Equity Investment Trends: Are UK Small Businesses Still Attracting Funding?

UK small businesses are still attracting equity funding, but the market has changed shape. The headline is not "no money", it is "more selectivity". Deal volumes have dropped, average ticket sizes have risen in pockets, and investors are concentrating on clearer winners.

Three data points frame the post-2025 picture:

• In 2024, equity funding into UK smaller businesses fell 2.5% to £10.8bn, while deal numbers fell 15.1% to 2,048 deals, showing fewer rounds getting done even as capital held up better. Source: British Business Bank, Small Business Equity Tracker 2025
• In Q1 2025, 382 equity deals were recorded at £2.3bn, a sign of activity continuing, but in a cautious environment. Source: British Business Bank, Small Business Equity Tracker 2025
• By Q3 2025, Dealroom's UK innovation snapshot reports $9bn raised in that quarter, and $17.3bn raised in the first three quarters of 2025, pointing to a stronger second half for venture fundraising overall. Source: Dealroom x HSBC Innovation Banking, UK Q3 2025

Are UK small businesses still attracting equity after 2025?

Yes, but the bar is higher. The British Business Bank's data shows that value held up better than deal count in 2024, which is a classic "fewer, bigger, more conviction-led rounds" pattern. Source: British Business Bank, Small Business Equity Tracker 2025

External deal tracking points to a choppier quarter-by-quarter market in 2025. For example, Beauhurst reports that Q3 2025 saw £4.45bn raised, up 5.1% in value and up 9% in deals versus Q3 2024, suggesting stabilisation year-on-year even if the market still swings quarter to quarter. Source: Beauhurst, The State of UK Investment Q3 2025

What changed: fewer deals, more concentration

1) Deal volumes fell faster than capital

In 2024, smaller business equity totals dipped slightly, but the number of completed deals dropped much more sharply. This matters because it changes fundraising strategy. Founders face more "no" decisions and longer timelines, even when there is still money in the system. Source: British Business Bank, Small Business Equity Tracker 2025

2) Early-stage felt the squeeze most

The equity tracker reports larger reductions in deal numbers at earlier stages in 2024, including seed and venture, versus growth-stage. That is a warning for very early-stage companies in 2026: the funding exists, but "easy seed" is less common than it was in the 2021 to 2022 peak cycle. Source: British Business Bank, Small Business Equity Tracker 2025

3) AI and "strategic" themes supported bigger rounds

In 2024, the tracker notes that deals in AI were 40% larger than the wider market average, and AI demand helped support investment values even while overall deal counts fell. That does not mean "add AI to the pitch deck". It means investors paid up for real technical advantage and clear adoption. Source: British Business Bank, Small Business Equity Tracker 2025

Where UK small business equity is still happening

Regional picture: London still leads, but growth is not only in London

The 2024 regional breakdown in the equity tracker shows London with 965 deals and £6,626m invested. But it also shows growth in several places, including Scotland (201 deals, £507m), and the North West (146 deals, £654m), both up year on year. That is important for 2026 searchers because it supports a practical takeaway: strong companies can raise outside the capital, especially when they align with local clusters and active angel networks. Source: British Business Bank, Small Business Equity Tracker 2025

Dealroom's 2025 view is also consistent with a more distributed ecosystem, reporting that 45% of UK funding rounds in 2025 had been raised outside London (as of end September 2025). Source: Dealroom x HSBC Innovation Banking, UK Q3 2025

Spinouts and research-linked companies stayed resilient

The equity tracker reports that investment in university spinouts was resilient in 2024, and that these companies accounted for 17% of total equity funding. For 2026 fundraising, this highlights a durable route to capital: defensible IP plus credible commercialisation plans. Source: British Business Bank, Small Business Equity Tracker 2025

Founder diversity: progress in some channels, but gaps remain

In the 2024 equity market data, teams with at least one female founder received 27.5% of total equity deals and 16.6% of total equity investment. That is meaningful participation, but it also shows a persistent gap in share of capital versus share of deals. Source: British Business Bank, Small Business Equity Tracker 2025

What "still attracting funding" looks like in 2026

If you are a UK small business raising in 2026, the post-2025 data suggests your odds improve when you match the market's new rules:

What investors are rewarding more often

• Clear traction, even if it is narrow, such as repeatable sales in one segment.
• A believable path to profitability, or at least disciplined burn and measurable unit economics.
• Defensibility, such as data advantage, technical lead, regulated distribution, or strong IP.
• Credible follow-on potential, because later-stage capital is still selective.

Common reasons good businesses miss out

• They rely on "market size" instead of proof of demand.
• They cannot explain why they win now, not just eventually.
• They start fundraising too late and run out of runway.
• They pitch a valuation anchored to 2021 norms instead of current comparables.

2026 scenarios: what the data implies next

The following are scenarios, not forecasts. They are based on how 2024 to 2025 deal data is behaving across the equity tracker and external deal trackers.

Scenario A: "Selective recovery" continues

If the later-2025 pickup in UK venture totals (as captured by Dealroom) continues into 2026, more rounds get done, but capital still concentrates into top-performing sectors and companies. Under this scenario, founders who can show momentum and capital efficiency benefit the most. Source: Dealroom x HSBC Innovation Banking, UK Q3 2025

Scenario B: "Lower volume becomes normal"

Beauhurst's H1 2025 write-up warns that deal volumes may remain structurally lower than the mid-2010s peak years, depending on how the rest of the year develops. If that persists into 2026, winning becomes more about preparation, timing, and investor fit, not just the story. Source: Beauhurst, The State of UK Investment H1 2025

Policy and market support that founders should know about

The British Business Bank remains a major market participant. In its finance markets reporting, the Bank notes a strong focus on addressing regional imbalances, including that 84% of the businesses it has supported are located outside London. For founders, this matters because it supports a practical approach: seek out regionally active funds, angel groups, and programmes designed to "crowd in" private capital. Source: British Business Bank, Small Business Finance Markets 2024/25

Conclusion: are UK small businesses still attracting funding?

Yes, but the market after 2025 is tighter and more targeted. In 2024, total equity investment into smaller businesses only dipped slightly, while deal counts fell much more, which signals higher selectivity. In 2025, external deal tracking shows volatility by quarter, alongside signs of recovery in total venture capital raised later in the year. The practical 2026 takeaway is simple: fundraising is still possible, but you need stronger evidence, better timing, and a sharper investor match.