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Falling startup valuations drive ‘unrealised’ losses at British Business Bank 

British Business Bank valuations
BBB CEO Louis Taylor

Falling UK tech startup valuations have led to an annual £122m paper loss at the state-owned British Business Bank.

The development bank, which invests primarily in SMEs across the UK through partners such as VCs, posted a loss 10% lower than in 2023.

British Business Bank CEO Louis Taylor said much of the loss at the bank is “unrealised” due to a short-term drop in UK tech valuations over the past two years. So-called paper losses are theoretical until an exit event for the asset.

Taylor said given the context of the market conditions, the bank performed “above expectations”.

The chief executive pointed to the £2.3bn of funded commitments to back British SMEs and the expected 39,400 new jobs and £8.4bn of gross value-added stemming from its 2023 activities.

Taylor added that valuations of the bank’s investments are expected to rise over the five-to-10-year investment period “as we enter a period of recovery and economic growth”.

Stephen Welton, chair of BBB, said: “This is an especially exciting time in the Bank’s development, with more being asked of us at a time when driving longer-term investment to support the growth economy is so critical.

“I look forward to working with the Board and the executive leadership team, and other key stakeholders, as we look to increase the scale, effectiveness and impact of the bank.”

BBB was highlighted as a significant organisation by the Labour Party in its general election campaign.

The party said in reports ahead of coming into power that it would support a more autonomous BBB that could pursue longer-term goals without requiring state approval for all strategic changes.

These calls were echoed by the Private Business Commission and the think tank the Entrepreneurs Network in a separate report.

Labour also indicated in its Financing Growth report last February that it would implement new key performance indicators to “ensure they provide access to SME financing across all regions”.

Read more: Investors shouldn’t fear slow years, says British Patient Capital MD

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