More than half of venture capital investment in the UK now goes to firms outside of London, highlighting the growth and significance of regional ecosystems, a new report has found.
In a comprehensive analysis of UK-based investment term sheets by HSBC Innovation Banking, it was found that regional funding rounds now account for just over 50% of deals across all life stages.
This is particularly the case for early-stage deals, with 51% of seed rounds taking place beyond the capital.
According to HSBC Innovation Banking’s report, regional concentration is particularly strong in life sciences, where 60% of deals are outside of London, clean tech, where 61% are and energy, where 56% are.
Spinouts remain key
The report also found that university spinouts continue to represent a key source of innovation and investments.
According to the new analysis, spinouts account for 9% of UK term sheets, however, it certain sectors this increases significantly.
In the life science sector, spinouts represent 46% of term sheets and in deep tech 38%.
Late-stage rounds show more ‘founder-friendly’ dynamics
In its analysis of term sheets, HSBC Innovation Banking also found that at the later stages, larger deal sizes and increased competition for high-quality companies are contributing to more favourable term sheet outcomes for founders.
The report revealed that the proportion of term sheets for investments over £10m has continued to rise, currently representing 31% of all term sheets. This has particularly be seen in AI and deep tech businesses.
In contrast, the report found that early-stage investment continues to reflect a more cautious and structured approach. Seed and other early-stage deals account for 69% of all term sheets.