The Takeaway: A Q&A With Ashish Patel on the Rise of International Investment in U.K. Startups

What is driving the rise in global investment in U.K. startups?

Following the global investment declines of 2022, investment in U.K.-based businesses is picking up. In 2024, we’ve seen landmark deals across AI (Wayve raising $1 billion for self-driving cars), life sciences (Nuclera securing $75 million for protein discovery), and FinTech (Monzo raising $430 million). It’s clear that international investors continue to see the U.K. as a fertile ground for building globally significant businesses across a variety of sectors.

What’s particularly interesting is the evolving profile of investors in these high-growth deals, with U.S. investors now contributing 33.8% of capital and increasing interest from the Middle East. A number of factors drive this kind of attention, including a growing pool of high-quality companies that, having raised early-stage venture capital, are now reaching breakout scale and becoming global businesses.

Other supporting factors include unique IP coming from U.K. research institutes, ease of doing business with clear regulations and company law, and the presence of multiple professional services firms that can ease the friction of international trade.

How do international investors perceive the risk and reward profile of U.K. startups?

Broadly speaking, the U.K. startup scene is perceived to have an attractive risk and reward profile among international capital managers, who will make investment decisions driven by detailed due diligence and relationships of trust.

Common themes in investor conversations often highlight the high-quality ecosystem in the U.K., which is increasingly producing both experienced CEOs and first-time founders being mentored by others who have had prior success. This creates a strong environment for compounding learning across successes and failures. We’re also seeing certain subsectors where the U.K. is starting to stand out, with deeper expertise than other startup hubs—particularly in deep tech, life sciences, SaaS, AI, and climate tech. Specialisms like these attract interest from high-quality business-builders, driving the ecosystem and bolstering investor belief that globally significant companies can be grown in the U.K. This is supported by data to show that London remains a top destination for international talent.

Investors often point out that achieving outsized returns typically requires international reach. In this respect, while the U.K. may be seen as a somewhat limited market in some sectors, its global talent pool, excellent transport links, and language and time zone considerations make it an attractive place to launch ventures that can head west to the U.S., east across Europe and Asia, or indeed both.

Are there specific sectors or industries in the U.K. that international investors are particularly interested in?

Foreign investors are tending to adopt a sector-specific approach in the U.K., recognising that the country offers a handful of sectors that provide immense potential for innovation and returns. FinTech is a particularly strong case in point as an industry supported by a forward-thinking regulatory framework and a dynamic financial services sector that cultivates talent. Recent data indicates that the U.K. ranks second globally in venture capital investment in FinTech, trailing only the U.S. and commanding nearly half of all funds invested in Europe.

Other notable industries include life sciences, in which the U.K. is internationally heralded for its prestigious research and innovation centres in Oxford and Cambridge. Similarly, tech and AI companies enjoy the benefits of a historically deep engineering talent pool, making it easier for investors to believe that companies can be built and scaled in the U.K.

So, what’s The Takeaway?

The U.K. offers one of the most vibrant startup ecosystems in Europe, with a strong track record in specific niches, a global talent pool, and international capital increasingly available. As markets thaw, U.K.-based companies are poised to capture the attention and deliver outstanding returns to growth investors. At Houlihan Lokey, our specialised teams with local presence and two U.K.-based offices are well placed to support the next generation of the nation’s success stories.