Financing the Real Economy Select Committee Inquiry Response:
Boardwave is the UK and Europe’s leading community of software founders, CEOs, Chairs, and investors and advisors. Founded in 2022 as an independent, not-for-profit social enterprise, our mission is to ensure that the UK and European software sectors can scale globally, compete with the best, and build the next generation of technology giants.
We have grown rapidly to a network of over 2,300 leaders, more than 1,300 of whom are based in the UK, spanning early-stage founders to executives running global, private equity-backed businesses. Our members represent every stage of the software lifecycle, but our core focus is on scale-ups: the mid-stage firms that have outgrown the start-up phase and are now building the foundations for global success.
Boardwave was created to tackle one of the UK tech ecosystem’s most persistent failures: while we are one of the best countries in the world to start a software company, we are not yet one of the best to scale one. We exist to change that, by connecting talent, amplifying founder voices, and advocating for policies that unlock UK scale-up potential.
Boardwave welcomes the Committee’s timely inquiry into growth capital and investment readiness for UK businesses. We believe this issue lies at the heart of the UK’s long-term economic and technological competitiveness, and nowhere is it more visible than in the software sector.
Our central message is this: software scale-ups are the engine room of the UK’s digital economy, but while progress has been made, they are not as well served in the UK compared to the US. Comparatively, they are starved of the capital, liquidity, and support needed to grow from promising innovators into global leaders. As a convening voice of the UK software scale-up community, Boardwave brings together unique lived experience and deep strategic insight into what’s holding these businesses back, and how to fix it.
Today, scale-up leaders face a fragmented and shallow capital market, a constrained public listing environment, limited support for investment readiness, and an absence of structured founder liquidity. These barriers are not theoretical, they are actively forcing the sale, stagnation, or relocation of some of the UK’s most promising firms, in particular to the US.
This submission draws directly on our work with more than 2,300 software leaders, alongside published research and strategic partnerships with institutions such as McKinsey & Company, the Future Governance Forum, OakNorth bank, as well as independent work. It sets out why unlocking scale-up finance is not only an economic imperative, but a strategic one, and offers practical policy recommendations to help the UK become the best place in the world to grow and retain world-class software companies.
Through our work with over 2,300 software CEOs and founders across the UK and Europe, we believe that the greatest pressure point for founders is at the scale-up stage. While early-stage capital for start-ups has improved markedly in the last decade, support shrinks drastically once businesses surpass the seed and Series A phases.
The result is what we define as the “valley of vulnerability”, the £10m to £100m revenue phase where businesses must raise significant follow-on capital to internationalise, professionalise operations, expand into enterprise sales, and compete globally. At this stage, UK firms are too mature for EIS/SEIS and too early or risky for most private equity or institutional capital. There is no policy mechanism, tax incentive, or public financial instrument designed to support this cohort.
The consequence is a pattern of stagnation or premature acquisition (often by US buyers) of firms that could have become long-term British successes.
This challenge is further quantified in the Future Governance Forum report, A Mountain to Scale (2024), sponsored by Boardwave and BVCA, which finds that UK software firms take 17 years on average to reach £100m in revenues, compared to 8-12 years in the US. This slower growth cycle reflects undercapitalisation, not underperformance.
Our joint report with McKinsey & Company, Europe’s Moonshot Moment (2025), reveals that although Europe produces 16% of global software revenue, it captures just 8% of enterprise value, pointing to the same structural weakness: lack of growth capital. Closing this gap could unlock €1 trillion in enterprise value across Europe by 2030. The UK is ideally positioned to lead this transformation, if it can fix its capital architecture.
Our Recommendations:
● Establish a Scale-Up Investment Scheme, modelled on EIS but aimed at £10m+ revenue firms, to attract growth-stage capital.
● Providing a path to partial liquidity for businesses during scale-up, enabling founders and management teams to ‘remain in the game’ for longer, and not sell their business or technology to larger firms based in other countries.
● Empower the British Business Bank with a direct scale-up mandate, enabling co-investments at Series B+ in software and AI firms.
● Incentivise UK pension funds to allocate capital to private growth equity through clear regulatory direction and return targets.
In short: no. The UK’s public markets are often poorly matched to the needs of high-growth, innovation-led firms. This failure is not just regulatory, it is cultural, structural, and financial.
The UK’s top 100 listed companies include just one software firm. In contrast, 36 of the top 100 US public companies are software-based. This dramatic imbalance stems from three core issues:
McKinsey & Company’s Europe’s Moonshot Moment report notes that Europe is home to just 14% of global software unicorns, and even fewer go public domestically. This reflects both poor late-stage funding and an unattractive listing environment.
In our engagement with founders, listing on NASDAQ is consistently seen as the superior choice for technology firms. The perception is that the US market offers higher valuations, more liquidity, and a better investor base. Unless corrected, this will continue to drain UK intellectual property and post-IPO wealth creation abroad.
Boardwave Recommendations:
● Reform listing rules to support dual-class shares and founder control for up to 10 years.
● Eliminate Stamp Duty Reserve Tax (SDRT) on share transactions to enhance trading liquidity.
