Supporting Materials

Q1 - 2025 Venture Bulletin Commentary

​

Prepared by VenturePath for The UK ScaleUp Investment Mission, we are very aware of an extended and growing decline in access to early VC funding for UK scaleups. Most notably at Series A, and particularly prevalent in the drop-off from seed funded businesses to Series A funded businesses, being at an all time low, of between sub 10% (our analysis) and 7% (according to the British Business Bank [30/04/25] “the Series A gap has seen conversion rates plummet from 25% to just 7% since 2021”). Less than 1 in 10 seed funded startups goes on to access VC funding. Whilst this number should never be 10 in 10, we have been as high in the UK as 5-6 so the drop-off is stark, and continuing to decline, worse than other nations. 

 

We track and highlight this data because we see a disconnect between the capital supply side and UK scaleups ability to access this. VCs have funding available. At VenturePath a selection of VC that we partner with manage £10bn of capital. The British Private Equity & Venture Capital Association (BVCA) in their latest (May 2025) investment activity report show that venture capital funds managed from the UK had a robust year in 2024 with the total amount raised reaching £4bn – compared to £2.3bn in 2023.  

 

Further new capital is on the way, and welcomed in to the market (through the Mansion House Compact encouraging UK pension funds to invest into UK venture, via the British Growth Partnership, through reforms to the British Business Bank and its LP function, plus the efforts of the newly formed Office for Investment  / DBT’s Venture Capital Unit working with overseas investors to drive Foreign Direct Investment / Inward Investment and other new sources of capital supply. The Industrial Strategy's goals also aim to capture a greater share of “internationally mobile investment”. 

 

Dealroom and HSBC Innovation Banking reported in April 2025 that UK startups raised $4.2B of venture capital in Q1 2025, across all stages,”the strongest start to a year since 2022”, but this is skewed by Series B and beyond, breakout and mega rounds. 

 

However less UK companies are receiving this funding at the earlier stage, notably around Series A-B, and that is where the UK ScaleUp Investment Mission is focussed. These demand-side challenges (investor alignment, company readiness, massive discrepancies in who can access VC funding highlighted by under-represented regions and founders) are all easily addressable should Government want to action the recommendations the UK ScaleUp Investment Mission and its 100+ ecosystem supporters and £10bn of VC partners have shared with the Government over the last 9 months, to date with good interest being shown, but no action or uptake of our recommendations to improve the UK’s ability to find and fund these future scaleups.  

 

“Your belief in the need to organise greater venture collaboration...aligns with the objectives across our newly expanded OFI. The Government has committed to a small business strategy to promote small business growth regardless of their financing needs or their location. This strategy [also] aligns with the UK ScaleUp Investment Mission to create more venture backed tech successes.

Rt Hon Jonathan Reynolds MP 

Secretary of State for the Department for Business and Trade (March 2025)

 

This lack of timely action matches the continuing decline in access to VC funding highlighted in Q1.

 

We remain committed to highlighting the trends around scaleup investment, as part of a rolling body of evidence of what the UK is doing well or badly with regard to funding our most ambitious scaleups. We have particular focus on domestic supply of capital into companies at late seed / pre-Series A and Series A+ stages, which these Venture Bulletins track closely. 

 

Day-to-day we support hundreds of UK-wide scaling companies through VenturePath’s ScaleUp Investment Platform, as they progress from £1-20m revenue, helping them access equity funding at pre-Series A (£1-2m), Series A (£2-10m) and Series B (£10-20m).