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British Business Bank boosts late-stage UK scale-up funding

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KAREN JOY BACUDO

Finance Editor

The British Business Bank has invested more than £600 million directly in more than 50 UK science and technology scale-ups, marking a sharp increase in the state-backed lender’s late-stage investing activity.

Direct equity investments have more than doubled from £290 million in October 2025 to more than £600 million, with more capital deployed in the past nine months than in the previous four years combined. The direct equity portfolio has grown from 31 companies in March 2025 to more than 50.

The expansion is part of a broader effort to address gaps in Britain’s late-stage funding market, where high-growth businesses have often looked overseas for larger rounds of capital. The bank is on track to invest more than £400 million a year through direct equity under a plan to commit £2 billion over five years.

Since making its first direct equity investment in Quantexa in 2020, the institution has built a portfolio spanning life sciences, deeptech, advanced manufacturing, clean energy, defence, artificial intelligence and fintech. Those are sectors policymakers and investors see as strategically important to the UK economy.

Latest figures also show a marked rise in deal activity. The bank completed 18 new investments and 18 follow-on investments in the 2025-26 financial year, compared with 12 investments the year before. Total investment rose 2.5 times year on year, from £75 million to £188 million.

The increase comes as ministers and public finance bodies seek to keep more scaling companies in Britain, while pension funds, insurers and other domestic institutions face pressure to commit more money to growth businesses. A longstanding concern in UK venture finance has been the relative scarcity of large domestic funding rounds for companies moving beyond the early stage.

The British Business Bank, the UK government’s economic development bank, has become a more active participant in later-stage financing through its direct equity programme. The strategy envisages deploying about £2 billion a year into the UK venture capital market overall, with about 20%, or roughly £400 million, earmarked for direct equity deals.

Under the model, the bank expects to make between 14 and 18 new investments a year. Initial cheque sizes typically range from £10 million to £40 million, with cumulative investments over time reaching up to £75 million.

Capital gap

The bank has framed the expansion as a response to structural weaknesses in the UK funding landscape. Britain has produced a steady flow of venture-backed companies in areas such as AI, life sciences and financial technology, but many founders and investors argue that the market still lacks enough later-stage capital to support growth at home.

The issue has fueled a broader debate about how to capture more of the economic value generated by British research and start-ups. Public policy has increasingly focused on whether promising domestic firms can remain headquartered in the UK and expand rather than shift abroad as they mature.

“Supporting UK scale-ups is a national economic imperative. The UK excels at creating businesses, but our domestic capital base has yet to match our scientific excellence. Our activity should be interpreted as a clear signal to UK institutional capital that we want them to join us in backing UK scale-ups. We now have fuel in the tank and intend to put UK innovation in fifth gear,” said Leandros Kalisperas, Chief Investment Officer at the British Business Bank.

The bank’s direct equity team has also linked the larger annual target to the number of venture-backed businesses that are now reaching the stage where they need larger rounds. That shift has increased pressure on both public and private investors to provide later-stage support in a market where overseas capital has often played an outsized role.

“We are accelerating our ambitions to match the calibre of UK innovation. By investing £400 million per year into the most exciting venture-backed UK scale-ups across life sciences, deep tech, AI and fintech, we aim to act as an ecosystem multiplier and ensure the most innovative UK businesses have the capital and support to scale rapidly,” said Charlotte Lawrence, Managing Director and Head of Direct Equity at the British Business Bank.

The government has presented the increase in direct investment as part of its industrial policy agenda, linking scale-up finance to economic growth and business retention in the UK.

“We are ramping up the pace and scale of investment, backing the UK’s highest-growth scale-ups at a level not seen before through our modern industrial strategy. By more than doubling investment in just nine months, we’re giving firms the firepower they need to stay and scale here in the UK and drive the economy,” Peter Kyle, Business Secretary, said.



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Oxfordshire Post Office duo set leaving date after rent spat

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Rana and Swarn Lally, who run the Woodstock Post Office – which is also a community shop – have said they will not renew their lease in 2028 after an argument with the council about the Park Street property.

The pair are popular figures within the community and have been running the Post Office for more than two decades.

