Key Takeaways
- • UK venture capital funds launched in 2020–2023 vintages achieved a pooled Total Value to Paid-in Capital (TVPI) multiple of 1.22, outperforming comparable US funds at 1.14, signaling stronger performance from newer UK-focused funds.
- • Over a 10-year horizon through end of 2025, UK private capital (PE and VC combined) delivered 15.8% annualized IRR, materially outpacing the FTSE All Share Index (8.4% p.a.) and MSCI Europe Index (10.2% p.a.), demonstrating private capital's long-term resilience.
- • UK venture capital median returns remain in line with European and US peers on a historical basis, though recent vintage cohorts are reversing the trend with UK funds now outperforming on an IRR and multiple basis.
- • European VC funds posted a net IRR of 7.43% in euros, running 52 basis points ahead of North American funds, with European infrastructure funds delivering 5.99% net IRR in 2025, according to PwC and UK Private Capital data.
- • One-year returns for UK PE and VC funds rebounded to 9.5% in 2025 from 2.1% in 2024, while public equities benefited from technology and AI-driven gains, yet private capital's 10-year track record remains the relevant benchmark for institutional allocators.
Summary
UK venture capital performance has converged with and begun to exceed long-term returns delivered by US peers, particularly among funds raised in recent vintage years, according to new performance data from UK Private Capital and PwC. The most significant finding centers on newer fund cohorts: UK VC funds with 2020–2023 vintage years generated a pooled TVPI multiple of 1.22, outperforming comparable US funds at 1.14. This marks a notable reversal, as UK venture capital historically lagged US counterparts on a median returns basis, though recent data indicates median returns across UK, European, and US markets have achieved parity.
The longer-term picture reinforces private capital's structural advantage over public markets. Over the 10-year horizon concluding at end of 2025, UK private capital funds (combining PE and VC) delivered an annualized IRR of 15.8%, substantially ahead of the FTSE All Share Index at 8.4% p.a. and the MSCI Europe Index at 10.2% p.a. This performance disparity persists even on a 5-year basis, where private capital generated 10.4% IRR versus 11.7% for the FTSE All Share, demonstrating that the 10-year window—aligned with typical fund lifecycles—is the appropriate measurement horizon for institutional allocators evaluating private capital commitments.
Within European markets broadly, VC funds posted a net IRR of 7.43% in euros, running 52 basis points ahead of North American funds, while European infrastructure funds achieved 5.99% net IRR in 2025. The 2025 calendar year saw meaningful recovery in one-year returns, with UK PE and VC funds generating 9.5%, a substantial improvement from 2.1% in 2024. This rebound occurred as public equities, particularly technology and AI-exposed segments, delivered outsized short-term gains. Nevertheless, institutional investors and fund allocators should weight the 10-year performance track record more heavily than cyclical annual returns when assessing capital deployment to UK and European venture vehicles.
The data suggests that UK venture capital, long positioned as a secondary market relative to Silicon Valley-dominated US fundraising, has begun attracting institutional capital on merit. Recent fund vintages demonstrate that UK managers, supported by high-growth technology and life sciences sectors, are generating returns competitive with or exceeding US benchmarks on an IRR and multiple basis. This shift may influence LP allocation decisions and position UK venture as a more credible counterweight to US concentration within diversified alternative portfolios.
The longer-term picture reinforces private capital's structural advantage over public markets. Over the 10-year horizon concluding at end of 2025, UK private capital funds (combining PE and VC) delivered an annualized IRR of 15.8%, substantially ahead of the FTSE All Share Index at 8.4% p.a. and the MSCI Europe Index at 10.2% p.a. This performance disparity persists even on a 5-year basis, where private capital generated 10.4% IRR versus 11.7% for the FTSE All Share, demonstrating that the 10-year window—aligned with typical fund lifecycles—is the appropriate measurement horizon for institutional allocators evaluating private capital commitments.
Within European markets broadly, VC funds posted a net IRR of 7.43% in euros, running 52 basis points ahead of North American funds, while European infrastructure funds achieved 5.99% net IRR in 2025. The 2025 calendar year saw meaningful recovery in one-year returns, with UK PE and VC funds generating 9.5%, a substantial improvement from 2.1% in 2024. This rebound occurred as public equities, particularly technology and AI-exposed segments, delivered outsized short-term gains. Nevertheless, institutional investors and fund allocators should weight the 10-year performance track record more heavily than cyclical annual returns when assessing capital deployment to UK and European venture vehicles.
The data suggests that UK venture capital, long positioned as a secondary market relative to Silicon Valley-dominated US fundraising, has begun attracting institutional capital on merit. Recent fund vintages demonstrate that UK managers, supported by high-growth technology and life sciences sectors, are generating returns competitive with or exceeding US benchmarks on an IRR and multiple basis. This shift may influence LP allocation decisions and position UK venture as a more credible counterweight to US concentration within diversified alternative portfolios.
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