HSBC Innovation Banking, the arm of Europe’s largest lender, celebrated the UK’s entrepreneurial value in its recent innovation report
UK innovation businesses secured £3.2bn of venture capital in the first quarter of the year – an eight percent rise from the same period in 2024.
The quarter also drew greater sums of investment, with more than six reported mega-rounds and the second-largest average deal value since 2020.
Health was the best-funded industry, with its second-best quarter in history. It more than doubled enterprise software in second place at £549m.
London-headquartered Isomorphic Labs and Verdiva Bio’s mega-rounds of £455m and £312m supported the industry’s overall sum.
This reinforced the UK’s dominance over its European counterparts and solidified its position as the hub of such investment in the region. During the first quarter, the UK has raised more than France, Germany and Spain put together.
Simon Bumfrey, HSBC Innovation Banking’s chief executive, said: “The UK is still Europe’s innovation hub – generating revenue, spawning more unicorns, and attracting an increasing proportion of VC investment.”
“With rising early-stage investment, fast-growing sectors, and standout IPO candidates, we’re excited to see what the rest of the year holds for the UK innovation economy and remain focused on supporting firms to accelerate growth across the ecosystem.”
The UK’s innovation economy is worth £911bn, according to data from Dealroom.co cited in HSBC Innovation Banking’s quarter one report. Fintech made up a quarter of the figure at £219bn.
UK is Europe’s leading unicorn breeder
The report noted that the UK has produced 185 unicorns – a start-up worth more than £1bn – with two more this year.
This has also created an alumnus pipeline of employees from some of the UK’s leading unicorns now starting up their own.
Deliveroo, which reached unicorn in 2017, has spawned the most 2nd generation start-ups with a total of 53. Revolut took the second position with 46 followed by video games maker King on 41.
Having 31 percent of Europe’s unicorns, London is perfectly placed to nail some of the most highly heralded IPOs.
Neil Shah, London Stock Exchange’s head of primary markets for the tech sector, stated: “we have had the strongest start to the year since 2021, and we are heartened by the IPO pipeline.
“Whilst against the backdrop of global markets, we are taking what is already a solid basis of backing for firms opting to list and a reputable exit vehicle for VC-backed companies.”
The London Stock Exchange has endured a grim few years since 88 companies abandoned their City listing in 2024 – the greatest since 2009.
Yet, the waiting list of fintechs – headliners such as Monzo, Zilch, and Starling – might be just the thing to bring the troubled LSE around.
The first quarter also recorded venture capital activity being diversified away from London. Cambridgeshire and Oxfordshire became investment hotspots, raising £222m and £212m respectively.
Tom Wilson, Seedcamp partner, explained: “In addition to the stand-out strength of London, it also heartening to see Cambridge and Oxford become more important hubs, making a meaningful contribution to total funds raised, most notably in frontier fields such as AIdrug discovery and semiconductors.”.
“While VC deployment remains measured, conviction is high where quality and technical edge meet market opportunities.”