READ MORE: Police reveal Tommy Robinson Oxford Union debate cost £100,000

The dispute came about earlier this month when Woodstock Town Council reportedly attempted to significantly hike the rent for the post office building which it owns, although the council has denied this.

A petition was organised against the move which said: “Our Post Office is a valued local service that provides essential facilities for residents, businesses and visitors.”

Woodstock.Woodstock (Image: Cotswolds)

It was signed by over 230 people and handed to the town council.

By this time an Extraordinary Town Council Meeting had been held on Tuesday, June 16 which was controversially kept confidential.

After it a new deal was agreed with Mr and Mrs Lally by which the Post Office shop and the flat above would be separated into two distinct units.

The former will be retained by Mr and Mrs Lally, with a £2,000 increase to £13,000 per annum, while the latter will be rented out to a different party.

Mr Lally said: “I am quite happy with the deal.”

However, on the council’s conduct he was less than satisfied.

Rana Lally of Woodstock Post Office (Image: Tim Hughes)

“The way they have gone about this,” he said. “I do not want to be their tenants anymore and I will not renew the lease in this property”.

The 68-year-old added: “Nobody from the council informed me about what was going on. All I got was emails from the estate agent.

“A few nights we had no sleep.”

When the immediate future of the Post Office was in doubt, multiple members of the community spoke out about the potential “tragedy”.

Lady Marie Stubbs said it would be “disastrous”.

She said: “It is a significant part of Woodstock and the people who run it are wonderful.

“It’s important; it’s accessible to elderly people, you can get your currency there before you go away.

READ MORE: Over 2,000 soldiers to fight in Battle of the Cotswolds near Clarkson’s Farm

“It meets the needs of a huge number of people. It would be a tragedy if it were to go.”

A local businesswoman added: “Everyone knows the couple and it would be a huge loss to the town.

“People who come to Blenheim use it; it’s a big part of what keeps the town vibrant.”

Speaking about the reaction of the community, Mr Lally thanked local people and said it was “absolutely brilliant”.





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Martin Lewis warns over broadband bills price rise trap

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Speaking on BBC Radio 4 ahead of a House of Commons Public Accounts Committee hearing, the Money Saving Expert founder said customers should know exactly what they’ll pay when they sign a contract.

“I’d love to see all price hikes banned during fixed contracts,” Lewis said. “But I accept that companies argue their costs can change. A fair compromise is simple: don’t allow prices to rise by more than inflation during the contract.”

Lewis believes such a rule would leave “99 per cent of consumers better off” while still allowing firms some flexibility if costs increase.

The consumer champion was particularly critical of broadband contracts, where two-year deals have become the norm.

“If you’re signing up for 24 months, you now have to factor in two separate price rises just to work out what the contract will really cost,” he said.

He also warned that the cheapest deals are rarely available directly from providers.

“The biggest savings usually come through comparison sites because they include marketing incentives like gift cards or cashback that aren’t available if you go direct.”

Lewis said one of the biggest flaws in the current system is that providers can still increase prices after customers have signed a contract.

Although firms must tell customers in advance, he argued the rules don’t work in practice.

“Most people don’t react when they receive a notification email. They react when they see the higher bill land. By then, the 30-day window to leave penalty-free has often expired.”

He wants customers to be given two opportunities to cancel without paying exit fees: once after notification of a price rise, and again after the increased bill arrives.


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Lewis also criticised Ofcom’s current pricing rules, saying they had failed to deliver for consumers.

“Seventy-five per cent of people are paying more under the new system than they did under the old one,” he said, citing MoneySavingExpert analysis of 45,000 broadband and mobile tariffs.

“Almost everyone is seeing above-inflation increases during their contract. That’s simply not fair.”

An Ofcom spokesperson said the regulator shared Lewis’s aim of ensuring consumers receive telecoms services “at a fair price”.

The regulator said its rules were designed to give customers “complete clarity upfront” about the prices they would pay throughout their contract and confirmed it will carry out an in-depth review of the pricing transparency rules, with findings due to be published next year.





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The Candy Garage doubles sales after logistics shift

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The Candy Garage has doubled sales after partnering with Diamond Logistics and moving to outsourced fulfilment.

