UK Venture Capital On Track for £25 Billion Year, KPMG Says

UK venture capital investment is on track to exceed £25 billion by year-end — the strongest total since 2021, according to the latest KPMG Venture Pulse report. The projection comes even after a quieter third quarter that pulled in just over £5 billion, down slightly from Q2 this year and Q3 2025.

The dip reflects a familiar seasonal pattern, not a stall. The UK held its position as Europe's number one destination for VC funding, and analysts expect the full-year figure to land on a four-year high.

What did the first half deliver?

The momentum was built in H1. UK start-ups secured deals worth a combined £14.2 billion in the first six months — the largest half-year total in four years, just short of the £14.8 billion raised in H1 2022 and marginally missing the record for the biggest half since records began in 2017.

London did the heavy lifting. The capital attracted £10.7 billion of that £14.2 billion, up sharply from £4.4 billion across 2025, and kept its status as the country's hub for tech innovation.

The takeaway: London is absorbing three-quarters of UK venture money, and the gap with the rest of the country keeps widening.

Which megadeals drove the numbers?

Artificial intelligence is the primary catalyst. The first half produced three billion-pound-plus megadeals, and experts now predict the UK has become the European home of the megadeal, with more expected this year and beyond:

• Isomorphic Labs — £1.5 billion for the frontier AI drug discovery platform
• Nscale — £1.48 billion for the AI infrastructure company
• Wayve — £1.1 billion for the autonomous driving business

Further AI-driven raises included £336 million by materials development company CuspAI and £237 million by AI chip company Olix. The third quarter's largest deal went to autotech firm Wayve at over £900 million.

The pattern is clear: capital is consolidating around a small number of very large AI bets.

Why is the exit market still stuck?

Funding is flowing; liquidity is not. The UK has not yet seen a broad reopening of the exit market, particularly for initial public offerings. KPMG notes a good pipeline of IPO-ready companies and considerable discussion of possible exits, but activity has not materialised.

Patrick Molyneux, Partner and Head of Venture Fundraising Advisory at KPMG, said: "As VCs apply greater rigor ahead of term sheets and reassess risk, companies coming to market are better prepared, backed by more sustainable unit economics, clearer narratives, and larger, defensible markets. Those that aren't quite ready are choosing to wait and resolve any meaningful issues ahead of market approach. After a prolonged downturn, the market appears to be moving through correction and towards a new normal, where fewer but higher quality and larger deals are getting done."

What about the global picture?

Globally, VC investment reached US$170.9 billion in the third quarter, driven largely by the infrastructure requirements of the AI sector, as investors poured billions into supporting the technology's rapid growth.

The concentration of capital into megadeals and AI infrastructure suggests a flight to quality that leaves little room for speculative business models. If the IPO paralysis persists, venture funds may have to lean on secondary sales or private acquisitions to return capital — and the raised barrier to late-stage funding means start-ups will need stronger defensibility than in the last cycle to get funded at all.