First-time equity deals shift outside London, study finds

The majority of companies raising equity for the first time are now based outside London, according to research from Beauhurst Insights and the law firm Penningtons Manches Cooper, with the capital’s share of first-time deals falling to 44.6 per cent in the first half of 2026.

London’s share of all first-time equity deals had already dropped to 49.1 per cent in 2025, the researchers said. The last time more first-time fundraisings were completed outside the capital than inside it was in 2022, according to Beauhurst.

Companies using artificial intelligence captured 58.6 per cent of the value of all first-time deals in the six months to June, the study found. That compares with 32.9 per cent in 2025 and 17 per cent in 2024.

The 2,730 start-ups that sold shares for the first time in 2025 raised a total of £4.4bn, an increase of 11.7 per cent, according to the report.

However, 30 per cent more companies secured external capital for the first time, and the researchers said investors had committed less money per company and at lower valuations. Pre-investment valuations fell by 20.3 per cent to £1.5m last year, and the average has since slipped to £1.45m.

The average deal size fell from £2m to £1.7m. The median deal stood at £290,000, a gap the researchers attributed to the effect of several very large first-time fundraisings.

Henry Whorwood, managing director at Beauhurst Insights, said the increased volume of first-time equity raises reversed a long-term decline. He attributed that decline to venture capital firms increasingly needing to support their existing portfolio companies with more capital.

Mr Whorwood said the rise of AI had driven the reversal, with a wave of companies seeking to exploit the technology.

London leads on AI rounds

Although the capital’s overall share has fallen, London completed more AI first rounds than the rest of the UK combined, at 392 against 268, the research found.

London’s 60 per cent share of AI fundraising rounds was 11 percentage points ahead of its share of the market as a whole. The researchers said this reflected the concentration of investors and support services for technology companies in the capital.

Separate Barclays and Beauhurst figures published in July showed that UK equity investment rose to £14.4bn in the first half of 2026, with London accounting for the bulk of the money raised.

Outside London, first-time fundraising in the West Midlands nearly doubled in 2025, according to the report. Northern Ireland recorded a rise of 73 per cent and Scotland 60 per cent. London-based deal volumes rose by 27 per cent.

Largest first-time rounds

The report pointed to several very large first-time fundraisings. Isomorphic Labs, the London-based, Google-backed start-up that uses AI for drug discovery, raised £464m in March 2025.

Edinburgh-based Fidra Energy, which has developed a battery energy storage system, secured £445m from its owner, the US institutional investor EIG, alongside the UK’s National Wealth Fund.

In the first half of this year, the £814m of first-time equity raised by Ineffable Intelligence represented 39 per cent of the value of all first-time deals, according to the research.

The London-headquartered AI company was founded in late 2025 by David Silver, a computer science professor at University College London and a former senior AI specialist at Google’s DeepMind labs in London. The British Business Bank was among the backers of the Ineffable Intelligence round.

Separate Tracxn data published in July found that investors were writing fewer, larger cheques in the first half across UK tech.

About the author

Jamie Young

Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the ‘covid era’ and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine’s coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk

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