Quantum and AI drive UK startup funding to $7.8bn in 2026
UK startup funding jumped to $7.8bn (£6.2bn) in the first quarter of 2026, as a surge in quantum computing investment and mega-rounds powered the strongest start to a year since 2022.
New data from HSBC Innovation Banking and Dealroom shows venture capital investment rose 60 per cent year on year, pointing to renewed confidence in the UK’s tech sector.
The figures come as ministers double down on emerging technologies, with a £2bn push into quantum computing running alongside a wave of private capital flowing into AI startups.
AI accounts for nearly a third of funding
AI dominated dealmaking, with homegrown AI startups raising $5.8bn, equal to around 74 per cent of all venture capital invested during the quarter.
More than 100 AI funding rounds were completed, with late-stage deals accounting for the bulk of capital.
Major raises included $2bn for Nscale, $1.2bn for Wayve and $500m for Eleven Labs, alongside significant rounds for Synthesia and Olix.
Mega-rounds of $100m or more contributed $5.1bn, or 65 per cent of total funding, with average deal sizes rising sharply as investors concentrated capital into fewer, and larger bets.
The trend mirrors wider European activity, where funding has increasingly focused on AI and strategically important technologies, as opposed to early-stage startups.
The UK retained its position as Europe’s leading VC market, attracting more funding than France, Germany and the Netherlands combined and accounting for 41 per cent of total investment across the continent.
It also continues to dominate in AI, producing roughly twice as many AI startups and unicorns as any other European country, with seven new unicorns created in the first quarter alone.
London, Cambridge, Oxford and Edinburgh remain among Europe’s top AI hubs, supported by a deep talent base and mature investment ecosystem.
Quantum adds to UK momentum
Alongside the AI boom, the UK is stepping up efforts to lead in quantum computing, with the government committing £2bn to develop new machines and real-world applications.
Liz Kendall has positioned quantum alongside AI as a core driver of future economic growth, with officials aiming to turn the UK into a global centre for next-generation computing.
The programme is expected to support job creation and attract further private investment, as policymakers look to position Britain as a leader in advanced technologies.
While AI is currently attracting the bulk of venture funding, quantum is increasingly gaining traction, with rising public and private investment across Europe and increasing collaboration between governments and industry.
Emily Turner, chief executive of HSBC Innovation Banking UK, said the latest figures show the UK’s innovation ecosystem is “accelerating”, with AI-led growth and strong late-stage funding helping to translate tech advances into long-term economic impact.