The UK has lengthy been the runaway chief relating to tech funding in Europe. The nation’s startup scene additionally holds its personal on the worldwide scene, boasting the third most dear know-how ecosystem in the world, in response to Dealroom’s UK Tech: A Forward Look To 2025 report.
So far this yr UK startups have raised €13.9bn in fairness funding throughout 1,338 offers, according to Sifted data. That’s in comparison with second-placed Germany, which has seen €7.4bn raised throughout 547 offers, and third-placed France, with €7.3bn raised throughout 502 offers.
Business chiefs additionally maintain the UK in increased stead than its friends on the continent relating to entrepreneurship. A 2025 survey by the Barclays Business Prosperity Index reveals that 62% of worldwide tech enterprise leaders contemplate the UK a extra engaging location to develop and scale a tech enterprise than mainland Europe.
There’s additionally a buzz flying in regards to the British ecosystem in the meanwhile. In the most recent version of Sifted Talks, we requested 4 consultants what’s driving a surge in confidence in UK tech.
Our panel of consultants included:
- Ceri Morgan CBE, His Majesty’s Trade Commissioner for Europe, Department of Business and Trade
- Kanishka Narayan MP, Minister for AI and Online Safety, Department for Science, Innovation and Technology (DSIT)
- Javier Nunez-Vicandi, principal at European enterprise capital agency Sofinnova Partners, which invests in life sciences startups
- Daniel Kim, chief monetary officer at AI-powered video platform Synthesia
Here are the important thing takeaways:
New authorities insurance policies
From the federal government’s Modern Industrial Strategy and AI Opportunities Action Plan to new modifications introduced in final month’s Autumn Budget, UK tech has a lot to shout about.
One of the bulletins from the latest Budget that goals to incentivise expertise have been modifications to the nation’s Enterprise Management Incentives (EMI) framework, designed to assist startups entice expertise by awarding worker shares in a firm with minimal tax obligations. The worker restrict and firm share possibility restrict have additionally been doubled, to 500 staff and £6m respectively.
“We are doubling the eligibility for enterprise tax incentives so scaleups can attract the capital and talent they need,” Morgan says. We are offering a new three yr stamp obligation exemption for corporations that record in the UK. We are additionally sustaining the bottom price of company tax in the G7.”
The authorities has additionally lately appointed Balderton’s James Wise to lead its sovereign AI unit — tasked with serving to to construct and scale AI capabilities in the UK — and has named leaders from Google DeepMind and Monzo as “AI ambassadors” to assist steer the nation’s AI technique.
The authorities’s new AI progress zones additionally guarantees £10bn of funding to construct knowledge centres between Newport and Bridgend.
“We’ve announced three AI growth zones in just the last three months, with billions in investment in each of those areas, firing up the fundamental input into modern AI. I was delighted that the last two were in North and South Wales.” – Kanishka Narayan MP, Minister for AI and Online Safety, Department for Science, Innovation and Technology
Domestic and worldwide expertise
Narayan explains that the UK is in a distinctive place relating to attracting worldwide expertise after the federal government introduced its Global Talent Fund in July. The fund will award 12 chosen UK analysis organisations with an institutional grant which can allow them to recruit worldwide researchers in science and know-how. The fund at the moment has £54m in backing from DSIT.
“If you’re a young person who’s building a product or focused on a startup, the UK is now one of the best places in terms of high potential and global talent visas, in light of recent changes that the Home Office has announced. There could be no more compelling story, both for domestic talent and for international talent.”
Narayan explains that as a results of the UK authorities being open and searching forward, it’s hoping that the perfect expertise from throughout the globe will come to construct “great businesses” right here.
For Kim, the expansion of the expertise pool in the UK has given corporations what they should keep in the nation. “When you think about scaling compared to where we were five or ten years ago, we’ve come a long way. You can do the whole journey today. You can go from seed to growth rounds to global partnerships,” he says.
In UK cities comparable to London, there are much more loyal staff in comparison with Silicon Valley as a result of fewer choices to leap ship, he provides.
“London is a bit more subdued, but it’s great for a startup or scaleup, because you need that continuity during the hardest part of a company’s journey.” – Daniel Kim, Synthesia
Hub for tutorial analysis excellence
The UK boasts a wealthy historical past of analysis and educational excellence, with three British universities — the University of Oxford, the University of Cambridge and Imperial College London — included in the Times Higher Education Top 10 World University Rankings 2026.
For Nunez-Vicandi, the UK’s robust educational historical past gives glorious alternatives for European funding. “The UK is the fourth best in research impact in life sciences. From that perspective, that early innovation and academic excellence can then drive subsequent growth and early-stage companies.”
The Oxford-Cambridge Growth Corridor initiative, which goals to create a science and know-how innovation hub linking the schools of Oxford and Cambridge with neighbouring cities, can also be contributing to abroad funding in the UK, provides Morgan.
She says: “I was in the Ox-Cam corridor a couple of weeks ago and I was looking at a Japanese startup that came to work in the UK, to be in the ecosystem. But there’s all kinds of things going on.
“I think sometimes people are still seeing a kind of dusty spire attitude to the corridor. The learning is still there and really advancing and developing. I think that connectivity and the hive mind that’s created around the corridor is pushing a lot of innovation.” – Ceri Morgan, His Majesty’s Trade Commissioner for Europe, Department of Business and Trade
Government being the primary buyer
There are signs the government is leaning more into buying from early-stage startups.
During a wave of announcements in November, it committed to act as a “first-customer” for UK startups developing AI hardware products but who are struggling to get off the ground without investment. The initiative is backed by £100m in investment, something VCs expect to move the needle for the early-stage ecosystem.
“The government’s role as a customer can be a huge driver of progress,” Narayan says.
“The key now is to take that change and make it more systemic so that every government department is able to get a good customer, send a clear demand signal for what they want to buy and then follow through in an accelerated, innovative way when it comes to sales cycles as well.”
From a healthcare perspective, the federal government appearing as a buyer is a welcome shift in investing, says Nunez-Vicandi. “We must ensure that the government is purchasers of these technologies, not only backers, particularly in the healthcare context where so much of the overall spend is institutionalised in systems such as the NHS.
“The more we can do to make the NHS as a healthcare system a better purchaser of technology, the more that it can stimulate the revenue growth in these companies.” – Javier Nunez-Vicandi, Sofinnova Partners