The Small Business Equity Tracker report provides an in-depth assessment of trends in UK equity finance and includes new analysis of the UK academic spinout investment landscape.
Key findings
- UK smaller businesses raised £12.3 billion of equity investment across 2,002 deals in 2025.
- Total investment declined by 4% from 2024, while deal numbers contracted more sharply by 17%.
- The market became increasingly concentrated in 2025, with the ten largest fundraisings capturing 23% of total investment in smaller businesses - the highest share since 2020.
- Investment into AI companies reached a record high of £5.4 billion in 2025, accounting for 44% of the total invested in smaller businesses and 26% of deals.
- Seed stage deal numbers declined more sharply than at any other stage, falling by 27% in 2025. Seed stage companies also took longer to secure funding on average.
- Growth stage investment was most resilient, rising by 10% to £5.7 billion despite a 4% decline in deal numbers in 2025.
- UK VC investment averaged 0.60% of GDP over 2023-2025, compared to 0.79% in the US. As a result, the UK gap with the US market increased to 32%, from 7% over 2022-2024.
- Advanced Manufacturing and Digital and Technologies saw the largest increases in investment value across the IS-8 sectors in 2025, of 49% and 21% respectively.
32%
UK-US VC market gap, adjusting for GDP (2023-2025)
57%
of UK equity investment in 2025 went to London-based smaller businesses alongside 48% of deals
25%
of UK equity deals went to companies with at least one female founder
Trends by Nation and region and founder diversity
- London recorded steeper declines in both deals (-18%) and investment value (-9%) than the UK as a whole in 2025
- Scotland (+74%), the South West (+104%) and the North West (+82%) saw the largest increases in investment, driven by large AI and energy deals
- The share of deals and investment value captured by companies with at least one
female founder both declined in 2025
Equity pathways for UK spinouts
- UK spinout VC activity in 2021-2025 ranked second only to the US, with deal counts up 95% from 2016-2020 and investment increasing from £2.7bn to £7.5bn
- The UK generates five VC-backed spinouts per $1bn of higher education and government R&D, outperforming its international peers
- Broader equity activity involving spinouts also expanded in the post-pandemic period, but momentum reversed in 2025, with deals falling by 33% and investment by 51% from 2024
- Fundraising outcomes for spinouts still vary significantly by location. Nearly half (49%) of spinouts in the Golden Triangle raise equity, compared with 38% in the Northern Growth Corridor.
Bank activity
15%
of UK equity deals were supported by the Bank’s equity programmes during 2023-2025, alongside 16% of investment value.
74%
of the Bank’s supported deals were in Digital and Technologies, a larger share than the wider market (61%). The same was true in Life Sciences and Professional and Business Services.
5 of 12
UK Nations and regions where the Bank accounted for a higher share of deals than the wider market
1 in every 5
spinout deals received Bank support
30%
of Bank-supported deals (30%) involve at least one female founder, exceeding the wider market
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