UK venture-backed companies attracted £16.9bn across 1,417 deals in the first seven months of 2026, but a lack of exits and a concentration of investment in fewer, larger funding rounds could hinder the ecosystem's future growth, according to a NatWest and PitchBook report.

The report, Reconnecting the Capital Cycle – Liquidity, Exits and the Outlook for UK Venture, found that AI and deep technology continued to drive investment, with AI companies attracting almost £12bn across 616 financings.

The number of active UK unicorns also rose from 33 to 41 over the past year, with combined valuations approaching £181bn.

However, liquidity remains a significant challenge. Just one venture-backed company has completed an IPO in 2026, compared with 43 in 2021, while trade sales remain the dominant exit route.

The report said subdued exit markets risk limiting the recycling of capital into the next generation of high-growth businesses.

The UK also remains reliant on international investors, with deals involving both UK and overseas investors accounting for the majority of invested capital. UK-only investors account for around one-third of transactions but just 10% of deal value.

Greg Brown, head of venture capital at NatWest Venture Banking, said: "The UK’s venture market continues to demonstrate resilience. We’re seeing sustained levels of investment, the emergence of new unicorns and strong investor interest in areas such as AI, deep technology and advanced research.

“The challenge highlighted by this report is not the UK’s ability to create innovative businesses, but its ability to recycle capital efficiently through the ecosystem. Healthy venture markets depend on a balance between investment and liquidity.

“While there are encouraging signs, particularly around efforts to mobilise more long-term domestic capital, there is still work to do to strengthen exit pathways and ensure successful companies generate returns that can be reinvested into the next generation of founders. Improving capital recycling will be critical if the UK is to maintain its position as a leading global venture ecosystem.”

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