New £1 Billion UK Scale Up Fund! Railpen and Nest Open Talks With British Business Bank

Ask a UK founder why the biggest cheques in a later funding round tend to come from Boston or San Francisco rather than London, and the honest answer usually comes back to where the money sits. A proposal now on the table from two of Britain's largest pension providers is aimed directly at that problem.

Railpen and Nest, working alongside the British Business Bank, are in talks to launch a new £1 billion investment vehicle dedicated to backing British tech scaleups, according to Sifted. The proposed UK Scale Up Fund would be a first of its kind vehicle designed to help homegrown startups commercialise, expand internationally and create jobs, funded by the retirement savings of millions of UK workers.

The timing is pointed. The talks were announced just weeks after Sifted revealed that France was seeking to block UK participation in the EU's own €5 billion Scaleup Europe Fund, a move that cast doubt over British startups' access to one of the continent's biggest emerging pools of late stage capital. A domestic alternative, even a modest one relative to the scale of UK pension assets, gives homegrown scaleups a fallback that does not depend on goodwill from Brussels or Paris.

In a statement released on Monday, Prime Minister Andy Burnham described the proposal as a vote of confidence in British business, British talent and British ambition.

He said the fund would help unlock good growth in every postcode, connecting pension investment with the entrepreneurs and technologies that will reindustrialise Britain and create the jobs of the future.

Railpen chief executive Andy Bord said the fund's priority is always to deliver strong long term outcomes for members, adding that the UK Scale Up Fund represents a compelling investment opportunity where disciplined, patient capital can help growing companies scale. Nest chief executive Ian Cornelius said there is an important role for pension capital in helping successful UK businesses access the funding they need to grow.

The proposal follows years of debate over Britain's shortage of domestic growth capital.

The UK has one of the world's largest venture capital markets by deal volume, yet many of its most successful startups still depend on foreign investors once they reach later, capital intensive stages of growth. Founders, investors and policymakers have repeatedly called for UK pension funds, which collectively manage well over a trillion pounds, to play a larger role in backing the companies growing in their own back yard.

That call has so far produced modest results. Analysis published this month by Startup Coalition found that UK pension default funds had invested just 0.6 per cent of assets in private markets under the Mansion House Accord, the voluntary commitment struck by 17 of Britain's largest workplace pension providers to put 10 per cent of default funds into private markets, including venture capital, by 2030. A dedicated, purpose built vehicle such as the proposed UK Scale Up Fund sidesteps some of the governance and liquidity objections that have slowed pension providers' broader private markets commitments, since it is designed from the outset around long duration, growth stage investment rather than retrofitted onto funds built for daily traded assets.

For founders, the practical impact will depend on details that have not yet been made public: cheque sizes, sector focus, governance, and how quickly committed capital actually reaches operating companies rather than sitting in the fund structure. The proposal is, for now, a set of talks rather than a live fund. But it lands as one of the clearest signals yet that Britain's pension providers see scaleup finance as a strategic priority rather than a niche allocation, and as a direct answer to the anxiety that UK founders' growth capital increasingly originates overseas.

Key Takeaways

• Railpen and Nest are in talks with the British Business Bank on a new £1 billion UK Scale Up Fund dedicated to domestic tech scaleups.

• The proposal follows France's attempt to block UK participation in the EU's own €5 billion Scaleup Europe Fund.

• It responds to years of pressure for UK pension capital to back domestic growth stage companies, an area where the Mansion House Accord has so far delivered limited results, with just 0.6 per cent of default fund assets in private markets.

• The fund remains a proposal rather than a launched vehicle. Cheque sizes, sector focus, governance and access criteria have not yet been disclosed.

• For founders, it signals a potential new pool of patient, UK based late stage capital, though the timeline for when committed capital would actually reach operating companies is still unclear.