This week, leading market research platform Tracxn released its Geo Funding Trend Report, which found the UK tech sector raised $15.3 billion USD in 2025 – an 11% decline year-on-year from the $17.1 billion raised in 2024. The funding also represented a 15% decrease from the $17.9 billion raised in 2023.
Not only has overall investment dropped, but there has also been a 35% contraction in deal volume between 2024 to 2025. Yet, the UK remains a top performer globally, sitting as the second-highest funded country worldwide – only after the U.S and ahead of India and China.
The study demonstrated a significant difference in funding according to stage. Funding for late stage startups remained resilient at $7.6 billion, while seed and early-stage capital dropped significantly, totalling $1.2 billion (-27%) and $6.4 billion (-19%), respectively.
Amid an uncertain economic climate, investors are opting to put their money behind late-stage startups rather than higher risk early-stage startups. But, while this can help avoid financial losses, it is also making it harder for founders to bring new products to market.
Dying or thriving?: The UK tech scene
As of 2026, the UK economy is in a tough spot – contracting by 0.1% toward the end of last year, just as Chancellor of the Exchequer, Rachel Reeves, announced £26 billion (€29.97 billion) in tax raises, including increased tax rates on dividends, property, and savings. A sluggish economy, higher tax rates, and cautious investors make up a challenging landscape for startup founders.
Despite these pressures, however, the UK remains a major global technology hub, with 28 funding rounds of over $100 million USD raised in 2025 – slightly lower than 2024 and 2023 figures of 31 and 29, respectively.
“Despite the current challenges, the future outlook is optimistic as the UK tech ecosystem continues to benefit from strong structural advantages, including globally recognised universities, established research institutions, and close collaboration between industry and government. There is continued investment in digital infrastructure, which strengthens the foundation for startups operating in data-intensive and emerging technology domains,” a spokesperson for Traxcn told 150sec.
Increased engagement from global technology firms and policymakers is also contributing to a more connected ecosystem, where startups can access capital, infrastructure, and market opportunities more effectively. As these frameworks mature, they are likely to enhance the UK’s appeal as a destination for building and scaling technology companies across multiple stages,” the spokesperson added.
Companies that raised over $100 million during the period included Nscale ($1.1 billion), DAZN ($1 billion), and FNZ ($1.2 billion). The 2025 period also saw five initial public offerings (IPOs), with companies including TeraView, Pattern Com, and Quantum Base going public throughout the year, and five new unicorns; SheMed, Tide, Nothing, Endless, and Cera.
The majority of funding went to enterprise applications, FinTech, and life sciences, which gained $9 billion USD, $4.2 billion USD, and $2.3 billion USD, respectively. It’s worth noting, however, that enterprise applications surged by 25% during the study period, while FinTech funding contracted by 12%.
It comes as no surprise that most of the funding raised was centred in London — which accounted for 78% – followed by Cambridge, which contributed 7% of total funding over the course of the year. There’s a fixation of capital, then, in the South East.
What about the wider European tech scene?
Although Tracxn has not yet released figures for Europe, global law firm Orrick’s State of European Tech 2025 report estimated that venture investment in European startups could reach $44 billion in 2025, making the $15.3 billion USD raised by the UK still an impressive total.
While the UK tech sector contracted, the European tech scene has also seen some decline, with investment levels remaining below their 2021 peak. In the UK particularly, startups have found regulatory burdens and difficulties accessing funding to be key concerns.
Many have thus turned to alternative funding methods, including angel investors and crowdfunders – a route that often proves slower than traditional VC.
“This year, we raised our first round, £350,000 from Startup Wise Guys and UK angels across the UK. It wasn’t clean, it wasn’t fast, and at several points I nearly walked away,” said Jack Clegg, founder and CEO at ecommerce tech startup Platter. The company, which strives to help food and beverage businesses digitize their processes, has secured $456,000 in total equity funding over two rounds.
“Angels invest in people. None of them asked for a 30-page financial model. They wanted to see belief, clarity, and resilience. They were betting on me. On the progress we were making, the conviction in our mission, and the willingness to keep pushing even when things were messy,” added Clegg.
The UK and European tech sectors are strong, but a general risk aversion among investors in the region and stringent regulations like the EU AI Act present new challenges, especially with regard to balancing product innovation against safety and compliance.
In any case, the UK still has a robust tech scene, with the London-based DeepMind sitting at the heart of the AI race, and an emerging generation of promising tech startups like Revolut, Stability AI, Monzo, Quantinuum, and Eleven Labs coming into the fold too.
Featured image: Cphotos via Unsplash+
