British Business Bank backs IQ Capital’s GBP £50m fund

British Business Bank has committed up to GBP £50 million as a cornerstone investor in IQ Capital Fund V, extending a relationship that has run across all seven of the venture firm's funds.

IQ Capital is a UK-based early-stage deep tech venture capital firm with offices in London and Cambridge. It was founded in 2005. The firm said it has supported more than 250 deeptech founders.

British Business Bank said it has made cornerstone commitments to each of IQ Capital's funds since Fund I in 2006. It said it has also co-invested alongside IQ Capital in four portfolio companies: Thought Machine, Paragraf, CyberSmart, and Cambridge GaN Devices.

Cornerstone role

British Business Bank described itself as the largest investor in UK venture and venture growth capital funds. It said cornerstone commitments can assist a fund in reaching a first close. It also said the commitments can act as a signal to other investors.

IQ Capital said Fund V will continue its early-stage venture strategy. The fund will focus on five areas. These are AI & Automation, Computing & Semiconductors, Health & Bio, Advanced Engineering & Energy, and Security & Resilience.

British Business Bank said it has supported IQ Capital through both its flagship funds and its growth strategy funds. It characterised the relationship as long-standing and said it has worked with the firm across multiple fund cycles.

Deep tech focus

IQ Capital invests from pre-seed through to growth stages. The firm said it leads rounds from pre-Seed to Series A. It also said its growth opportunity funds can follow on with up to $40m.

British Business Bank framed the commitment as part of a wider approach to UK venture investing. It said its role includes backing fund managers and seeking to increase the amount of private capital available for technology businesses.

Christine Hockley, Managing Director and Co-Head of Funds at British Business Bank, pointed to the length of the partnership and the bank's approach to anchor investing.

"We're glad to expand our 20-year relationship with IQ Capital. The success of IQC perfectly demonstrates the long-term impact of the Bank's fund commitments. We invested in their first fund, and the firm has steadily grown into the recognised and respected name it is today. This is why we consistently act as an anchor investor to UK venture capital firms, allowing new funds to get off the ground and helping to create a thriving venture landscape in the long run. It's exciting to think that the first-time fund managers we back today could become the IQ Capitals of tomorrow," said Christine Hockley, Managing Director and Co-Head of Funds, British Business Bank.

British Business Bank Investment Director Chris Smart said the bank's backing reflected its view of IQ Capital's investment record and the wider role of deep tech companies in the UK market.

"IQ Capital has built a strong track record of identifying early-stage deep tech opportunities and supporting companies through critical stages of growth. Our continued support reflects both the strength of their investment approach and the role these companies play in building the UK's technology market," said Smart.

Fund V plans

IQ Capital Managing Partner Max Bautin said the firm has grown during the period of its relationship with British Business Bank. He said IQ Capital has reached £1B AUM.

"The Bank has been a key partner in IQ Capital's successful growth from a start-up to £1B AUM, and we are grateful for their support over the past 20 years. The Bank's investments into our funds have been transformative for IQ Capital and the hundreds of deeptech founders we've backed. This continued partnership enables us to support the next generation of ambitious founders as they build globally significant companies," said Bautin.

British Business Bank said the transaction is operated by British Patient Capital. IQ Capital said Fund V will concentrate on the five stated themes as it continues its early-stage venture strategy.