New report: UK first-time investment rallies and spreads beyond London as AI powers UK funding recovery

The UK’s first-time equity investment market experienced a resurgence in 2025 and H1 2026, with more companies securing external funding than at any point in the last four years, according to a new report published today by Beauhurst and Penningtons Manches Cooper.

The State of UK First-time Investment 2026 report that 2,730 companies raised equity for the first time in 2025, representing a 29.9% increase year-on-year and marking the strongest year for first-time investment activity in four years. Collectively, those companies raised £4.4bn, an increase of 11.7%. The momentum has continued into 2026, with 1,221 companies securing first-time equity investment in the first half of the year, raising a combined £2.11bn.

A broadening market

The research suggests that while more businesses are accessing funding, investors are writing smaller cheques. The average first-time deal size fell from £1.97 million in 2024 to £1.67m in 2025, while the median round size declined to £200,000. The pattern persisted into H1 2026, when 1,221 companies raised £2.11 billion, equating to an average deal value of £1.79 million, while the median remained at £170,000.

Regional founders take a larger share

For the first time since 2022, more first-time fundraisings were completed outside London than within the capital, highlighting the growing strength of regional innovation ecosystems. Companies outside London accounted for the majority of first-time rounds in 2025, a trend that accelerated further during the first half of 2026.

An increasingly AI-led funding environment

AI emerged as the standout investment theme in the UK’s first-time funding market and is increasingly shaping the early investment landscape. AI companies accounted for 660 first-time fundraisings in 2025, with the sector attracting £1.45 billion of investment , representing 32.9% of all capital raised by first-time fundraisers, up from 17.0% in 2024. Investor appetite has strengthened even further in 2026, with AI accounting for 58.6% of first-time equity investment value in H1. The data points to an increasingly AI-led funding environment, with the technology becoming a key driver of growth in the UK’s early-stage ecosystem.

“The region and sector in which a company raises its first round of equity are among the clearest early indicators of where the UK’s next generation of innovative businesses is emerging,” said Will Axtell, Partner at Penningtons Manches Cooper Will Axtell, Partner at Penningtons Manches Cooper.

He continued: “It’s great to see these findings paint a positive picture of the state of the UK’s early-stage investment ecosystem. The fact that more companies are securing equity funding for the first time than at any point since 2021 is a real testament to the strength of our pipeline of entrepreneurial and innovative businesses.

It’s also really encouraging to see that, for the first time in several years, more first-time fundraisings were completed outside London. This reflects our on-the-ground experience of the growing importance of regional innovation clusters across the country. The continued momentum seen in the first half of 2026 points to a market that is becoming more geographically diverse, and accessible to first-time founders.

Overlaying all of this is the rapid rise of AI, which has become a major driver of first-time investment activity and is now influencing funding across an increasingly diverse range of sectors.”

Henry Whorwood, Managing Director at Beauhurst Insights, commented:

“The data shows a first-time investment market that is both expanding and changing shape. More companies are raising equity for the first time, while smaller deal sizes suggest capital is reaching a broader range of businesses. The fact that the regional swing in first-time deals has continued into the first half of 2026, with London’s share falling further, combined with AI’s share of the market climbing past 58%, point to a structural change rather than a temporary shift.”