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What the Church of England and other asset owners want from small companies

Editorial

By TrustList Editorial

The Church Commissioners hold 5.1% of their fund in venture capital but reach startups through managers. In our October count, pensions and sovereign funds backed only six of 102 rounds, all at Series B or later.

About What the Church of England and other asset owners want from small companies

What the Church of England and other asset owners want from small companies

The Church Commissioners for England, who manage the Church of England's endowment, held 5.1 per cent of an investment fund worth about 11 billion pounds in venture capital at the end of 2024, and another 10.6 per cent in private equity. In 2025 the venture capital holdings were the best performers of all its private assets. Yet the Commissioners do not pick startups. Like almost every large asset owner, they reach small companies through funds managed by someone else.

Our own funding reports show the same pattern from the other side. Of the 102 startup rounds we reported on TrustList between 2 and 14 October 2026, a pension fund, sovereign fund or insurer invested directly in only six, and every one of those was a Series B or a later round: Singapore's GIC led the round in Supabase, Ontario Teachers' Pension Plan joined EliseAI, the Finnish pension insurer Varma joined Verda, Abu Dhabi's Mubadala announced its investment in Paymob, Temasek is among the backers Vinci lists, and the Korean insurer Kyobo Life joined GMI Cloud. At seed stage the only asset owners we saw were family offices, in Prodoc AI and Spotable.

So the money of churches, pensions and nations does reach small companies, but late, large and mostly at one remove. This piece looks at why these institutions invest in small companies at all, why the tax system makes them natural holders of risky, illiquid assets, and what happened when the Church of England found out what one of its funds had bought.

How we counted. We read the 103 funding-news items published on TrustList from 2 to 14 October 2026 (one company was reported twice, leaving 102 rounds) and listed every investor named as taking part. We counted as asset owners pension funds, insurers, sovereign and state investment companies, endowments and single-family offices. Figures for each institution come from its own annual report, website or government statement, read on 14 October 2026.

The Church Commissioners' fund

The Church Commissioners' 2025 annual report puts the fund at 11.6 billion pounds at the end of 2025, net of bond liabilities, up from 11.1 billion pounds a year earlier. It returned 8.0 per cent in 2025, its 17th consecutive year of positive returns, against a long-term target of CPIH inflation plus 4 per cent a year. Over the past 30 years it has averaged 9.2 per cent a year.

The money pays for two things. The first is the Church of today: grants to dioceses and parishes, bishops' costs, and the pensions of clergy for service before 1998, which the Commissioners still meet. In June 2025 they approved a record distribution of 1.6 billion pounds for 2026 to 2028, 36 per cent more than the previous three years, while warning that distributions at that level "are not sustainable in the medium to long term". The second is what the report calls the Church of tomorrow: keeping the endowment's value in real terms for future generations, which "requires high exposure to growth assets".

That second goal is why a church holds venture capital. At the end of 2024 the Commissioners' published allocation was 31.6 per cent in public equities, 10.6 per cent in private equity, 5.1 per cent in venture capital, 3.4 per cent in timberland and the rest spread across property, credit, bonds and cash. In 2025, the report says, venture capital "benefitted from the surge in AI valuations and came in strongest with a gain of 7.8%", ahead of private credit at 4.3 per cent and private equity at 4.0 per cent. Looking further ahead, it expects private assets to deliver returns above public markets, "reflecting the illiquidity" of holding them.

The report puts the dilemma in one sentence: "The challenge for a faith-based investor is to deliver good returns while also meeting high ethical standards."

The Wonga lesson

That challenge became public in July 2013. Justin Welby, Archbishop of Canterbury since February that year, had told the payday lender Wonga that the Church wanted to "compete you out of existence" by backing credit unions. That same month the Financial Times reported that the Church Commissioners had an indirect stake in Wonga, through their investment in a fund run by Accel Partners, the venture firm that led Wonga's 2009 fundraising. Civil Society, reporting the Archbishop's response on 26 July 2013, put the indirect holding at about 75,000 pounds out of a fund of about 5.5 billion pounds. Welby said he was "embarrassed" and that the managers "didn't pick up" the holding because it sat inside a pooled investment vehicle.

The BBC's guide to the Church's investments, published the same day, set out the ethical rules that should have caught it. The Church's Ethical Investment Advisory Group advised against investing in any company whose main business, "defined as more than 25% of group turnover", was tobacco, gambling, alcoholic drinks, high interest rate lending or human embryonic cloning. Welby said that 25 per cent threshold was "probably too high" and asked for a review.

The episode is the clearest illustration of how asset owners reach small companies. The Commissioners never chose to back Wonga. They chose a venture manager, and the manager chose Wonga years earlier, before the Church's view of payday lending was a public issue. Today the Commissioners apply ethical exclusions through their asset managers, monitor "restricted exposures" in pooled funds quarterly and cap them at 1 per cent of the portfolio, according to the 2025 report. Wonga went into administration in 2018, and the Church said at the time that the Commissioners would not take part in any buy-out of its UK loan book.

