Hello there!
This week, we’re looking at something we haven’t seen in a while: real momentum coming back into the UK’s venture ecosystem.
One reason we are doing this is that the UK remains Europe’s top destination for venture capital. According to new data from HSBC Innovation Banking and Dealroom, UK startups raised $9 billion in Q3 2025. That makes it the strongest quarter since 2022 and the second-highest Q3 ever.
Additionally, the UK remains the top destination in Europe for venture capital. It has already raised $17.3B this year, more than France, Germany, and Switzerland combined. France has $6.3B and Germany has $6.0B, but neither is anywhere near the UK’s level.
After two slow years, the UK has undergone a real comeback. Despite shifting global conditions, investors continue to prioritize the UK when backing new tech, science, and deep-tech ventures.
Now, let’s take a look at some of the other reasons why the UK has its momentum.
Inside the UK’s Venture Comeback
This year’s report from BVCA highlights how deeply embedded venture capital has become in the UK economy. In 2024, around £9B was invested into UK VC-backed companies, supporting a footprint of 9,100 businesses and creating employment for more than 378,000 people.
The average VC holding period is now 6.7 years, showing how investors are taking long-term positions in the companies they back. Notably, 51% of new VC-backed businesses were based outside London, pointing to a more geographically balanced ecosystem.
VC-backed companies also play a major role across key industries: 36% of jobs in VC-backed firms are in information and communication, followed by professional and technical activities, finance, insurance, manufacturing and healthcare.
Together, these numbers show a resilient VC ecosystem that continues to drive innovation, employment, and regional growth across the UK.
Big Deals Are Back
A big reason funding is rising again is that large rounds have returned. In Q3 alone, there were 12 deals worth $100 million or more, which is almost as many as the previous two quarters put together. We also saw something we haven’t seen since 2022: two billion-dollar rounds. Revolut raised $2B, and NScale raised $1B.
But it’s not just the big names. Early-stage companies are seeing momentum too. Series A rounds reached their highest level in seven quarters, which is a strong sign that investors are feeling more confident and willing to back younger startups again.
More Funding Outside London
London still dominates with $13B in 2025 investment, but activity outside the capital is speeding up. Cambridge leads with $2B, followed by Oxford at $406M, making both cities major engines of UK innovation this year.
Other active hubs like Cardiff–Newport, Glasgow, and Manchester show that funding is spreading more evenly across the country.
On a regional level, Greater London saw the most rounds (811), but the East of England, South East, Scotland, and the North West all posted vigorous activity. This trend toward more balanced growth is a sign of a maturing startup ecosystem.
Defence Is Getting More Attention
Another trend this year is the rising interest in defence-focused innovation. The British Business Bank says it’s seeing more defence-related pitch decks, and investors are increasingly looking more closely at the space. This includes both generalist funds adding more defence deals to their strategy and new specialist managers launching defence-first funds at seed and Series A.
BBB’s direct investment team, which usually invests at Series B and beyond, says defence deal flow is rising there as well. Most of the startups they see are building “dual-use” technologies, innovations that serve both military and civilian markets. BBB expects even more of these deals to appear over the next 1 to 2 years, simply because it takes time for companies to grow from seed to Series B.
🌍 Across the Ecosystem | News & Useful Resources for You
There’s a lot of energy in the UK venture market right now, and people across the ecosystem are talking about what’s driving the comeback.
Across the country, fund managers are watching valuations, seeking better ways to deploy capital, and paying attention to trends such as secondaries and new government support. As we head into 2026, the key question is how investors will adjust, and who will take advantage of a market that’s becoming more competitive, specialised, and focused on long-term strength.
🗞️ News | British Business Bank backs Sofinnova Capital XI with €30m investment
The British Business Bank has invested €30 million into Sofinnova Capital XI, a €650m life sciences fund run by Sofinnova Partners. This fund will back early-stage biotech and medical technology companies working on new treatments for unmet medical needs.
According to the firm, reaching this fundraising milestone during a difficult market shows strong confidence in its model and the future of biotech innovation.
📊 Report | UK and European pension funds push for venture investment
The UK pension industry is vast, with total assets of about £2 trillion. Still, it has traditionally invested only a tiny share of that money into venture capital or other private markets. Most assets sit in large pension schemes such as the Local Government Pension Scheme (LGPS), private defined benefit pensions, and defined contribution schemes.
Even though the system is a large one, pensions have stayed cautious about investing in VC, infrastructure, or private equity.