But Taylor does not see this as a major problem, because allocation to his (or any) VC/early stage fund would be tiny.
"The allocation they're making out of their total funds is a very small percentage. We're not looking for anything more than a single digit of pension capital. A small allocation to a higher fee fund is possible within the 75 basis point cap."
It has invested in some significant companies. Accurx, a healthcare platform establishing itself in the NHS, received funding from the BBB, and has turnover of £32.6mn, although last year it made a £3.5mn pre-tax loss.
Another has been a recent investment in Pragmatic Semiconductor, a manufacturer of semiconductors, which is using the money to expand a production facility in the North East of England. It is currently loss-making, according to the latest annual report.
But moves are afoot with the new Labour government. Recently, it announced that the BBB would be "aligned" with the new national wealth fund, alongside the UK Infrastructure Bank, to facilitate investment in the private sector.
Much of the structure has to be worked out still, says Taylor, but he does not see the BBB being subsumed by the fund as the start-up loan part of the BBB’s work is not part of the national wealth fund’s remit.
Ultimately, Taylor's job is to help deliver the government's growth agenda and contribute to the British economy as well as offering a new vehicle for the UK's pension sector, grappling with changing demographics and fund dynamics.
"We definitely see a gap in the capital available for businesses, and the government has an interest in seeing companies that are growing staying in the UK.
"If there's no capital they will go where the capital is, and will gravitate towards the US, and will be a loss to the UK economy as they become interesting."
For the pension trustees, "there's a recognition for investment for more growth and these companies can provide good growth".
Melanie Tringham is features editor at FT Adviser