The Church has since tried to do directly what that fund did by accident. In 2020 the Archbishops' Council set up a Social Impact Investment Programme, funded by the Commissioners, making 25 million pounds available for investments in housing need, vulnerable communities and the environment, mainly in England and "primarily through investment funds and similar investment vehicles". A separate 100 million pound impact fund, announced in response to research on the Church's historic links to enslavement, was still going through legal and regulatory processes with the Charity Commission at the end of 2025.

Pension funds are being pushed towards small companies

British pension funds hold far more money than the Church, and the government wants more of it in unlisted British companies.

In 2023, under the Mansion House Compact, eleven workplace pension providers committed to aim to put 5 per cent of their defined contribution default funds into unlisted companies by 2030. In May 2025 seventeen providers, managing around 90 per cent of active savers' defined contribution pensions, signed a broader Mansion House Accord to invest 10 per cent of their workplace portfolios in private markets, including infrastructure, property and private equity, by 2030, with at least 5 per cent in the UK. The government expects that to bring 25 billion pounds into the UK economy by 2030.

Nest, the state-backed workplace pension scheme, shows the reasoning. Private markets made up 16 per cent of its portfolio at 31 March 2025, and it expects to raise that to 30 per cent by 2030. Its statement of investment principles says why: "Long-term investors earn better returns net of costs as they can invest in assets with higher risk premia, notably equity and illiquidity risk."

The state is building vehicles to channel that money. In November 2025 the government announced that Aegon UK, NatWest Cushon and M&G were in the final stage of approving an initial 200 million pounds for the British Growth Partnership, a fund set up through the British Business Bank to invest pension money in UK science and technology companies.

Endowments and sovereign funds abroad

University endowments pioneered the approach. Yale's endowment was worth 44.1 billion dollars at the end of June 2025 after an 11.1 per cent return, and it pays for more than a third of the university's operating revenue. Its financial report describes a "heavy allocation to non-traditional asset classes", including venture capital and buyouts, chosen because it "generates return potential and diversification". Its chief investment officer described the endowment as "structured to support the university's mission in perpetuity through prudent risk-taking and sustainable spending".

Not every large owner follows. Norway's sovereign wealth fund invests about 70 per cent in listed equities and 30 per cent in bonds, with up to 7 per cent allowed in unlisted real estate and 2 per cent in unlisted renewable infrastructure, and no venture capital or private equity at all. Its manager advised the Finance Ministry in November 2023 to permit unlisted equities generally.

Gulf and Asian state investors sit at the other extreme. Saudi Arabia's Public Investment Fund set up Jada in 2018 as a fund of funds that backs venture capital, private equity and private debt funds investing in Saudi companies. Singapore's GIC and Temasek, Abu Dhabi's Mubadala and Canada's pension plans invest both through funds and directly in late-stage rounds, which is where they appeared in our October count.

Why tax makes these institutions natural owners

The deeper reason these institutions can wait ten years for a startup investment to pay off is that they pay little or no tax while they wait.

In the UK, income from investments held for a registered pension scheme is exempt from income tax, and gains on selling them are exempt from capital gains tax, according to HMRC's pensions manual. Charities "can claim exemption from tax on most types of income and capital gains, if they're applied to charitable purposes", and investing to build up income for later charitable use counts. The Church Commissioners are a charity.

That exemption changes the arithmetic of illiquid assets. A taxable investor who holds a venture fund for twelve years pays tax on the gain at the end; an exempt one keeps it all and can reinvest every distribution. The exemption also removes the reason a taxable investor might prefer income now to growth later.

The US has started to tax its richest universities. The 2025 budget law replaced the flat 1.4 per cent excise tax on the net investment income of large private university endowments with three tiers from tax years beginning after 31 December 2025: 1.4 per cent where the endowment per student is between 500,000 and 750,000 dollars, 4 per cent up to 2 million dollars, and 8 per cent above that, for institutions with at least 3,000 tuition-paying students. Even at 8 per cent, the endowment still pays far less on its returns than a private investor would.

What a small company should take from this

For founders, the lessons are practical.

  1. Asset owners usually arrive through a fund. A pension or endowment that wants exposure to startups commits to a venture fund for ten years or more. A founder reaches that money by pitching the fund's managers, not the pension.
  2. Direct money comes late and large. In our October count, no pension fund, insurer or sovereign investor appeared before Series B. Family offices were the only asset owners at seed.
  3. Ethics travel down the chain. The Wonga affair taught asset owners to push their exclusions onto their managers. A company in lending, gambling, alcohol or tobacco may find some funds closed to it because of their investors' rules, not their own.
  4. Patience has a source. A ten-year fund life exists because its investors are tax-exempt institutions that can wait. Understanding who a fund's investors are explains how long it can hold, and how hard it will push for an exit.

Asset owners and funds in our catalogue

Our venture capital firm category lists the managers through which most institutional money reaches startups, and our startup funding programmes page lists state funds of funds such as Jada and the British Business Bank. The rounds named above, and every round we report, are on our funding news page with their investors as the companies state them.

Company profile on TrustList: GIC

Company profile on TrustList: Ontario Teachers' Pension Plan

Company profile on TrustList: Church Commissioners for England

Company profile on TrustList: Varma Mutual Pension Insurance Company

Related on TrustList:

Sources

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