The UK’s early-stage VC market is globally competitive. However, the growth-stage capital gap between £10m–£100m raises is significantly less impressive, in particular in comparison to the US. Venture capital availability drops dramatically at the Series B stage, particularly for capital-intensive models (deeptech, AI, enterprise SaaS) that require patient capital and larger rounds.
In the A Mountain to Scale Report (2024), the Future Governance Forum highlights that 85% of late-stage VC globally flows to US firms, and just 14% of European unicorns are able to reach a successful listing or private equity milestone. UK firms rely heavily on US funds for Series C+ rounds, weakening domestic control and opening the door to early M&A (mergers and acquisitions).
This is compounded by conservative SME lending practices. Challenger banks capable of supporting scale-ups with revenue-based lending are hindered by regulations like MREL (Minimum Requirement for Own Funds and Eligible Liabilities), which disproportionately impact mid-tier banks in the UK. This significantly limits available credit for asset-light, IP-led software businesses.
Even where bank lending is technically possible, traditional underwriting models fail to account for subscription-based revenue, annual recurring revenue (ARR), and software margin dynamics, leaving tech firms classified as high risk by default.
Boardwave Recommendations:
● Implement MREL reforms to reduce regulatory burdens on non-systemic mid-tier lenders.
● Fast-track IRB (Internal Ratings Based) accreditation for challenger banks to enable tech-forward SME lending.
US capital markets are not just larger, they are better designed to support the growth trajectory of innovation-led firms. Our analysis highlights key distinctions:
● Deeper pools of capital: US funds manage significantly larger portfolios, enabling sustained follow-on investments at Series C, D and beyond.
● Institutional buy-in: Pension funds and university endowments in the US invest meaningfully in late-stage venture and crossover funds. UK equivalents are only beginning to experiment in this space.
● Cultural reinforcement: Silicon Valley’s “founder factory” ecosystem recycles capital and experience efficiently. The UK lacks this systemic flywheel due to early exits and limited liquidity opportunities.
Furthermore, US financial instruments are more founder-friendly. Simple Agreement for Future Equity (SAFE) notes, convertible rounds, structured secondaries, and option pool flexibility are all more common and better understood. This allows entrepreneurs to retain control while continuing to grow. UK deals, in contrast, are often over-lawyered, punitive, and tend to dilute ownership at the later stages.
On the public markets side, US exchanges offer higher liquidity, greater analyst coverage of growth sectors, and more favourable regulatory frameworks.
Boardwave Recommendations:
● Deliver Mansion House pension reforms with mandatory 5% allocation to UK growth equity within five years.
● Empower the British Business Bank to operate more like BPI France, with discretion to lead rounds and set valuation benchmarks.
Survey data from Boardwave members shows that barriers to scale are not only about access to capital, but also about the ability of firms to present themselves as investment-ready. This readiness is shaped by three main factors: skills, adoption, and visibility.
Skills and Leadership Gaps: UK leadership teams lack critical AI, cloud, and digital transformation skills. September 2024 data from our members confirmed AI as the top concern for businesses across both early scale-up (£10m–£25m ARR) and leader (£100m–£200m ARR) phases.
Back in 2023, the ONS reported that 85% of UK firms were not using AI and 83% had no plans to adopt it within three months. A more recent 2025 study from MoneyPenny, sampling 750 UK businesses, has found that 39% of businesses are now using AI, with another 31% considering its implementation. This is promising progress, but those businesses yet to implement the technology will struggle to present credible growth stories to investors. We have therefore called for government to expand AI-focused upskilling, including reforming the Growth and Skills Levy and widening access to the Flexible AI Upskilling Fund.
Technology Adoption as Investor Validation: As we set out in our Whitepaper (2024), UK corporates spend six times more on US software than UK alternatives, starving domestic firms of validation that investors seek. This problem can be corrected through public procurement: allocating at least 5% of government digital and AI contracts to UK scale-ups would demonstrate confidence, improve visibility, and enhance investment-readiness.
Visibility and Networks: Access to investor networks is one of the biggest barriers to investment readiness, particularly for underrepresented founders. The British Business Bank found that all-female teams secured just 2.1% of UK VC funding in 2022, while Extend Ventures showed Black women received only 0.02%. The UK Business Angels Association (2023) highlights that just 14% of UK angel investors are women, reducing both capital flows and mentoring opportunities. Even in 2023, PitchBook data showed female-led tech start-ups received only 3.5% of VC funding, despite evidence they deliver higher returns.
To close these gaps, government and industry should support the creation of structured mentorship and networking programmes, ensuring that founders from underrepresented backgrounds gain direct access to investors, board-level mentors, and procurement opportunities. This would strengthen visibility, credibility, and ultimately the investment readiness of a far broader pool of UK scale-ups.
Our Recommendations
● Expand AI and digital upskilling by reforming the Growth and Skills Levy and widening eligibility for the Flexible AI Upskilling Fund.
● Leverage procurement by reserving 5% of government digital and AI contracts for UK scale-ups.
● Establish a national mentorship network in partnership with industry to connect scale-up founders with experienced peers, CFO-level advisers, and investors.