Andrew Williamson, managing partner of Cambridge Innovation Capital, discusses how world-class innovation can deliver strong long-term returns for DC pension funds while fueling the growth of the UK’s most promising science and technology companies.

As defined contribution (DC) pension schemes begin to explore a broader range of asset classes, private markets are attracting growing interest. From private equity and infrastructure to venture capital, trustees and investment managers are asking timely and important questions:

  • How do we access these opportunities?
  • What are the structural challenges?
  • How can these investments support strong long-term outcomes for members?

The momentum behind this shift is encouraging. With initiatives such as the Mansion House Accord and a fast-growing pool of investable UK companies, the opportunity to thoughtfully incorporate private assets into DC portfolios is clear. Yet, while appetite is increasing, so is the need for careful navigation, open dialogue and trusted partnerships.We believe investing in UK innovation can play an important role in helping pension funds diversify and deliver returns. Our experience supporting some of the UK’s most exciting science and technology companies gives us a front-row seat to what’s possible, and why now may be the right time to build these conversations into long-term DC investment planning.

Venture capital in DC portfolios: why now?

The UK is witnessing a generational opportunity to align pension capital with high-growth sectors. From quantum computing and advanced therapeutics to semiconductor manufacturing and artificial intelligence, companies founded within the past decade are reaching commercial maturity. These businesses are no longer speculative science projects – they are revenue-generating, globally competitive and have robust business models.

DC schemes are particularly well-placed to consider the long-term growth potential of these sectors. Unlike traditional public market investments, private markets offer a different risk/return profile, one that can add resilience and diversification to a portfolio.But we also recognise that DC funds may face structural constraints. Liquidity, fee transparency and member-centric fiduciary duties all shape how new asset classes can be introduced. This is why collaboration between fund managers and pension schemes is so important, whether that be around bespoke fund structures or access to co-invest.The growth of these sectors is also supported by data. According to Pitchbook, the UK venture capital (VC) market has grown from £4 billion a decade ago to £17 billion today, with around 60%, or £10 billion, now invested in deep tech and life sciences. A decade ago, only 25% of VC investments were in these sectors. This growth reflects the maturing scale of opportunities available and increasing investor confidence.

Building confidence in innovation-backed investing

CIC sits at the intersection of academic excellence, commercial ambition, and institutional capital. With over a decade of experience in backing spinouts and scaleups from the University of Cambridge and beyond, we’ve seen the maturation of the UK’s innovation ecosystem first-hand.Companies such as Riverlane, enabling error correction for quantum computers, and Pragmatic, a leader in next-generation semiconductor manufacturing, illustrate the scale and global relevance of today’s UK deep tech sector; they are the future of these industries.These companies do not stand on the brink of global success through chance. They are products of Britain’s heritage of scientific discovery and truly world-class research base.

These companies are also delivering broader societal and environmental value. Whether it’s CMR Surgical making it easier for hospitals to provide minimal access surgery to patients, or Trimtech Therapeutics accelerating the treatment of severe neurodegenerative and inflammatory disorders such as Alzheimer’s and Huntington’s disease, these businesses have the potential to transform sectors that matter most to society. They are helping to accelerate breakthrough technologies, improving healthcare outcomes and creating highly skilled jobs – benefits that align closely with the long-term goals of pension fund members.Investing in innovation is about high potential. And with appropriate diversification, long-term horizons and manager expertise, these investments can offer attractive returns alongside public market exposures.

A future built on innovation and collaboration

The UK has all the ingredients for success: a strong pipeline of innovation, a supportive policy environment and a pensions industry increasingly open to change. The key now is to maintain momentum, through collaboration between asset owners and asset managers, well-structured investment vehicles and a shared focus on long-term outcomes.We are committed to working alongside the DC pension community to build that future.By bridging the gap between world-leading innovation and long-term capital, we can help deliver strong returns for members, boost domestic prosperity and support the UK’s broader ambition to lead in the industries of tomorrow.