The Lincoln confectionery business, founded by Gemma Faye Bell, began as a £30 venture selling pick ‘n’ mix, freeze-dried sweets and American confectionery to local customers. Demand spread across the UK through the brand’s social media presence, helping the business reach £130,000 turnover in its first year while expanding its product range.

Since joining Diamond’s network, shipping volumes have increased from one courier collection a week to daily collections. The business has also recorded 30% year-on-year growth, hired a part-time employee and become VAT-registered.

Bell had previously managed most of the operation herself, including administration, mixing sweets, packing bespoke orders and making deliveries across Lincolnshire. As volumes rose, she could spend up to three hours a day on the road.

Before the change, the business used mainstream parcel carriers directly. Bell said that often meant taking parcels to regional depots herself because order volumes did not meet minimum collection thresholds, while delivery queries could involve long waits for a response.

The Candy Garage then began working with Fleetline Despatch, Diamond Logistics’ network partner in Lincoln, led by Managing Director Bob Fenwick. The arrangement gave the retailer a local collection service and access to Diamond’s shipping platform, Despatchlab.

Bell said the company’s early growth quickly put pressure on operations.

“Having initially started The Candy Garage four years ago, the business almost took off overnight and as such I very quickly went from managing a small volume of orders per week to demand increasing tenfold.

“It got to the point where it was becoming a struggle to manage everything as not only was I dealing with general administration, mixing sweets and packing orders – most of which were bespoke – but I was then jumping in the car to make deliveries across the breadth of Lincolnshire,” said Gemma Faye Bell, Founder, The Candy Garage.

Logistics shift

Bell had been cautious about handing over deliveries because she feared outsourcing could weaken the close relationships she had built with customers. The brand has grown around her direct role in mixing sweets, packing orders and acting as the public face of the business.

She said the logistics arrangement had not changed that identity.

“I was largely hesitant about handing over the keys to our logistics and delivery operations as I was worried we would lose the personal touch because I’m very much the face of the brand, with all the sweets being mixed by me and I was also at the heart of the day-to-day running of everything from packing orders to delivering them myself,” said Bell.

“Realistically, people can buy sweets anywhere, but customers have bought into The Candy Garage brand and what we’ve built over these past few years. Thankfully, because of Diamond’s culture and its focus on retaining that human element, I haven’t lost that connection with our customers at all.

“Aligning with them has given me back time to focus on growing the brand, as managing it all on my own was completely unsustainable, while still feeling like we’re delivering that same personal, hands-on service our customers expect and deserve. It has also given me more time to focus on marketing, wholesaler relationships and expanding the brand’s presence on a national scale,” said Bell.

Single system

Despatchlab now pulls through customer orders each morning, allowing invoices and shipping labels to be generated from one system before same-day collection from Diamond’s Lincoln depot. For a small retailer with growing order volumes, this reduces manual administration and cuts the time spent dealing with shipment issues.

Bell said visibility over consignments had improved, making it easier to identify problems and contact support with the relevant details. She contrasted that with previous arrangements, where customer service delays could leave orders unresolved for long periods.

“Working with Diamond has given me the time to really push the business forward. In many ways they’ve been a lifesaver, as they’ve helped the business scale without losing any of our identity, and the customer experience has actually improved.

“With everything managed through Despatchlab, I also have full visibility over orders and shipments in one place, so if there is ever an issue, which is rare but does occasionally happen, I can quickly pick it up, contact the Diamond team with the consignment details, and it’s usually resolved within around 30 minutes.

“That for me was a huge breath of fresh air as before working with Diamond, resolving delivery issues could be incredibly time-consuming and stressful. Now, I know there’s a dedicated team on hand that understands our business and can deal with things quickly, which gives me real peace of mind,” said Bell.

The figures add to evidence that outsourced logistics is becoming more central to smaller eCommerce businesses as they move beyond the start-up stage. For companies built on direct-to-consumer sales, fulfilment can quickly become a constraint when order growth outpaces a founder’s ability to manage picking, packing, dispatch and customer service alone.

At The Candy Garage, the operational shift appears to have created more time for Bell to focus on marketing, wholesaler relationships and broader brand development, while daily collections have replaced the weekly dispatch pattern of its earlier growth stage.



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