Nordic-based pensions groups are putting more into British start-ups than in their homegrown counterparts, a new survey has found.
Funds in Denmark, Finland, Iceland, Norway, and Sweden invested £70m or US$88m in venture capital funds in the UK and Ireland this year, according to a key review by investment firm Atomico.
That compares to US$49m by UK and Ireland pension funds and underscoring the point that overseas investors have a higher opinion of UK businesses.
Rishi Sunak’s government has been mulling various measures to boost investment in small companies in Britain.
Earlier this year several UK pension groups including M&G, Aviva and Legal & General agreed to put 5% of their assets in start-ups
Atomico’s State of European Tech report said that the UK and Irish pension funds invested US$52m last year in the sector, just 5% of their total pension investment.
In comparison, new tech companies overall raised US$45bn, though this was half the level of two years ago, with Nordic and US-based funds accounting for more than half.
A surge of investment in generative AI has accounted for the largest chunk of all of the investment so far this year.
Atomico said pension funds in the UK and Ireland lacked the “relevant experience” to invest in tech, which also had a perceived greater risk than other sectors despite its huge success in the US.
Worryingly for the UK government, American funds have also started to look elsewhere said Atomico, with 58 cent of every dollar of of investment heading for the UK against 86 cent two years ago.
Britain, though, still remains the largest recipient of start-up funding in Europe at US$12.6bn but the gap with France, in second place, is shrinking.