Soho Square Capital, a London-based growth finance provider, has secured a €58 million ($67.28 million) cornerstone investment from the British Business Bank for its second fund. The capital injection represents a significant backing for the fintech’s mission to address financing gaps affecting established, founder-owned small and medium-sized businesses across the United Kingdom.
The commitment underscores growing recognition within the UK institutional investment landscape of the need for flexible capital solutions tailored to mature SMBs. Rather than traditional equity financing, which often requires founders to cede ownership stakes, Soho Square Capital’s approach provides structured capital arrangements designed to preserve founder control while enabling business growth.
Filling a Gap in UK Growth Finance
Founded in 2021, Soho Square Capital has positioned itself within the growth finance sector, targeting established businesses that have moved beyond startup phase but require capital for scaling operations, technology adoption, or acquisitions. The British Business Bank’s backing validates this positioning, particularly as the institution increasingly prioritizes investments aligned with the UK government’s Industrial Strategy priorities.
The fund will concentrate on businesses operating within designated growth sectors, including digital and technology services as well as professional and business services. This focus reflects both the urgency of supporting UK competitiveness in these domains and the proven track record of established firms in these areas.
Walid Fakhry, Co-Managing Partner at Soho Square Capital, highlighted the significance of the backing in a statement. “The Bank’s support enables us to expand what we established from the outset: providing founder-owned businesses with institutional capital resources on conditions that preserve their autonomy and enable continued development,” he explained, describing the arrangement as instrumental to the firm’s core mission.
Unnamed US Backing Completes Round
While the British Business Bank serves as the lead investor and cornerstone participant, the funding round also includes backing from unnamed US institutional investors. This combination of domestic and international capital suggests confidence in both Soho Square Capital’s track record and the broader opportunity within UK growth finance markets.
The total funding for Fund II stands at €58 million, providing the fintech with substantial dry powder to deploy across its target market over the coming years.
Implications for European Startup Ecosystem
The investment reflects broader patterns within European growth finance, where alternatives to traditional venture capital continue gaining traction. While Soho Square Capital operates specifically within the UK context, its model speaks to challenges facing established, profitable businesses across Europe seeking capital without surrendering significant equity positions. As European policymakers increasingly emphasize support for SMB scaling, institutions like the British Business Bank are backing financial instruments and providers that address this underserved market segment.