The past two years have seen funding flow into the UK at a rapid pace. According to Sifted data, €25.7bn was raised in 2025 across 1.6k deals, a steady increase from the €21.7bn raised in 2024 across 1.4k deals.
But, securing capital is only half the battle. Today’s startups and scaleups are also navigating the ongoing challenge of finding and retaining top talent and expanding into new markets.
In our latest Sifted Talks, held in partnership with the UK government’s Department for Business and Trade, our panellists explored how founders can fund and scale their startups without losing momentum — from better alignment between entrepreneurs and investors to collaboration with government.
Our panel of experts included:
- Alex Depledge, entrepreneurship advisor to Chancellor of the Exchequer, HM Treasury.
- Iana Dimitrova, chief executive of financial services company OpenPayd
- Eileen Burbidge, founding partner of VC firm Passion Capital
- Rishi Khosla, cofounder and CEO of digital B2B bank OakNorth
Getting the pension engine turning
Depledge believes the UK is on the cusp of a scaleup phenomenon, and hopes to see more companies, such as the likes of fintech giant Revolut, AI video unicorn Synthesia and decision intelligence company Quantexa, dominating the UK’s fintech, deeptech and AI sectors.
To nurture the next generation of upstarts, more growth-stage capital is needed in the ecosystem. One source of that is pension funds, the source of debate in tech circles in recent years.
Research by the Trades Union Congress showed that the proportion of UK shares directly held by UK pension funds fell by 90% between 1990 and 2018, but work is underway to change that.
The Mansion House Accord, which aims to unlock billions of pounds worth of pension money for UK tech, was signed by 17 workplace pension providers last year. The signatories, which include Aviva, Legal & General and M&G, are expected to invest 10% of their workplace portfolios into assets that boost the economy, such as infrastructure, property and private equity — including VC — by 2030.
“My own view, outside of the government and the Labour party, is that if we’re going to deploy taxpayers’ money into companies, we need it to be largely UK headquartered,” said Depledge.
“When most of the money leaves the UK into the US, we are starving our FTSE and private markets of capital. It’s not a ridiculous notion to tell our pension funds that they must start investing in UK equities.”
Attracting foreign investment into the UK is hugely beneficial and shouldn’t be overlooked though, added Burbidge.
She said: “It’s fantastic that we’re attracting investment from other countries or other sources as well.”
It’s actually validating the fact that what we’ve got here in the UK is attractive to people outside of the UK. – Burbidge
Utilising funding
When it comes to type of funding startups need — equity, debt, grants — companies should focus on equity funding until they have a positive cash flow and have determined product market fit, then other options, such as debt, can be considered.
“Once you’ve proven that the business model works and generates earnings, you can continue to raise equity or you can start looking at debt. Debt has the massive advantage of not being dilutive,” Khosla told the audience.
“Some entrepreneurs say that if they knew the toolkit available to them, they would have actually preferred to use much more debt funding to scale the business before selling out.
“There’s an opportunity to educate the entrepreneurial world of how they can use debt effectively.”
Before pursuing alternative finance options, like debt, founders should seek out advice on whether it’s right for them.
“We’re not investment bankers, and so having a good understanding and access to a network that can give you the right advice on financing options is incredibly important,” Dimitrova said.
“For entrepreneurs, most of the time we’re head down 24/7 building a business and we don’t necessarily have the ability to hire a corporate development team to help us make some of these decisions.” – Dimitrova
Can companies expand into both the EU and the US?
It depends on the market and the type of business, but expanding into the US isn’t completely critical for scaling, said Burbidge.
European companies, such as Skype and Monzo, have proven that growing a successful and profitable business is possible without ever expanding into the US.
“There’s an opportunity to address the whole world from the UK. We have a time zone that overlaps with more regions around the world than anywhere else. We can have conversations with colleagues, customers and partners that are in North America and Asia within the same business day. That really benefits companies that are scaling from here.”
Going to the US though obviously has its benefits.
Khosla said: “When you’re in the UK and expanding across Europe, each country has scale, but it doesn’t have the same scale individually as the US. Given all else is equal, if you’ve got a business growing from the UK to Europe, you’re less likely to lose it than if you’re going from the UK into the US.
“The UK still has incredible talent and is a core market for us, but we can see the US becoming a larger part of our business.
“However, London’s a lot cheaper than New York and doing certain things in London makes more sense than doing certain things in New York.” – Khosla
Retaining top talent
When OakNorth first started, employees had the opportunity to invest in the company, which was a major tool in retaining talent, said Khosla.
“Up to the point where we had 250-300 employees, about two-thirds of them had invested the equivalent of one year’s net salary in cash into the business. Having someone cut a check creates incredible alignment and loyalty.”
OpenPayd has also managed to retain talent using stock options, added Dimitrova.
She said: “The alignment that this delivers across, not just the senior management team but every single member of the team irrespective of level of seniority, is incredible.
“It is a powerful tool especially at the early stage of a company. Of course you can’t continue with it indefinitely, but what we find is that when speaking to investors we can demonstrate that the entire team is vested.”
The Enterprise Management Incentives (EMI) scheme in the UK, which gives employees tax breaks on share options at small- and medium-sized companies, was a crucial part of the last Budget, added Depledge, and something the government is working to strengthen.
“We had a call for evidence around whether the government rewards risk appropriately for entrepreneurs and how the schemes are working generally. It’s amazing what can happen when entrepreneurs talk to the government.
“For the first time, the treasury has interacted with entrepreneurs and heard firsthand about company share option schemes and EMI.
“The team is invested in looking at whether these schemes need modernising and understanding what the questions are they should be answering.” – Depledge