But perhaps some of the $22trn on corporate balance sheets will.
My favourite part of following a topic over several decades is seeing how slight changes in language can bring dramatic impact on capital flows.
The UK and Europe are going through their own version of the investment law shifts that the US went through 50 years ago. The initial interpretation of America’s Employee Retirement Income Security Act (ERISA) of 1974 meant that, as early-stage startups and venture capital were inherently high-risk, pension managers worried they would be sued for breaching their fiduciary duty if a single investment failed. As a result, institutional pension money flowing into venture capital slowed to a virtual standstill.
Then, in early 1979, the US Department of Labor issued a clarification to the original, “Prudent Man” standard, allowing pension fund managers to move from judging individual investments in isolation to evaluating them based on their role in the whole portfolio
By the mid-1980s, annual capital commitments multiplied 10-fold, turning public and corporate pension funds into the largest single source of funding for venture capital.
In the UK and Europe, there is no single such interpretation stopping venture investing but rather a combination of factors, which, to their credit, governments and industry are trying to shift as attendees at the UK Private Capital Association summit this month noted.
Under London’s Mansion House Accord, 17 pension providers have pledged to invest at least 10% of their main default funds in private assets by 2030, although a tweak to the original wording — from “unlisted equities” to “private assets” — means most of this money will flow to infrastructure and real estate rather than VC and entrepreneurs.
As a result, for example, L&G, one of the big insurers managing people’s retirement pots, is now, under its news CEO, disbanding its excellent venture capital team as it can deliver the government’s targets through property and infrastructure, which are more scalable and usually with clearer return expectations and fees than VC.
According to the 2025 report by the State of European Tech, UK and Irish pension funds invested “a staggeringly low” 0.001% of their assets under management in European venture capital in 2024. Not much will change for pension allocation at least in the short-term, therefore, so the UK government, which is desperately trying to funnel tens of billions of pounds to VCs and entrepreneurs, is left to pay investment managers itself.
The same is true across Europe. Governments and sovereign wealth funds committed $37.4bn to European venture funds over 2015–2025. European pension funds committed $6.5bn.
For Yoram Wijngaard at Dealroom, this is a central part of Europe’s scaleup funding debate: how to build a broader base of long-term investors, while respecting pension funds’ obligations to savers.
But there are quicker ways to bring in private capital to support private businesses: the underrepresented middle. Corporations and the family offices built on entrepreneurial wealth already provided more than $50bn to European venture funds as limited partners between 2015 and 2025. This was more than governments and all pension funds combined.
And there is plenty of liquid capital sitting on corporate books – about $22trn at last count – that can be allocated to venture if the right approach is taken and lessons are learned from Switzerland, the US, China and other Asian countries.
James Mawson
James Mawson is founder and chief executive of Global Venturing.
