VC fundraising in 2025: Reports of UK VC’s decline are greatly exaggerated
At the end of last year, European VC fundraising data from leading providers showed not just an overall decline in VC fundraising across the world, but a marked decline in the UK. For example, Dealroom highlighted that UK fundraising dropped 56% year on year and that French VCs raised $5.1bn in 2025 and the UK $3.7bn, and that the UK had its lowest ever share of European fundraising (18%) - only narrowly ahead of Germany (17%).
I am guilty of parroting the line that the UK raises more capital than “France and Germany combined” in previous years, so should allow my European colleagues some schadenfreude when those countries raised double what the UK did last year. I am also delighted to see European fundraising and the amazing tech successes we are seeing across the continent.
However, I would highlight that this data paints a narrow snapshot of fundraising activity in one year and shouldn’t be taken as evidence that the UK has lost its status as one of the world’s best jurisdictions to raise a VC fund. That analysis focuses on one metric: the total amount raised in newly closed funds, and it misses the broader context of the UK’s sustained global leadership in this asset class.
First, the UK continues to dominate European venture capital investment overall. According to all of the leading data providers, UK-based startups attracted more total VC funding in 2025, with strong momentum especially in AI deals. This demonstrates that while French VCs may have closed a few larger funds in this period, the underlying investment ecosystem in the UK remains larger and more active.
Second, the UK ecosystem’s quality and depth give it a structural advantage for fundraising. London alone has historically accounted for a significant share of European VC capital, bolstered by a concentration of experienced fund managers, LP networks, and access to international institutional capital. Moreover, UK funds routinely secure capital from global LPs, including US pensions, endowments, and sovereign wealth funds, which prefer the UK’s strong legal system, regulatory clarity, and depth of market.
Third, UK VCs have delivered outstanding returns, with flagship exits and portfolio growth that reinforce investor confidence. Flagship exits and sustained portfolio growth have delivered compelling returns for LPs, underlining the UK’s ability not only to raise capital but to deploy it effectively. For example, Balderton’s returns from early investments in Revolut has generated significant multiple returns for its LPs, illustrating the UK’s ability not just to raise funds, but to deploy them successfully. As the Revolut example demonstrates, there is an increasing appetite for secondaries and other innovative ways to drive returns in the asset class as we wait for the next wave of tech IPOs, which again we hope to see more of this year.
Finally, beyond headline fundraising totals, the UK retains a leading position in strategically important and emerging sectors including AI, life sciences and defence. These areas continue to attract specialist and global LPs who prioritise depth of expertise, quality of deal flow and innovation ecosystems.
A fuller picture will emerge with the publication of the BVCA’s forthcoming Report on Investment Activity later this year. Looking ahead, new programmes launched by the British Business Bank in April, alongside growing interest from pension schemes in venture and growth capital, should support a rebound in UK fundraising and reinforce the UK’s position as a leading global venture capital hub.
Authored by Chris Elphick,
Head of Venture Capital, BVCA
