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The UK suffered its slowest quarter of venture capital investment in five years despite a surge in interest in the artificial intelligence sector, according to data from KPMG.
The latest KPMG Private Enterprise Venture Pulse report showed levels of investment dropped to £2.6bn across 435 deals in the second quarter of 2025, down from £3.8bn in quarter one across 507 deals, as a result of a pullback across corporate VC activity.
AI remained a dominant investment theme alongside the areas of health tech and fintech with megadeals during the quarter including £251m for EV charging firm Believ, cloud computing business XY Miners securing £223m and £148m for health tech firm CMR Surgical.
This meant that, despite the overall downturn, the UK secured three of the top 10 deals across the whole of Europe.
Looking ahead, trends expected for quarter three and beyond include a continuation of subdued levels of VC investment, due to uncertainty being caused by fluctuating tariffs being imposed by the US.
Nicole Lowe, UK head of KPMG’s emerging giants practice, said: “While quarter two marked the slowest quarter for UK venture capital since early 2020, the long-term outlook remains strong, particularly in AI.”
“We’re seeing growing confidence from investors in the UK’s innovation ecosystem, and the government’s significant AI-focused commitments, including job creation and infrastructure investment, signal a clear intention to position the country as a global leader in next-generation technologies.”
Global venture capital investment declined from £95bn in quarter one to £75bn in quarter two. Despite the solid VC investment, however, global VC deal volume dropped to a decade-low of 7,360 in quarter two, down from 9,314 in quarter one, as many investors paused activity outside of resilient sectors like AI, fintech, and defence tech.
