British Business Bank backs Longwall's GBP £50 million fund

The British Business Bank has committed up to GBP £50 million to Longwall Ventures' fourth fund, making it a cornerstone backer of the vehicle.

Made through the Enterprise Capital Funds programme, the commitment builds on the bank's backing of Longwall's previous three funds. Longwall 4 has already raised GBP £86.2 million and is targeting a final close of GBP £100 million.

The fund will invest in UK start-ups and early-stage deep-tech companies, with a focus on science and engineering businesses. It plans to make initial investments of between GBP £500,000 and GBP £2 million in 14 to 16 companies, while reserving additional capital for follow-on rounds.

Founded in 2008, Longwall has built its investment approach around university and industry research emerging in the UK. The new fund will focus on Advanced Manufacturing, Clean Energy, Defence and Life Sciences.

This is the fourth Longwall fund backed by the British Business Bank. The relationship began with Oxford Technology ECF, followed by Longwall Ventures ECF and Longwall Ventures 3 ECF.

The Enterprise Capital Funds programme is designed to increase the supply of equity capital to early-stage UK businesses and lower barriers for venture capital managers entering the market. It has backed 54 funds so far, representing about GBP £2.7 billion of finance.

As a cornerstone investor, the British Business Bank often provides early commitments to help funds reach a first close. That role has become more prominent as specialist venture managers seek larger pools of long-term capital for sectors that often require extended development periods before generating revenue.

Track record

One of Longwall's earlier portfolio companies was OrganOx, an Oxford University spinout focused on medical technology. Longwall's first fund was among its early investors.

OrganOx was sold to Terumo Corporation for more than USD $1.5 billion. The deal was described as the largest acquisition of an Oxford University spinout to date and one of the UK's biggest medtech exits. The sale delivered a 19.2 times return for investors, including the British Business Bank.

With five exits recorded so far in Oxford Technology ECF, private limited partners in that fund have received returns of six times their original investment to date. Those figures give Longwall a realised performance record that may help attract further institutional capital for specialist early-stage funds.

Policy focus

The investment also aligns with wider government efforts to direct more capital towards sectors linked to industrial policy and scientific research. Deep tech investing has drawn increased attention in the UK because companies in fields such as medical devices, energy systems and advanced engineering often need longer funding cycles than software businesses.

"The Enterprise Capital Funds programme plays a crucial role in helping early-stage funds raise capital with a cornerstone investment, increasing the amount of scale-up finance available for high growth early-stage companies. With businesses like OrganOx already pushing the boundaries of what's possible, our continued partnership with Longwall Ventures will help uncover the next generation of breakthrough technologies and UK success stories," Mark Sims, Managing Director and Head of Development Equity Funds at the British Business Bank, said.

Business Secretary Peter Kyle said the investment would support technology businesses in strategic areas of the economy.

"British Business Bank's investment into Longwall Venture's new fund will provide a major boost to start-ups across key growth sectors and is a shot in the arm for the UK's thriving technology sector. This news demonstrates how this Government is using our Modern Industrial Strategy to deliver long-term growth and opportunities that support skilled jobs and raises living standards across the UK," Kyle added.

"The Bank has a longstanding relationship with Longwall Ventures, having made four investments since its inaugural fund in 2008. Longwall's strategy of backing our most promising companies in key sectors helps create more jobs and drives wider economic growth. The Enterprise Capital Funds programme has backed 54 funds to date, highlighting the value of the programme and the positive role it plays in the venture market," said Elizabeth Bailey, Director, Development Equity Funds at the British Business Bank.

For Longwall, the new fund extends a strategy centred on identifying commercially promising, research-intensive businesses at a very early stage. Such companies often emerge from university laboratories, research campuses and specialist industrial teams, but can struggle to secure patient capital from mainstream investors.

"The UK's strong research base across academia and industry has created a rich seam of opportunities to turn groundbreaking science into valuable businesses, but these businesses often struggle to raise long-term capital to support them on their journey to commercialisation. We are excited to find the next crop of deeptech investments for our new fund," David Denny, Managing Partner at Longwall Venture Partners, said.

The British Business Bank said its core programmes support GBP £23 billion in finance to almost 64,000 smaller businesses.