The British Business Bank has committed up to £35mn to the latest fund from Episode 1, extending a long-standing relationship with the early-stage investor.

The commitment to Episode 1’s Fund IV follows previous backing for its 2014, 2018 and 2022 vintages, and forms part of the Bank’s broader strategy to expand access to capital for high-growth UK businesses.

Episode 1 focuses on pre-seed and seed-stage companies, using an algorithmic approach to identify and assess software-driven ventures. Its investment activity is concentrated in areas including artificial intelligence, software infrastructure, deep technology and tech bio — sectors closely aligned with the UK government’s industrial strategy.

A significant proportion of its previous fund has been deployed into priority areas such as digital technology, financial services, clean energy and life sciences. Fund IV is expected to continue this emphasis.

The British Business Bank, the UK’s largest investor in venture and growth capital funds, typically acts as a cornerstone backer, enabling funds to reach an initial close and attracting additional private investment. The latest commitment also reflects its five-year plan to direct more funding into strategically important sectors.

Christine Hockley, managing director and co-head of funds at the Bank, said the investment would “expand the pool of capital available to support high-growth, innovative businesses”, helping them to scale within the UK.

Michael Laycock, investment director, added that Episode 1 had demonstrated “a strong track record” in identifying early-stage companies with significant growth potential, noting that the new fund would continue to support businesses operating within key industrial sectors.

Episode 1’s partners said the backing signalled institutional confidence in its model. Adam Shuaib described the commitment as “a huge vote of confidence” in the firm’s combination of proprietary sourcing technology and behavioural analysis of founders, while Hector Mason said it reflected growing recognition of the firm’s investment thesis.