UK VC investment storms ahead of Europe as AI dominates
UK venture capital funding stormed ahead of its European peers in the first half of 2025 as the country’s innovation economy remained resilient in the face of wider geopolitical tensions.
Total investment topped $8bn (£5.9bn), edging up three per cent from the final six months of 2024. This gave the UK a 30 per share of all European venture capital investment for the year-to-date.
The increase came as artificial intelligence made up a record share of funding as the tech diversified across industries.
UK AI pocketed $2.4bn (£1.8bn) in VC investment in the first six months of the year, representing 30 per cent of all funding raises – the highest on record.
The fresh figures, revealed by HSBC Innovation Banking and Dealroom, show AI’s widening influence across industries.
The largest rounds in the first half included AI drug discovery company Isomorphic Labs ($600 million), generative AI media platform Synthesia ($180 million), and autonomous shipping technology startup Orca AI ($72.5 million).
Government bullish on AI
The UK government has boisterously thrown its weight behind AI with pledges to create 13,000 jobs across the country.
At London Tech Week last month, Prime Minister Sir Keir Starmer joined Nvida chief Jensen Huang to unveil a major tech push in a bid to make the UK an “AI maker, not an AI taker”.
This included pledges to strengthen the UK’s domestic computing capabilities by 20 times and support the nation’s booming AI startup ecosystem with a £1.5bn investment.
Just a decade ago, AI accounted for only 13 per cent of UK VC activity.
Simon Bumfrey, head of banking at HSBC Innovation Banking UK, said the diversity of innovative AI startups extended beyond just “established tech hubs” to towns and cities nationwide.
He added the UK’s “innovation economy continues to show resilience… despite broader geopolitical uncertainty” due to its ability to attract capital across “all growth stages”.
The first half of the year also included a surge in health, which narrowly bested fintech to become the “most funded innovation sector”.
The UK also added two more unicorns to its ranks in the second quarter of the year in Mubi and Oxford Ionics, taking the total to 188.
But Britain is also under renewed pressure to hold onto its tech titans as US giants swoop to snap up UK stocks.
Oxford Ionics accepted a $1.1bn takeover from New York-listed rival IonQ last month, in a blow to the City’s tech standing.