The British Business Bank and NatWest have reached a significant agreement to invest in Phoenix Court, a prominent UK venture capital firm, marking a notable development in the country’s efforts to channel more domestic capital into growing businesses. The deal is described as a “watershed” moment, reflecting increased collaboration between public and private financial institutions to foster innovation and economic growth.

Under the arrangement, both the British Business Bank and NatWest will invest in Phoenix Court funds alongside HSBC and M&G. This marks NatWest’s first-ever venture capital fund investment, while HSBC and M&G have previously participated in Phoenix Court’s funding rounds. The British Business Bank has committed £50 million, with the combined investment from all parties expected to total several hundred million pounds, though the exact amount remains undisclosed.

The British Business Bank was established in 2014 by the coalition government with the aim of deploying public funds to support fast-growing UK businesses. The Labour government subsequently expanded its capabilities significantly, increasing its budget from £15.3 billion to £25.6 billion and setting a goal of investing roughly £2.5 billion annually. Recent policy directives have emphasized allocating more than 60 percent of funding to scale-up companies and enhancing the bank’s ability to co-invest alongside private sector partners.

Saul Klein, co-founder of Phoenix Court, emphasized the importance of the deal, noting the rapid pace of the UK’s innovation economy. He highlighted that it is a pivotal moment with major financial institutions, including high street banks, collaborating to unlock the potential of the market.

Data from HSBC indicates that UK start-ups raised $17 billion in the first half of 2026, surpassing the combined total raised by France, Germany, and Sweden. Despite this strong fundraising environment, only 30 percent of capital for funding rounds exceeding $100 million originated from within the UK. The figure declines further to 16 percent when considering funding rounds above $250 million. This suggests a reliance on foreign investment for the largest funding events, a point of concern for those seeking to boost domestic capital availability.

The new investment by state-backed and private banks into Phoenix Court is aimed at addressing this gap by increasing the amount of UK-based capital available to support high-growth companies, potentially reducing dependence on foreign investors while accelerating innovation and economic expansion.