Early-Stage Funding Is Pulling Forward In The UK 

The most recent analysis from Pitchbook affords an optimistic view of Sequence A-B funding rounds; but additionally serves a warning that extra established startups will discover their later funding rounds far much less profitable. 

The info exhibits that Sequence A–B rounds stay strong, comprising 65.5% of complete VC deal worth in H1 2025 – up from 51.2% in 2024.

The increase has been pushed by sturdy exercise in pharma and biotech. Nonetheless, the Pitchbook information exhibits that Sequence C–D funding has declined, capturing simply 14.3% of deal worth.

Early stage optimism

The Pitchbook report describes Sequence A-B funding as “resilient” regardless of “a weaker macroeconomic backdrop and elevated market volatility”. There was a decelerate from the earlier yr, however the report acknowledges that 2024 was a “report” yr. 

In H1, the capital raised reached £1.5bn. If this degree continues for the remainder of the yr, non-public fundraising within the UK can have declined 59.6% year-on-year. 

Main the pack for complete funding are AI ventures and Huge Information has entered the highest ten sectors for the primary time because of AI-linked purposes. The report singles out life sciences as a “uncommon space of progress”, whereas pharma and biotech ventures get pleasure from “sturdy deal movement”. 

A shifting fund construction

The distinction with 2024 just isn’t solely certainly one of capital raised. It seems the very nature of the fund construction has modified. The info reveals that the majority new funds raised are below £50m. In 2024, greater than 15% of funds closing exceeded £250m. 

There have been some huge hitters although no megafunds (£1bn-plus autos) thus far. The report mentions the Adams Avenue European Enterprise Fund 2023, which raised £230.7m and was the fourth-largest shut in H1 inside all of Europe. 

This was adopted by QuantumLight Capital Fund and 2150 City Tech Sustainability Fund II, which raised £188m and £166.8m, respectively. 

For capital raised, 69.6% of capital was in rising companies in H1, in contrast with simply 25.6% in 2024.

Quandary for extra established startups

This report confirms what now we have already seen available in the market – that issues are powerful for rapidly-growing ventures or later stage startups taking a look at their third or fourth funding rounds. 

Warning bells have been already sounding after the UK misplaced certainly one of its most lauded startups – Deliveroo – in a buy-out by a US competitor. 

Different indicators embody the cash switch agency Clever’s resolution to ditch its major itemizing with the London Inventory Alternate. As an alternative, it has gone for a twin itemizing however with the US as its major base, regardless of the Chancellery pinning its hopes on a fintech increase. 

Regardless of this, there’s confidence. This yr’s funding could not hit the heady heights of 2024, however the Pitchbook report nods to the Mansion Home Accord, an settlement signed in Could 2025 by 17 main pension suppliers to allocate no less than 10% of their outlined contribution (DC) default funds. It estimates this “may unlock £50bn for personal markets by 2030”.

Many UK tech corporations are additionally reportedly mulling becoming a member of PISCES, the inventory marketplace for buying and selling non-public firm shares the federal government introduced in Could this yr. It’s hoped that PISCES will assist to enhance late-stage funding for personal companies within the UK.

In the intervening time, early-stage startups may be optimistic about securing their Sequence A-B funding. But it surely seems possible that the UK could lose extra of our larger and established startup ventures until there’s a dramatic change within the panorama.