Nest has launched a £200m dedicated venture capital (VC) sleeve with Schroders Capital, and plans to invest up to £1bn in VC by 2030, as it looks to increase its exposure to late-stage, high-growth private companies.

The pension scheme said the allocation, made on behalf of its 14 million members, will incorporate existing venture investments and provide fresh capital for new late-stage VC opportunities.

Nest noted the allocation could rise to around £1bn by 2030, subject to the availability of high-quality investment opportunities, with a strong focus on UK-based unlisted companies.

The new sleeve will be tailored and managed by Schroders Capital, building on Nest’s existing private markets strategy and its investments in growth-stage companies since 2022.

Examples of UK companies Schroders Capital has already invested in on behalf of Nest, which will sit within the new VC portfolio, include autonomous driving AI software company Wayve and AI video creation firm Synthesia.

Nest said the new VC sleeve supports its wider ambition to grow private markets exposure to up to 30 per cent by 2030, and forms part of its broader aim to enhance long-term returns through greater diversification, while also supporting UK innovation.

Nest Invest chief executive officer, Mark Fawcett OBE, said: “As Nest has grown, we have continued to evolve our investment approach, opening up new investment opportunities for our members.

“We are delighted to expand this approach further into venture capital, providing injections of cash that growing businesses need to scale.

“As a large, long-term investor, Nest is well positioned to support ambitious private companies. Our members save with us over decades, which allows us to invest patiently and back innovation through different stages of growth.”

Fawcett added that Nest was “particularly drawn” to opportunities in the UK business sector, where support for innovation could drive job creation and economic growth.

“Over the coming years, we will build a more meaningful allocation to late-stage venture capital, giving our 14 million members access to the long-term growth potential that innovative, high-growth companies can offer,” he continued.

“To this end, we are delighted to deepen our partnership with Schroders Capital. Their capabilities across venture and growth investing, combined with their experience investing across the full business lifecycle, make them a strong partner for this strategy.

“We also expect a significant proportion of these investments to be in UK-based companies, something our members tell us they want.”

Meanwhile, Schroders Capital head of private equity investments, Tim Creed, said the partnership created a “strong platform” to identify and support high-quality growth companies.

“The UK is already Europe’s largest venture hub, and the world’s third largest," he continued.

“It is one of the most efficient venture ecosystems globally, growing unicorns at pace - however, domestic capital has not historically participated at the same rate.

“As a global innovation leader, the UK has a significant and largely untapped opportunity to bring this growth to pension portfolios.”

Pensions Minister, Torsten Bell, commented: “Britain creates some of the best, most innovative new companies in the world.

“By channelling pension savings into high-growth UK companies, Nest is backing the entrepreneurs and innovators driving jobs and growth across the country, while delivering better long-term returns for its 14 million members.”

Similarly, UK Private Capital chief executive, Michael Moore, welcomed the announcement, describing it as a “significant and welcome milestone” for the UK VC market.

“It demonstrates growing confidence that backing innovative, high-growth businesses can deliver attractive long-term returns for pension savers while supporting the UK's future economic growth,” he said.

“Commitments of this scale send an important signal to the market that there is a compelling investment case for UK innovation, and we hope it encourages other pension schemes to accelerate their own plans to invest in private capital.”

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