UK start-ups on track for best year since 2022
New data from KPMG shows that investors put over £5 billion into UK start-ups in the third quarter of 2026. The firm’s analysts predict the year looks set to end on a four-year high, with expectations of a final total of over £25 billion invested.
The data shows investment was down from Q2, but KPMG noted this is a common sector trend and did not stop the UK from remaining Europe’s top fundraising market.
One mega deal was a £900 million+ investment in auto taxi firm Wayve, and AI continues to drive investment, as shown by a £336 million raise by AI-driven materials development company CuspAI and a £237 million raise by AI chip company Olix.
However, KPMG noted that the UK exit market remains the big unknown, with no broad reopening so far this year, particularly for IPOs. While there is a good pipeline of IPO-ready companies and considerable discussion of possible exits, activity has not yet materialised, it noted.
What’s being funded?
Start-ups focusing on artificial intelligence (AI) remain the main factor in this rise in investment, with particular focus on London being the hub for tech innovation. A total of £10.7 billion of the £14.2 billion raised so far this year centred on the city, up from £4.4 billion in 2025.
The first six months of the year has also seen a spike in billion-plus mega deals, seeing three in total, with experts predicting the UK now being home to the ‘megadeal’ in Europe and more are expected this year and beyond.
These megadeals were for frontier AI drug discovery platform Isomorphic Labs (£1.5 billion), £1.48 billion for AI infrastructure company Nscale and autonomous driving business Wayve (£1.1 billion).
Elsewhere in the world, Q3 global venture capital investment reached £128 billion as investors continued to back AI at unprecedented levels and poured billions into the infrastructure needed to support the technology’s rapid growth.
“As VCs apply greater rigor ahead of term sheets and reassess risk, companies coming to market are better prepared, backed by more sustainable unit economics, clearer narratives, and larger, defensible markets,” said Patrick Molyneux, Partner and Head of Venture Fundraising Advisory at KPMG.
“Those that aren’t quite ready are choosing to wait and resolve any meaningful issues ahead of market approach. After a prolonged downturn, the market appears to be moving through correction and towards a new normal, where fewer but higher quality and larger deals are getting done.”
