Bethnal Green Ventures acquired by B Corp asset manager in move to tap pension funds
The UK’s Bethnal Green Ventures has been acquired by asset manager Connected Asset Management in an unusual deal that will allow tech for good startups to tap into the financial heft of pension funds.
In the past few years Bethnal Green Ventures has invested £1m to £2m a year in startups, CEO and managing partner Paul Miller (pictured above centre) told Pioneers Post. The acquisition, announced today for an undisclosed sum, “straightaway means that next year we’ll be able to invest over £10m. So it's a big step up for us”.
The pensions industry is heavily regulated, and Bethnal Green Ventures had until now been “too tiny”, Miller said, to access the pension fund market, worth £3trn in the UK alone. Joining Connected was a chance to be part of “something bigger”.
We are competing with mainstream VC investors, so it was important to us that we had the same financial firepower
“Tech for good is becoming mainstream, and actually we are competing with mainstream VC investors, so it was important to us that we had the same financial firepower that they did.”
Created in 2012, Bethnal Green Ventures has since invested in 141 companies including sustainable smartphone maker Fairphone, patient platform DrDoctor and campaigning platform Organise. It was the first UK VC to become a certified B Corp in 2015, and last year was the fifth-most active VC in the UK and Ireland, by number of deals.
London-based Connected Asset Management was set up in 2019 by Darren Agombar, who also co-founded pension provider Smart Pension. Agombar first approached Bethnal Green Ventures a few years ago, and the “real alignment” of objectives led to acquisition talks, Miller said.
Rather than increasing the number of investees, the capital boost will provide more follow-on investment, with the goal of filling the post-startup financing gap, Miller said.
“This really enables us to step in and potentially to lead pre-seed and seed rounds into companies that we’ve backed at that startup stage.”
The acquisition is an unusual one – “certainly the first big exploration from the point of view of a pension fund asset manager into tech for good”, according to Miller.
His firm would retain independence under the Connected umbrella, he said, with the tie-up not affecting its existing funds or investors (these include Nesta and Big Society Capital). It expects to hire a few more staff over the next six months.
Connected’s B Corp status – achieved last year – offered some assurance that it would not “water down” Bethnal Green Ventures’ focus on social impact, said Miller. The deal had also safeguarded that commitment: Bethnal Green Ventures joins the board of Connected and had “complete control” over who invests in its funds. “The investment strategy of BGV is completely up to us.”
Agombar said the deal would allow pension savers to “also benefit from the high returns that investing in these firms can offer over the longer term whilst helping to deliver positive social and environmental change”.
Despite the prospect of reform to allow DC pension funds to invest in this type of illiquid investment, it is still something very few providers have managed to do
He added: “Despite the prospect of progressive regulatory reform to allow DC [direct contribution] pension funds to invest in this type of illiquid investment, it is still something very few providers have managed to do, preferring to invest in listed and passive investments that are cheaper to manage.
“We hope by taking the lead and demonstrating that investing in companies with good corporate governance, positive climate change principles and social purpose, is not just a question of values, it is evidence of doing good business and a source of untapped financial returns.”
Evita Zanuso, a senior director at Big Society Capital – whose investments in Bethnal Green Ventures reached £2.25m in 2019 – said the deal had “significant potential to enable further scale and impact by unlocking pension fund investments into impactful businesses. Also exciting is its potential to enable pension fund members to access investment opportunities in the tech for good space that have not been accessible to date.”
Header image, left to right: Melanie Hayes and Paul Miller, managing partners at Bethnal Green Ventures, and Darren Agombar of Connected Asset Management
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