Private Markets
In it for the long haul: The private companies creating the future
7 min read 21 Oct 25
Many people are aware of the huge role that technological innovation will play over the coming years. The transition to a low-carbon economy, the proliferation of artificial intelligence (AI) and increased healthcare demand from ageing populations will all require innovative solutions.
And yet, for the average person on the street, the exciting companies creating these technologies go unnoticed. Pensions and other long-term savings are rarely invested in these fast-moving firms, creating a disconnect between their future expectations and asset allocations – and also removing the potential to support solutions that deliver meaningful social and environmental impacts.
We believe there is currently a unique opportunity for savers to benefit from an investment strategy focused on private companies driving the transition to the future economy – harnessing significant prospects for value creation over the coming years, while helping them to navigate an uncertain future more effectively.
Why private markets?
There are a host of innovative private companies, both in the UK and across Europe, currently flying under the radar of the everyday investor. Within the UK, there are almost 800 venture capital-backed private companies that generate more than $25 million in annual revenue. They are joined by 321 companies in France, 265 in Germany and 139 in Sweden1. Europe’s innovation is also evident from the large number of ‘unicorns’ created in the region. These are private companies with a valuation of more than $1 billion. While the US and China lead the way with 793 and 284 respectively, there are currently at least 170 in Europe2.
Many of these innovative private companies are disrupting existing value chains and business models, and offering differentiated solutions based on unique technology or intellectual property. They are likely to be the driving force behind the transition to the future economy – and all that it entails.
Financing such companies through public markets poses challenges, and stretched bank balance sheets also mean that funding must come from elsewhere. Fortunately, private markets investing is undergoing a phase of democratisation, with an increasing number of investors now able to direct capital towards these exciting businesses.
We aim to hasten this process through M&G Catalyst, which focuses solely on growth-stage private enterprises that harness technological innovation. These enterprises are not only commercially promising, but also designed to address pressing global challenges, from climate resilience to healthcare access, ensuring that investment returns are coupled with measurable positive outcomes for people and the planet. The strategy invests in line with a number of future economy-focused trends.
The funding gaps – and opportunities
Once their technology has been proven, these companies usually require significant investment to achieve scale and grow the business. For example, to expand their workforce, manufacturing and operational capabilities, research and development, or geographical reach.
However, unlike the bustling venture capital scene of California’s Bay Area, in the UK and Europe there is a notable funding gap in these later-stage fundraising rounds (the difference between targeted and actual funds raised). This poses two problems. First, founders struggle to secure the capital needed to scale their businesses – and expand solutions that reduce emissions, improve health outcomes or create inclusive economic opportunities. Second, investors are left with a narrower universe of assets to choose from, potentially being excluded from some of the most compelling commercial opportunities.
M&G Catalyst aims to fill this gap. We are one of the few institutional investors with the scale and expertise to make significant commitments in later-stage funding rounds. We can help solution providers to drive the transition to the future economy, while opening up previously inaccessible assets to the person on the street.
New potential for the UK and Europe
We are witnessing a structural shift away from the US within this investment space, opening up new opportunities for UK and European investors. It is driven in part by the US administration’s assault on top universities – traditional hotbeds for the creation of innovative, future-focused technologies. While Harvard has been the highest-profile target, the Trump administration has taken aim at more than 4,000 grants across 600 institutions3, and frozen billions of dollars in additional funding. A shift away from climate change mitigation and wider politicisation of sustainable investing have also produced headwinds for companies and investors targeting future trends such as clean energy and electrification.
This shift could see a move of researchers and solution providers away from the US and towards European global financial centres, such as London. In a recent poll by the Nature journal, 75% of the scientists polled said they were considering leaving the US, with Europe as a top destination4. What’s more, the European Commission has created a €500 million grants package to attract researchers5. We believe there will be fresh opportunities for future-focused investors in these regions, and new potential to diversify away from the US in existing private equity portfolios.
Our M&G Catalyst team is based in offices in the UK, Singapore and India. Our local expertise means we are well-placed to capitalise on opportunities in the UK and Europe – but also further afield in the emerging markets, which are not commonly explored by investors in this space, but which offer huge potential over the coming years, in our view.
