Lord Mayor of London Nicholas Lyons pledges to take on Silicon Valley

Sun splashes through the windows onto the ornate plasterwork interiors of the Mansion House as the Lord Mayor of London explains his goal of creating a UK tech investment fund to rival Silicon Valley.

The Palladian grandeur of the 18th century residence opposite the Bank of England seems an incongruous place for Nicholas Lyons to set out his aim: to take on the venture capital giants of California who have dominated the scene for five decades.

But Lyons expresses his determination over a plan for a Future Growth Fund, which could help Britain’s savers reap the benefits of this country’s talent for innovation.

He has been trying to set up a £50billion fund to channel pension investment into start-ups and growth companies for some time but the idea has been fraught with difficulties.

But he hints that a big announcement on progress is likely when Chancellor Jeremy Hunt delivers his annual Mansion House speech next Monday.

Past and present: The Lord Mayor Nicholas Lyons wants to take on the venture capital giants of California

Lyons wants Future Growth, funded by a levy from UK pension funds, to be ‘as good as it can be… world-leading so it sits alongside the likes of Sequoia Capital as a globally acknowledged specialist in the area of late-stage venture capital for tech companies’.

It is a big ambition. Sequoia, founded in 1972, has backed the likes of Apple, Google and Instagram. 

A common complaint in Britain, cited by Lyons, is that when innovative new companies want to ‘scale up’ to become world-beaters they are forced to seek capital from overseas or even move abroad.

That means that it is foreign investors – from US venture capitalists to giant Canadian pension funds – who often enjoy the biggest rewards from cutting-edge technology developed here. 

Lyons wants UK pension funds to commit 5pc of the money they are looking after into the fund or via their own schemes backing start-ups.

That could add up to a fund worth £25-30billion by 2030 and when the larger funds’ efforts are included, the total would amount to £50billion.

It comes amid soul-searching over the decision of companies such as chip designer Arm choosing to list in New York instead of London.

Lyons says his fund will mean Britain keeps ‘many more businesses – growing and scaling and staying in the UK’. 

Talk that pension funds may be compelled to invest has attracted pushback from managers who say it could clash with obligations towards savers.

But Lyons does not favour compulsion, saying: ‘If you create a Future Growth Fund and you get a lot of the major players saying “This is the fund we’re going to be using”, you then get a sense of this is the acceptable thing to do.

‘I think people are always nervous about doing something and putting their head above the parapet. 

‘That’s exactly the reason why we’ve got the problem we have, which is that we’ve had a sheep-like mentality of always doing the same thing, and as a consequence we’ve got really mediocre returns on our pensions system.’

The initial aim will be to convince the major firms to sign up to allocating 5pc of defined contribution pension pots to unlisted equities. ‘We are working towards an agreement from people who control more than 50 per cent of the market to say “Yes” and they will be all the big names.’

Apple’s head office in Silicon Valley, US. Pension fund Sequoia Capital, founded in 1972, has backed the likes of Apple, Google and Instagram

Lyons would not identify any of them or when an announcement would be made but added: ‘We have the Mansion House speech coming up – who knows? 

‘That is normally the opportunity for the Chancellor to make some big announcements. We’ve been liaising with No 11 on this for the last few months.’

He is confident the fund will ‘end up being a lot bigger’ than the £25-30billion scale he sees for it initially. 

‘Whenever I go abroad and speak to the big asset owners they all say, we’d love to invest in the Future Growth Fund… so there’ll be a huge demand. Effectively, you’re having a play on the intellectual property of this country.’

Lyons is chairman of Phoenix Group, Britain’s biggest pensions firm but is on sabbatical for his year as Lord Mayor, a post that dates back to the Middle Ages and which is today better known for its ceremonial function.

Lyons spoke to the Mail in the Mansion House – where he lives, with his wife – and clearly relishes the formal trappings. 

He shows off the velvet and ermine robe with gold braid he wore for the Coronation and speaks enthusiastically about the pageantry of an event that provided a direct link with Dick Whittington, who was Lord Mayor four times.

This year is the 600th anniversary of Whittington’s death and the crystal sceptre held by Lyons at the Coronation dates back to that time. It was given to the City of London after the battle of Agincourt and used in a Coronation in 1421 when Henry V’s Queen, Catherine of Valois, was crowned.

The 64-year-old, who has worked in the City for four decades, wants to use his experience to make a difference.

He adds that he has the ‘huge advantage’ of being able to ‘look over the whole of the operations of financial and professional services’ and identify where they could do better. 

I felt that we were underperforming on pensions, providing capital for growth companies, on the investment in infrastructure and in providing financial literacy for people in this country.

‘I didn’t see myself as an activist, I saw myself as somebody who was calling out areas where we collectively need to find solutions. 

We can’t just sit on our laurels. I believe the role of the Lord Mayor is a wonderful opportunity to convene and shine a light on what we’re good at but also what we’re not so good at and to try to bring people together to find solutions.

‘And I hope future Lord Mayors will do the same.’