The UK remain number one in Europe for venture capital (VC) investors despite a fall in both overall investment and number of deals, according to new figures.
The latest KPMG Private Enterprise Venture Pulse report showed that the UK continues to come out on top across the EU with a total of £4.1 billion raised across 507 deals during the first quarter of 2025, securing four out of the top 10 deals including the biggest in Europe after London-based AI drug discovery Isomorphic Labs scooped a £453m award.
For comparison, the nearest other countries in Europe were Germany (securing £1.6 billion) and France (securing £1.2 billion).
This was also partly driven by strong investment in the health and biotech sector during Q1 2025, including UK-based Verdiva Bio securing £309 million and Cera £113 million.
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 climate 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 investment in these sectors, which are key to driving long-term economic growth and supporting our future workforce, and therefore should ensure we all be doing as much as we can to make these investments as attractive as possible.”
Merger and acquisition activity started to pick up in the UK during Q1 2025, although this has not yet translated into deal value given slow deal speeds and the enhanced focus on due diligence.
Patrick Molyneux, Head of Products and Partnerships at KPMG Acceleris, said: “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.”
What’s happening elsewhere?
Global VC investment surged from £89 billion in Q4 2024 to a ten-quarter high of £95 billion in Q1 2025, despite ongoing geopolitical conflicts and tensions, continued concerns about global trade and tariffs, and the delay of a major reopening in the IPO market.
The overall increase in deal value was largely driven by a series of mega-rounds by AI companies, including a record-setting £30 billion raise by OpenAI.
While VC funding rose considerably given the red-hot investment in AI, global deal volume continued to plummet, falling from 8,801 deals in Q4 2024 to a record low of 7,551 deals in Q1 2025. While many VC investors were optimistic heading into Q1 2025, fresh uncertainties saw many pressing pause again on major deals outside of the AI space.
The Americas attracted £71.4 billion in VC investment in Q1 2025—nearly three-quarters of the global total—with the US accounting for £69 billion of this amount. Europe remained relatively flat, with £13 billion in VC investment raised across 1,883 deals, while the Asia-Pacific region continued to experience a significant slump, drawing only £9.7 billion in investment across 2,149 deals.
https://kpmg.com/uk/en/media/press-releases/2025/04/uk-leads-venture-capital-investment.html
