Innovate Capital Partners HOUSE VIEW | PRIVATE MARKETS
Private Markets at the Half: Why Early-Stage Venture Belongs in the Conversation
Five months into the year, the wider private markets story is becoming clearer. For HNW and Sophisticated investors who already understand the asset class, the case for putting capital to work with British early-stage founders, supported by the EIS and SEIS schemes, has rarely looked more interesting.
Anyone who spent the first few months of the year reading the major private markets outlooks could be forgiven for feeling that the industry was still holding its breath. The reports from McKinsey, BlackRock, Partners Group and Moody's all carried a tone of cautious optimism, though the emphasis tended to fall on the word cautious. Five months on, the picture looks rather more interesting. Deal activity has picked up. Borrowing costs have continued to ease. The long awaited reopening of the exit window, for so long a topic of frustrated speculation around the dinner tables of Mayfair, is finally beginning to look like a genuine trend rather than wishful thinking.
What is interesting is what this means at the smaller, earlier end of the market, where British founders are quietly building the companies that will define the next decade of private markets activity.
Private markets, broadly defined
It is worth pausing for a moment on the scale of the wider asset class. Private equity, private credit and infrastructure between them now represent one of the largest pools of capital in global finance. Private credit alone has roughly doubled in size over the past five years, and the major research houses expect it to approach five trillion dollars by the end of the decade. McKinsey estimates the world will need 106 trillion dollars of infrastructure investment between now and 2040. These are extraordinary figures, and they speak to a long term shift in how capital is being put to work.
What sits at the source of all of this is the companies themselves. Every private equity exit, every infrastructure platform, every credit fund eventually traces its way back to operating businesses. And every one of those operating businesses began, at some point, as an idea backed by someone willing to take the earliest risk.
Why the smaller end of the market matters
The story of the last cycle in private markets was, in many ways, a story of size. Funds got larger, deals got larger, and the gravitational pull of capital tended to favour the biggest managers and the biggest companies. That has begun to shift. Investors and commentators are increasingly drawn to the earlier end of the market, where valuations are more reasonable, where capital is genuinely scarce, and where the returns, when they come, can be of a magnitude that the larger end of the market simply cannot replicate.
Britain remains an unusually fertile country for this kind of investing. The universities continue to produce world class research. The founder community, particularly in life sciences, climate technology, fintech and frontier software, is the deepest it has been in a generation. And the public policy framework around early-stage investment, anchored by the EIS and SEIS schemes, is genuinely among the most thoughtful in the world.
EIS and SEIS in their proper context
The Enterprise Investment Scheme and its smaller sibling the Seed Enterprise Investment Scheme were designed to do something quite specific. They exist to encourage UK investors to back young British companies at the point where the risk is highest and the need for capital most acute. They do so by offering a set of tax reliefs that, taken together, reshape the risk and reward calculation in a way that makes a great deal of sense for those who qualify.
For an HNW or Sophisticated investor who is already allocating to private markets, the schemes offer a way to participate in the earliest, most generative end of the asset class while taking advantage of reliefs that no other private markets allocation can match. That is a reasonably distinctive proposition, and it tends to be undervalued in conversations that focus only on the larger institutional end of the market.
Access has always been the harder question
If there is one thing that has historically held back private investor participation in early-stage venture, it is not the appetite. It is the access. Finding the right founders, at the right stage, on the right terms, and with the right structure around the investment, is genuinely hard. The companies that go on to do well are rarely the ones that are easiest to find. This is the gap that ICP exists to close. We spend our time meeting British founders, understanding what they are building, and bringing the most interesting opportunities to the attention of the HNW and Sophisticated investors who form our network. We do not give financial advice. We provide access, context and a thoughtful introduction, and we leave the investment decision where it belongs, which is with the investor.
The Innovate Capital Partners view
Looking at the picture as it stands in May, the wider private markets story is more constructive than the January outlooks dared to suggest. Capital is being deployed. Exits are returning. The structural tailwinds behind the asset class are intact and arguably strengthening.
What is easy to miss, amid all the talk of trillion dollar markets and global megatrends, is that the foundation of all of it remains the same as it has always been. Real companies, built by real founders, supported at the right moment by investors willing to look beyond the obvious. That has always been where the most interesting returns in private markets have been quietly made. For those who qualify, and who would like to understand how to participate, this looks to us like an unusually good moment to be paying attention.
Sources: McKinsey Global Private Markets Report 2026; BlackRock 2026 Private Markets Outlook; Partners Group Private Markets Outlook 2026; Moody's Private Credit Outlook 2026; AIMA / Houlihan Lokey.
This article reflects the house view of Innovate Capital Partners Ltd and is provided for information only. It does not constitute investment advice, a personal recommendation, or an offer to buy or sell any security. Innovate Capital Partners is not authorised or regulated by the Financial Conduct Authority. Investments in early-stage companies are illiquid, place capital at risk, and the tax treatment of EIS and SEIS depends on individual circumstances and may change. This communication is directed only at investors who qualify as High Net Worth or Sophisticated under the Financial Promotion Order 2005.