The final panel of Parliament's AI inquiry examined a familiar UK pattern: strong early momentum, thin domestic backing at scale, and too many reasons for the best companies to look elsewhere as they grow.

Amy Wilson Wyles

April 2026

The final panel of the Business and Trade Select Committee's inquiry into Artificial Intelligence, Business and the Future of the Workforce turned to one of the most commercially urgent questions in the whole discussion: what will it actually take for AI companies to grow and scale in the UK, rather than being built here early and backed elsewhere later?

Giving evidence were Simon Menashy, General Partner at MMC Ventures, Karim Palant, Director of External Affairs at the British Private Equity and Venture Capital Association, and Phill Robinson, co-founder and chair of Boardwave.

The earlier panels had covered frontier models, infrastructure and energy. What this final session brought into focus was more structural: Britain is good at producing promising companies, but far less reliable at helping them become globally significant businesses on home soil. The gap between a strong start and a fragile middle is not a new observation but in the context of AI, the cost of repeating the pattern has never been higher.

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The early stage is stronger. The middle is where things can break.

There was genuine recognition in the room that the UK has improved meaningfully at the earliest stages of company building. Seed capital is more available than it was five or ten years ago. The ecosystem is more mature. More founders are building with global ambition from the outset. The AI wave has only intensified that early momentum.

But the picture shifts as companies grow.

As Menashy pointed out, for the top five percent of the most exciting growth companies in the UK, there is now a meaningful amount of capital available at the early stages. The score, as he put it, starts high - perhaps a nine or ten out of ten for early-stage support - and drops quite quickly once businesses begin to scale. By the time companies are approaching IPO scale, the UK's score looks considerably less impressive. The support infrastructure that works well at the start does not keep pace as ambitions grow.

Robinson put it plainly: the UK has become better at starting companies, but still struggles to turn promising businesses into globally significant technology players. The barriers are not only financial. They include confidence, access to markets, talent, and the practical complexity of scaling across multiple geographies - all of which compound in the long stretch between early momentum and true scale. It is precisely this stretch, where support pulls away and challenges multiply, that Boardwave was built to address, connecting the founders, CEOs and investors who have navigated it before with those navigating it now.

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Pension capital: the numbers that should embarrass us

The most substantive exchange in the session concerned pension capital and the chronic absence of domestic institutional money from later-stage UK growth.

Palant put hard figures on a problem the sector has been circling for years. Once companies need serious growth cheques (the kind of capital required to commercialise at scale and expand internationally) around 95% of that funding is still coming from international venture capital, predominantly from the US. International pension savers represent roughly 22% of all investment into UK venture and growth equity. UK pension savers account for about 1%.

That is a structural failure with direct consequences: value creation travels with the capital. So does influence. So does the gravitational pull on founders deciding where to build the next phase of their business.

Why has domestic pension capital stayed away? The explanation points to a combination of regulatory structure, fee constraints and market incentives. Pension schemes have been competing primarily on cost rather than outcomes (an employer will opt for the best immediate terms rather than more expensive ones with longer-term growth), which pushes them towards passive, low-fee strategies and away from active investment in growth businesses. The schemes that should be natural long-term backers of UK innovation are instead sitting on the sidelines while American institutions take the positions, and the returns.

The panel was broadly supportive of current pension reform efforts, including the Mansion House Compact, which asks large pension schemes to allocate 5% of their default funds to unlisted equities by 2030. But the mood was clear: progress is moving too slowly, and the pressure for reform needs to intensify rather than ease. The prize: potentially doubling the flow of domestic capital into UK growth equity - is large enough to change the national picture entirely.

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The scale-up problem is a system

The UK's scale-up problem is not only about funding. It is about the entire environment companies encounter once they move beyond the start-up phase.

Support schemes tend to look strongest at the beginning. As businesses grow, they run into a more fragmented reality. Hiring becomes more complex. International expansion exposes policy gaps. Domestic backing looks shallower. And critically, some of the very schemes designed to support UK companies (tax incentives, visa frameworks, investment structures) begin to break down the moment a company starts to succeed at scale or expand into the US.

That is not always a policy design problem, Robinson noted. Sometimes it is an enforcement and interpretation problem: rules that were not written with genuinely scaling businesses in mind, applied in ways that penalise exactly the companies that should be celebrated. The result is a system with structures that say they want growth but actively create friction for the companies achieving it.

Menashy pointed to market access as another pressure point. For years, US companies benefited from a single, deep domestic market that allowed them to scale before going international. UK companies have typically had to move across multiple European markets sequentially, each with its own regulatory and commercial landscape, which slows momentum and increases complexity at precisely the moment when speed matters most.

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Keeping more of the upside at home

The deeper question running through this session was not just whether the UK can produce great companies, but who ultimately benefits when those companies succeed.

In the most mature ecosystems, the answer compounds over time. Founders who exit businesses go on to back others, start again, mentor the next generation and deepen the market around them. Capital and experience recycle. The US has been running this loop for long enough that the later-stage infrastructure including: the large growth funds with experienced founders in them and the dense networks of angels who have made the journey, is now deeply embedded.

The UK has some of this. It does not yet have enough of it at the scale required. And there is a cautionary lesson in how other markets have handled the tension between protecting domestic companies and letting them grow. France spent several years aggressively blocking potential acquisitions on competition grounds, with the effect of suppressing some promising businesses rather than protecting them. The instinct to guard what you have built can, if applied clumsily, end up limiting the very companies it was meant to support. The UK has largely avoided that trap but the broader point holds: keeping upside at home requires building the conditions for growth, not just defending against external capture.

Menashy proposed a targeted mechanism to accelerate the flywheel: a tax incentive for founders and investors who reinvest gains from a UK exit back into UK startups or growth companies, rather than paying capital gains immediately. The principle is already used in Sweden and Estonia. The effect would be to keep experienced capital and talent in the domestic ecosystem rather than exporting the gains that were built here. It is the kind of relatively small policy change that could drive significant behavioural shifts, and crucially, it would reinforce the cultural change that makes experienced founders want to stay involved and reinvest rather than simply exit and move on.

Building that compounding effect: connecting experienced operators with the companies coming behind them, keeping capital and hard-won knowledge in the domestic ecosystem is also one of the central things a community like Boardwave can do that policy alone cannot. The peer relationships and knowledge-sharing that happen inside a network of 2,000+ European tech and AI CEOs are part of how the flywheel starts to turn faster, independent of whatever reforms eventually make it through Parliament.

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AI adoption in the wider economy may matter as much as frontier success

The panel's most useful passage moved the conversation away from venture-backed AI companies and towards the broader economy.

Palant pointed to government research suggesting that around one in six mainstream UK businesses has implemented AI in some form, a figure that puts the UK around twelfth among the countries surveyed. The Chancellor has spoken publicly about making the UK the fastest in the G7 for AI adoption. The gap between that ambition and the current reality is wide.

The barriers for most businesses are informational. Companies do not know where the value sits for them. They do not know what use cases are relevant to their sector. They are uncertain about regulatory implications. They need sign-posting, practical guidance and accessible support, not broad encouragement to embrace the future.

Robinson reinforced this from direct experience. The opportunity runs directly through the existing software industry: a large, revenue-generating, globally competitive base of companies that built on the cloud and now need to migrate into an AI-first world. Those companies have deep domain expertise, established customer relationships and genuine commercial scale. Supporting them to make that transition quickly is one of the most valuable things the UK could do right now. Without it, a significant part of the country's existing tech advantage risks being stranded.

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The representation gap

One thread in the session that deserves more than a footnote is the persistent underrepresentation of women in venture capital, and it was Robinson and Menashy who brought it to the fore, reflecting a priority that sits at the heart of Boardwave's own work.

The numbers among VC investors themselves have moved somewhat since the early 2010s. There is slightly more diversity at junior levels. But a strong preponderance of similar profiles persists at senior levels. Among the founders being backed, the picture for women remains poor. Investment in women-led businesses consistently underperforms relative to the opportunity, shaped more by pattern-matching and network proximity than by evidence of returns.

