has already exceeded the total size of its predecessor fund.

The Bank’s expanded growth equity mandate enables it to invest in lower mid-market private equity funds that back smaller businesses operating within the Government’s eight priority sectors identified under its Industrial Strategy. Operating on a fully commercial basis, the strategy is designed to attract additional private investment, increase access to scale-up finance and support regional economic growth.

Founded in 2016, FPE Capital is a specialist private equity investor focused on scaling B2B software, data and software services businesses. The firm typically invests in UK and Irish companies with enterprise values between £10 million and £75 million and often acts as the first institutional investor in founder-led businesses.

Fund IV will continue this approach, targeting ambitious companies with strong growth potential and providing access to FPE’s specialist expertise, network and operational support to help businesses scale.

Adam Kelly, Managing Director and Co-Head of Funds at the British Business Bank, said: “There is a significant funding gap in the lower-mid-market, particularly for those smaller businesses that have outgrown early-stage funding. FPE is helping to address this by providing a flexible solution for businesses at a critical stage of their growth journey.

“By backing firms like FPE through our expanded mandate, the Bank is increasing the supply of capital available to UK businesses ready to move into their next phase of growth.”

Blair McDougall, Minister for Small Business and Economic Transformation, said the investment aligns with the Government’s ambitions to support innovative businesses through its Industrial Strategy.

“Through our Modern Industrial Strategy, we are unlocking the investment high-growth firms need to thrive and compete from the UK,” he said.

“This support is focused on the most ambitious SMEs in key sectors, enabling them to scale up, create high-quality jobs and power growth, and raise living standards across the UK.”

Richard Coldwell, Investment Director, Funds, at the British Business Bank, highlighted FPE’s track record in supporting technology-focused businesses.

“FPE is a specialist growth investor with a strong track record in scaling UK software, data and software services businesses,” he said.

“The Bank’s commitment will ensure that growth capital is channelled to high-potential companies entering the next stage of their growth journey. By focusing on the Digital and Technology, and Professional and Business Services sectors of the Industrial Strategy, FPE will contribute to creating high-value jobs and driving economic growth across the UK.”