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The UK continues to lead venture capital investments with a total of £4.1bn raised across 507 deals during the first quarter of 2025, KPMG said.
According to the latest KPMG Private Enterprise Venture Pulse report, the UK secured four out of the top 10 deals including the biggest in Europe after London-based AI drug discovery Isomorphic Labs scooped a £453m award.
The result was also partly driven by strong investment in the health and biotech sector during Q1 2025, including UK-based Verdiva Bio securing £309m and Cera £113m.
However, overall the quarter recorded a fall when compared to Q4 2024 in both the overall level of investment (from £4.4bn to £4.1bn) and total volume of UK VC deals (from 569 to 507) – driven by investor confidence currently being aligned with more established, proven start-ups given uncertain market conditions and ongoing lack of exits.
Nicole Lowe, UK head of KPMG’s emerging giants practice, said: “In a financial market that is currently fluctuating on a daily basis following the recent activation of tariffs across the globe, investors are backing companies that offer the fastest path to profitability. This has made it challenging for UK startups in IP rich areas as these are longer term investment areas, which, while not favourable at this moment, could actually provide excellent opportunities in the coming weeks, months and years.
“This switch could indicate we are at risk of missing out on important investments in these sectors, which are key to driving long-term economic growth and supporting our future workforce, and therefore should ensure we all are doing as much as we can to make these investments as attractive as possible.”
Patrick Molyneux, head of Products and Partnerships at KPMG Acceleris, added: “While overall deal volume remains measured, this may signal an evolving investment landscape rather than a temporary slowdown. This shift in cadence could represent a more sustainable funding model that emphasises quality over quantity in today’s market.”
