UK biotech funding hits £2.8bn as AI deals reshape sector

UK biotech venture capital investment jumped 44% to £270m in the third quarter, putting the sector on track for its strongest funding year since 2021, according to the BioIndustry Association's (BIA) quarterly report.

The quarter takes total UK biotech venture funding to £2.8bn so far this year. That growth came despite a difficult economic environment and a broader decline in venture capital investment across UK industries.

There's a caveat. A substantial share of the 2025 total came from a single deal: Isomorphic Labs' £1.6bn Series B round. Strip that out, and the picture is thinner. The BIA said the latest quarterly performance tracked wider UK venture investment trends.

Who raised the biggest rounds?

Basecamp Research secured the largest investment of the quarter, raising £104m in Series C financing. The company plans to use the money to train its next generation of artificial intelligence models and push AI-designed medicines toward clinical development.

Two other names filled out the quarter's deal sheet:

• Draig Therapeutics — £49m in second-round financing
• Mironid — £27m in second-round financing

The UK stayed Europe's largest destination for biotech venture capital, accounting for 26% of the continent's £1.1bn total.

Where is the money missing?

Funding remained uneven. Mid-sized rounds were scarcer, and seed investment stayed thin. BIA chief executive Professor Chris Molley said: "Looking at the weak spots, mid-sized rounds were thinner on the ground this quarter, and seed funding fell to just £12 million across four deals."

Molloy pointed to the intersection of biotech and AI as a major driver of recent investment — and a marker that separates the UK from rival markets. "It's where life sciences and AI come together, and big pharma, big tech, and US investors are all backing companies here," he said.

Recent evidence backs him up. NVIDIA, the US technology company, invested in two London-based start-ups, Prima Mente and Boltz Bio.

What about public markets?

The public side of the market remains shut. The UK biotech industry has now gone 17 consecutive quarters without an initial public offering, when a company first sells shares to public investors.

Follow-on financing, which lets publicly listed companies raise additional capital, totalled £151m in the third quarter. Almost all of it came from one transaction: Silence Therapeutics' £130m fundraising on Nasdaq, which closed ahead of a US$1.3bn takeover offer from Merck KGaA.

Why does British investor participation matter?

The BIA warned that limited participation by British investors in private and public markets could mean fewer investment returns get reinvested in the UK biotech sector. In effect, global capital funds UK science, but the gains leak abroad.

Molloy put it bluntly: "The pattern this year is clear: UK science attracts expert global capital, but we are missing an opportunity to see returns recycled in our own ecosystem, because too few British investors are taking part. This is true in both private and public markets."

He added: "Our focus is on making sure companies at all stages of development can access the finance they need to grow, and that the UK benefits from the upside. Government has a vital role to play in getting the environment right for that, and in incentivising wealth creators to recycle their gains."

What does the BIA want from the Budget?

Ahead of the Autumn Budget, the BIA is calling for measures to improve financing conditions for UK life sciences businesses. Its proposals include:

• Preferential access to national research and development infrastructure
• A more supportive tax system
• Enhanced R&D tax credits
• Incentives for reinvestment

Whether the Treasury acts will help determine whether the UK converts this year's venture rebound into a durable recovery — or watches another cycle of returns flow overseas.

By Amara Osei