Deeptech and AI companies attracted almost two-thirds of UK venture capital investment in 2025, according to a report from UK Private Capital.
The Venture Capital in the UK 2026 report found that a total of £8bn was invested into UK venture-backed businesses in 2025 by VC firms alongside others, with deeptech and AI companies receiving £5bn of the total transaction value.
Investment into AI companies was concentrated in London, with deeptech businesses in other sectors such as biotech having a greater geographic spread around the UK. Overall, 50 per cent of venture businesses backed in 2025 were outside of London.
The report, which launched at UK Private Capital’s annual Accelerate Conference in Central London yesterday (20 May 2026), found that 9,100 high-growth businesses are backed by venture capital across the UK, employing 378,000 people.
It also found that the holding period for VC investments exited in 2025 was almost seven years, reflecting the sustained capital and support required to build and scale high-growth businesses.
VC fundraising was £2bn in 2025, lower than 2024 when several large VC’s successfully closed funds, and on par with 2023. Despite the tougher market, several UK venture capital firms successfully closed funds in 2025, including SV Health Investors and Elbow Beach Capital.
UK Private Capital’s latest report showed that, despite commitments from UK defined contribution (DC) pension funds to increase allocations into venture capital and growth equity, there is limited evidence of any significant investment into the asset class.
Feedback from 83 venture capital and growth equity firms found that the limited progress has impacted perceptions of the Mansion House agenda negatively, with almost half (48 per cent) of respondents not optimistic that Mansion House agreements will generate greater investment by 2030, compared to just 20 per cent who were optimistic.
UK Private Capital has called on the government to continue to press for momentum on the pensions investment agenda and adopt further measures to drive progress. It urged the government to adopt NOVA, a proposed new marketplace of accredited private capital funds, to boost the scale and pace of DC investment into private markets.
The association also called for the introduction of new Scale-up Reinvestment Relief (SRR) to strengthen later-stage funding and ensure successful founders reinvest in the UK’s next generation of high-growth businesses. The proposal formed part of UK Private Capital’s response to a recent HMT call for evidence on the tax system for entrepreneurs.
UK Private Capital chief executive Michael Moore said: “The UK’s status as an emerging leader in AI and deeptech is underpinned by venture capital firms providing the expertise and investment to help founders turn ideas into industry-leading companies.
“However, the UK’s potential in this space suffers from a shortage of scale-up capital. Greater momentum in increasing domestic pension allocations into venture capital is needed for a greater number of promising British businesses to grow and become internationally competitive.
“It’s also important to incentivise successful founders and investors to back the next generation of startups. A Scale-up Reinvestment Relief would send a clear signal that the UK intends to compete for capital, talent and ambition. It would reduce premature exits driven by tax or capital constraints, supporting founders to remain engaged for longer.”