Palant pointed to a government-backed fund of funds designed to invest in diverse venture funds, alongside transparency measures and mentoring infrastructure. These are welcome steps. But Robinson went further: this is a market that systematically underinvests in a significant portion of its talent pool and this means it is leaving commercial value on the table at exactly the moment when the competition for the best ideas and the best founders is most intense.

Representation also compounds in the same way capital does. The more women are seen leading and scaling significant businesses, the stronger the pipeline behind them becomes. Getting this right is not peripheral to the ambition of building a world-class UK AI ecosystem. It is part of what spinning the flywheel faster actually means.

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The confidence question

The UK keeps reaching the same psychological moment in its growth story. It gets excited about creation, then grows hesitant about scale. It produces strong businesses, then starts looking overseas for validation. It backs innovation in principle, then under-supports the mechanisms that help companies become globally consequential.

The current uncertainty around US policy is creating genuine openings: talent reconsidering their options, capital looking for stable environments, founders who might previously have defaulted to San Francisco now weighing their choices differently. The UK has real advantages to offer: strong universities, a credible legal and regulatory framework, a genuinely international talent base, and proximity to European markets that still matter. But some of that advantage has quietly eroded, and the mood around UK tech has been more negative than the fundamentals warrant. Mood matters: it shapes hiring decisions, investor allocation choices and the daily decisions founders make about where to put their energy.

Getting the big structural calls right in areas like pension reform, reinvestment incentives, and market access would do more than improve the economics. It would signal that the UK is serious and a great place to build companies, and that signal travels.

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What this means for your business

If you are scaling and beginning to look at serious growth rounds, the capital picture described in this session is your reality. The majority of later-stage money available to you is international, and with it comes pressure (sometimes subtle, sometimes direct) about where to headquarter, where to list, where to hire. That deserves deliberate strategic attention rather than a default assumption that the best outcome will follow from the best product. The more experienced operators and investors you have around you at this stage, the better placed you are to navigate it on your own terms. Boardwave partners with many of the leading investment teams in Europe, and we are always happy to make 1-2-1 introductions.

If you have exited a business or are approaching one, the reinvestment incentive discussion is worth watching closely. The capital gains deferral mechanism Menashy described is under active policy consideration. If it passes, it creates a meaningful reason to keep your capital and experience in the domestic ecosystem and the panel made a compelling case that experienced founders who stay involved and reinvest are one of the most valuable things the UK ecosystem currently lacks at scale.

The session ended without settled answers. What it made clear is that the UK has the ingredients. The question is the same one it has faced for the better part of a decade: whether the system can be reformed quickly enough to assemble them into something durable before the AI moment passes and the familiar pattern reasserts itself.

Key takeaways

• The early stage is stronger than ever, but the middle remains fragile. Support and capital that work well for startups do not scale with the businesses they helped create, and that is where the UK consistently loses ground.
• Pension capital is the most glaring structural gap. UK pension savers represent just 1% of investment into UK venture and growth equity, against 22% from international pension funds. The cost competition that drives pension schemes towards passive strategies is the core of the problem and reforms are in progress but moving too slowly.
• The scale-up problem is a system. Tax structures, visa frameworks, market access complexity and government procurement uncertainty all compound each other and some actively penalise companies at the moment of success.
• A reinvestment incentive could change the flywheel. A targeted capital gains deferral for founders who reinvest into UK growth companies is under active policy consideration and could meaningfully accelerate the recycling of capital and experience back into the ecosystem.
• The existing software base cannot be left behind. The UK's established software industry faces a genuine migration challenge, and the companies that move fastest will consolidate significant advantage.
• Diversity in venture capital remains a structural and commercial weakness. Underinvestment in women-led businesses is leaving value on the table at exactly the moment the competition for the best founders is most intense. Progress is being made but not fast enough.

This article draws on oral evidence given to the Business and Trade Select Committee on 14 April 2026 as part of its inquiry into Artificial Intelligence, Business and the Future of the Workforce.

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