Majority of UK venture capital investment heads to deeptech and AI
UK Private Capital’s latest report on the venture capital industry shows that almost two thirds (63%) of VC investment in 2025 was directed towards deeptech and AI companies.
Venture Capital in the UK 2026 shows in total, £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 is concentrated in London, with deeptech businesses in other sectors such as biotech having a greater geographic spread around the country. Overall, 50% of venture businesses backed in 2025 were outside of London.
The report, which launches at UK Private Capital’s annual Accelerate Conference in Central London today, shows that 9,100 high growth businesses are backed by venture capital across the UK, employing 378,000 people.
The report confirms that venture capital makes long term investments, finding that the holding period for VC investments exited in 2025 was almost 7 years, reflecting the sustained capital and support required to build and scale high-growth businesses. This long-term investment enables companies to expand, improve productivity, develop talent, and create high-quality jobs.
VC fundraising was £2bn in 2025, which was 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.
To retain the UK’s status as the leading hub for venture capital outside the US, UK Private Capital is calling for the Government to continue to drive momentum on the pensions agenda and incentivise founders to reinvest capital and expertise after successfully exiting businesses.
Industry calls for increase in momentum on the Mansion House agenda
UK Private Capital’s latest report shows 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 – with firms describing it as difficult to engage with pension funds.
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%) of respondents not optimistic that Mansion House agreements will deliver greater investment by 2030, compared to just 20% who were optimistic.
UK Private Capital is calling on Government to continue to press for momentum on the pensions investment agenda and adopt further measures to drive progress. The Association is calling on 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. NOVA draws on the experience of the successful Tibi scheme in France, which the Labour Party endorsed in its 2024 financial services strategy while in opposition. Since Tibi’s launch in 2020, the scheme has successfully attracted approximately €12–13 billion in commitments from long-term investors.
Reinvestment relief would boost next generation businesses
The association is also calling on the Government to introduce a 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. The SRR would create a new capital gains tax reinvestment relief, to apply where gains from successful investments are then reinvested into qualifying businesses. This would be targeted at UK headquartered scale ups, UK-focused venture and growth equity funds, and R&D-intensive companies aligned with priorities set out in the Government’s Industrial Strategy.
“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.”
“Britain’s strength in AI and deep tech is no accident - it’s the result of world class talent, cutting edge research, government backing and the growing appetite by venture capital to back brilliant companies to grow and succeed.
“This report shows the scale of the opportunity, with billions of pounds flowing into technologies that will define our future. From AI to biotech, this is how we are sparking productivity, creating high quality jobs, and powering growth in communities right across the UK.”
Notes to Editors:
A full copy of the report is available here.
For further information, please contact:
UK Private Capital Press Office
Email: [email protected]
Background:
About UK Private Capital
UK Private Capital is the industry body and public policy advocate for the private equity (PE), venture capital (VC) and private credit ecosystem in the UK. With a membership of 600 firms, we represent UK-based private capital firms, as well as their professional advisers and a large base of UK and global investors. The private equity, venture capital and private credit industry has a vital role to play in driving national and regional growth. Currently over 13,000 companies, employing more than 2.5 million people, are backed by private capital investment in the UK.
