British Business Bank adds €58 million Soho Square deal to recent run of UK investments

The British Business Bank continues its recent spree of investments in British innovation with a cornerstone commitment of €58 million (£50 million) to Soho Square Capital Fund II to help established SMBs looking to grow further.

The Bank is joined by several unamed US institutional investors in the fund.

Walid Fakhry, co-Managing Partner, Soho Square Capital says, “The Bank’s backing lets us do more of what we set out to do: give founder-owned businesses the institutional capital they need, on terms that let them stay in control and keep building. That is what our partnership capital is about, and having the Bank behind it means more high-quality UK businesses can take their next step without giving up the reins.”

Today’s commitment to Soho Square Capital Fund II forms part of a wider flow of institutional capital into UK and European growth-finance vehicles in 2026.

EU-Startups has seen approximately €548.9 million across five adjacent announcements, including a €46 million British Business Bank commitment to London-based FPE Capital’s lower mid-market growth fund, Tapestry VC’s €70 million fund, Lansdowne Partners’ €128.9 million first close and up to €104 million for ten emerging UK fund managers.

Together with Soho Square’s commitment, the disclosed capital totals about €606 million. Several of these vehicles reflect the British Business Bank’s broader use of cornerstone investments to expand the supply of institutional funding for UK businesses at different stages of development.

Adam Kelly, Managing Director and Co-Head of Funds, British Business Bank adds, “This commitment is directly addressing a gap in the debt market. It will unlock flexible capital solutions for established businesses with strong growth potential, an area currently underserved by other lenders. It will create more jobs and drive long-term economic growth across the UK’s nations and regions, while strengthening the modern Industrial Strategy sectors which are critical to the UK’s future competitiveness.”

Founded in 2021 and headquartered in London, Soho Square Capital is a lower mid-market focused investment firm that provides structured capital solutions to support UK based, founder-owned businesses during periods of transition including adopting new technology, scaling or making an acquisition.

Soho Square offers businesses an alternative route to funding through a primarily debt instrument, also providing partnership capital to support the growth of portfolio companies.

Their second fund will target established companies in the government’s Industrial Strategy’s key growth sectors, with a preference for those in digital and technology, and professional and business services, looking to expand, or undergoing succession events.

The firm says traditional Bank lending is often insufficiently flexible for these purposes and traditional private equity often requires significantly diluting ownership or the sale of the business. Structured capital solutions combine downside protection via senior secured credit instruments with the potential for equity upside through much smaller or minority equity positions.

Soho Square will provide loans to established companies, typically with EBITDA of up to €17 million (£15 million) and turnover of up to €235 million (£200 million). At least 75% of the fund will be invested in the UK, with a particular focus on businesses across the UK’s Nations and regions.

The Fund will seek to address the structural gap in the availability of capital to smaller companies in the UK and will provide business owners with the capital to help them to scale their companies and stay in the UK.

The British Business Bank has also committed capital within its Five-year Strategic Plan to prioritise deployment to the eight Industrial Strategy sectors. As a cornerstone investor, the Bank will have the opportunity to participate in co-investments alongside the fund.

Blair McDougall, Minister for Small Business and Economic Transformation says, “Through our Modern Industrial Strategy, this Government is ensuring businesses with the highest growth potential have the capital they need to succeed here in the UK.

“This commitment backs dynamic SMEs in key sectors, helping them scale, create jobs and drive growth, to raise living standards across the UK.”