The regional shift: where UK venture capital is growing

In the first half of 2026, UK businesses raised £14.4 billion in equity investment, up 26% on the second half of 2025.¹ London took the biggest slice of that, as it always does, growing 48.5% to £10.1 billion. But the North West grew almost twice as fast, up 89.4% to £1.19 billion, pulling ahead of every UK region except London.¹ For a market that’s spent a decade being described as “London plus everyone else,” that’s not a number you’d expect.

The North West, Scotland and South West’s UK equity growth in 2026

London’s share of UK equity investment fell from 60% in 2024 to 57% in 2025, according to the British Business Bank’s Small Business Equity Tracker, published in July 2026.² Over the same year, the North West grew 82%, Scotland grew 74% and the South West grew 104%.²

It’s worth understanding what’s driving those regional numbers. A handful of large AI and energy deals did a lot of the work, the kind of mega deals that can boost a region’s growth rate without reflecting a broader base of activity underneath it.

The North West’s headline H1 2026 figure fits that pattern: roughly £814 million of its £1.19 billion total came from a single AI funding round.¹ The South West’s 104% jump fits it too, and so does the most extreme number in the 2026 data: Wales grew 530% to £159 million in the first half of the year, most of it from a single £81 million semiconductor raise by IQE.¹ So what’s been driving this spike in regional growth outside of London?

Recent funding announcements targeting the UK regions

What’s changed since is the scale of deliberate, government-backed capital aimed at the regions specifically, and three moves landed within about a month of each other.

The British Business Bank confirmed a new £150 million Northern Scale-Up Fund on 7 September 2026, offering £5 million to £15 million tickets to high-growth businesses, including university spinouts, across Liverpool, Manchester, Bradford, Leeds, Sheffield, York, Hull and Newcastle³
A £210 million South East Investment Fund opened for applications the same week, offering debt finance from £25,000 to £2 million and equity investments of up to £5 million⁴
In August 2026, the government confirmed a further £100 million portion of the Investor Pathways Capital programme, aimed at launching up to ten new venture capital funds run by first-time managers from underrepresented backgrounds, building on the £90 million already committed to ten microfunds in June 2026⁵

The Bank itself frames the Northern fund as a deliberate correction, not a bonus. As Leandros Kalisperas, Chief Investment Officer at the British Business Bank, put it: “This new Northern scale-up fund reflects the Bank’s commitment to addressing regional equity gaps and helping ambitious, innovative businesses in the North of England to have the same opportunity to access the capital they need to grow and thrive as other parts of the UK.”³

The Investor Pathways Capital programme carries the same logic, aimed at where a fund manager is based rather than just where they invest. As Chancellor John Healey put it when the tranche was confirmed: “This £100m boost will help provide the fuel to drive new life into local economies up and down the country.”⁵

Between them, the British Business Bank’s Nations and Regions Investment Funds now commit more than £2 billion to backing businesses outside London, part of the £6.6 billion the Bank has committed to UK innovation under the Modern Industrial Strategy, of which £2.6 billion is earmarked specifically for the nations and regions.⁶ ⁷ That’s a materially bigger pool of regionally targeted capital than existed even a year ago.

Why it’s important to look at who allocates capital, not just how much exists

As recently as 2024, London took 60% of all UK equity investment.² Adding more regional funding doesn’t fix that on its own if capital allocation decisions stay concentrated in one place too.

Investor Pathways Capital applies that idea to who runs a fund, not just where it invests: its cohorts include both first-time managers from underrepresented backgrounds and those based outside London.

Meghan Stevenson-Krausz, former CEO of Diversity VC and a contributor to the programme’s design, makes the underlying case for widening that group at all: “Who gets to allocate capital shapes which ideas are funded, which companies are built and ultimately who benefits from economic growth. Investor Pathways Capital represents an important step towards broadening access to venture investing by helping talented emerging managers establish institutional track records.”⁸

The same logic extends to geography: a fund manager who has never had to raise or invest outside London isn’t necessarily best placed to spot the best deals in the North West or Scotland.

A fund manager based in Liverpool or Newcastle, with a mandate to keep investing there, behaves differently to a London-headquartered generalist fund chasing whichever deal looks best that quarter. The bet behind September’s announcements is that changing who allocates the capital, not just how much of it exists, is what makes regional growth durable rather than a one-off spike.

What this means for founders if you’re raising outside London

For founders, the practical takeaway isn’t that raising outside London has suddenly become easy. It’s that the sources of capital have multiplied and diversified in a way that didn’t exist twelve months ago. A scale-up founder in Leeds or Sheffield now has a specific, well-funded route through the Northern Scale-Up Fund that didn’t exist in August. A first-time fund manager based outside London has a real shot at the next Investor Pathways Capital cohort this autumn.

Where this goes next

The map of UK venture capital hasn’t flipped. London still raised more in six months of 2026 than the North West, Scotland and the South West combined did across the whole of the previous year. But the direction of travel isn’t ambiguous anymore, and for the first time in years, the fastest-growing part of the story is happening a long way from the M25.