Themes of the future
Investing in the economy of the future is not just about anticipating technological shifts; it’s about backing companies that are actively shaping a better world. Whether through cleaner energy systems, more efficient infrastructure or healthcare breakthroughs, these businesses are delivering tangible benefits that align with long-term societal goals. Here we explore two structural themes that will play out over the coming years. For each, we also look at an M&G Catalyst investee providing innovative solutions in these areas.
Compute efficiency
Demand for compute (or processing power) is set to accelerate rapidly over the coming years. It is being driven by the proliferation of AI, where compute demand is set to increase 10,000 times by the end of the decade6. Global data centre demand is set to nearly triple by 2030, with the bulk of demand coming from AI7. This will place even more pressure on already strained energy and water infrastructure. There is clearly a need for greater efficiency solutions, which can deliver the processing power that the future economy requires while minimising the use of resources.
M&G Catalyst investee, Submer, is helping to tackle the challenge via its liquid cooling technology for data centres. The company’s system immerses IT hardware in tanks – filled with a proprietary, non‑conductive, non-toxic biodegradable fluid – which are regulated by software algorithms to increase performance and efficiency. The system is 1,400 times more efficient than air cooling solutions8, using 99% less water and reducing energy consumption by 50% compared to traditional systems9. The captured heat can then be reused elsewhere in the facilities, helping to cut energy usage further.
Biological innovation
The significant advances in both AI and computer processing capabilities of recent years have created new abilities to unlock insights into human biology. This is creating huge potential to improve quality and efficiency in many pockets of the global healthcare system. This will be essential over the coming decades, as an ageing population, increasingly prevalent lifestyle diseases, and a growing middle class in emerging economies continue to push up global healthcare demand at a time when there simply aren’t enough healthcare workers.
Fortunately, innovative technology is driving new solutions across a host of areas. They include faster and more accurate diagnoses, the early detection of diseases, drug discovery and the development of preventative measures.
M&G Catalyst investee, Nuritas, is one company focusing on the latter. The company discovers and produces bioactive peptides (short chains of amino acids) derived from plant-based sources. They provide a variety of clinically proven health benefits, including enhancing muscular health, increasing bone density, improving sleep quality and improving metabolic health. The company’s flagship product, PeptiStrong, is an AI-discovered ingredient derived from fava bean protein. It has been proven to improve muscle strength, muscular endurance and reduce muscle atrophy.
The democratisation of private markets is creating new options for investors to direct capital towards exciting companies driving technological advances. By backing private companies at the forefront of innovation, investors can unlock long-term value while actively contributing to solutions that improve lives, regenerate ecosystems and build resilience for future generations. They can ensure their capital is not only aligned with the future economy, but is also impact-driven.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast, nor a recommendation to purchase or sell any particular security.
Contributor
Alex Seddon, Head of Impact & Private Equity
1 Phoenix Court, ‘Capital Allocation in the Innovation Economy’, (phoenixcourt.vc), November 2024.
2 Visual Capitalist, ‘Visualising Unicorns by Country in 2025’, (visualcapitalist.com), August 2025.
3 Center for American Progress, ‘Mapping Federal Funding Cuts to U.S. Colleges and Universities’, (americanprogress.org), July 2025.
4 Nature, ‘75% of US scientists who answered Nature poll consider leaving’, (nature.com), March 2025.
5 European Commission, ‘Choose Europe for Science: EU comes together to attract top research talent’, (ec.europa.eu), May 2025.
6 UK Government, ‘UK Compute Roadmap’, (gov.uk), July 2025.
7 McKinsey & Company, ‘The cost of compute: A $7 trillion race to scale data centres’, (mckinsey.com), April 2025.
8 Data Centre Frontier, ‘LiquidCool Brings Immersion Cooling to the Server Chassis’, (datacenterfrontier.com), January 2018.
9 Submer, ‘Submer, global leader in data center immersion cooling, announces investment from Planet First Partners’, (submer.com), January 2022.
M&G Investments does not provide any asset management service in Hong Kong. This website is general in nature and is for information purposes only. It is not a solicitation, offer or recommendation of any security, investment management or advisory service. The information on this website is for Professional Investors only. Specifically, the information on these pages should not be used or relied upon by the public of Hong Kong or any other type of investor from any other jurisdiction.
This website has been issued by M&G Investments (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission.