Why more and more UK startups are looking for investment from the US

A new wave of transatlantic capital

When London-based Dex, an AI-powered recruiter, announced its $3.1 million pre-seed round this spring, one detail stood out: the round was led not by a UK fund but by Andreessen Horowitz’s Speedrun programme out of Silicon Valley¹. Just a week later, StackOne secured $20 million in Series A funding from Google Ventures, with Workday Ventures also joining in². By the summer, Magentic had closed a €4.6 million seed round backed by Sequoia Capital.

The pattern is hard to miss. More UK startups are raising early-stage rounds from American investors, drawn by deeper capital pools and a more risk-tolerant mindset.

As Paddy Lambros, CEO of Dex, explained: “The US is a large market. Culturally, US investors are more ‘risk on’ at the early stage — they back companies with promise before traction. The pace, expectation, and bar in the Valley remain the global maximum.”

Why now?

The shift comes against a backdrop of strain in the UK market. According to the British Business Bank, equity deals fell by more than 15% in 2024, marking the lowest levels in a decade³. Seed and venture-stage deals saw double-digit drops, and early-stage founders now face average fundraising timelines of nine months or more⁴.

Tech Nation’s Unlocking the UK’s Growth Potential report found that while six in 10 founders rate the UK positively for starting a company, fewer than 3 in 10 say the same about scaling. Almost half describe the UK as poor for exits⁵.

This perception gap is pushing ambitious founders to look abroad. Patrick Smith, CEO of zally, a behavioural AI platform, put it plainly: “UK startups are increasingly looking to the US because that’s where the growth capital and exit opportunities are. The ecosystem has both the depth of funding and the scale of ambition that founders need to build global companies.”

For zally, the decision went further than funding. The company recently relocated their HQ from Manchester to San Francisco, with Smith adding: “Moving to the Bay Area is about being at the centre of the next wave of AI — close to investors, talent, and partners who share our vision.”

Beyond the cheque: why founders value US backers

Capital alone does not explain the pull. For many founders, US investors also bring sector expertise, global networks, and a culture of scale.

Dex CEO Lambros emphasised the mindset difference: “In the UK, there’s a sense of learned helplessness — almost cheerleading for not trying. The draw of US investors was clear: they understand that early-stage investing is about backing promise, not waiting for traction.”

For others, the choice is about structure as much as scale. Anthony Rose, CEO of SeedLegals, has seen what he calls an “exponential rise” in UK founders incorporating their companies in Delaware, a move designed to smooth the path to US investment.

“You can separate it into two concepts,” Rose said. “First, founders with a UK company who want to raise from foreign investors. And second, those who particularly want to raise from US investors and remove friction by flipping to Delaware. About 20% of investors in UK rounds are foreign, and half of those are from the US. The number of Delaware flips is massively up recently.”

A hotbed of innovation — but at risk

None of this means the UK is a weak market. On the contrary, it remains Europe’s largest venture hub. In the first half of 2025, UK startups raised $8 billion in venture funding — more than Germany and France combined⁶. The tech ecosystem as a whole is now worth $1.2 trillion⁵, cementing Britain’s role as a global innovation magnet.

Much of that strength lies in AI, healthtech, and fintech, which together account for the majority of recent funding⁶. Yet, as Tech Nation points out, the UK often struggles to retain its scale-ups. Homegrown champions such as Wayve and Darktrace both turned to the US for investment and exits.

At a recent Cambridge Tech Week panel, Mark Slack, CEO of CMR Surgical, reflected that “there was no other place in the world” where his company could have been founded, praising Cambridge’s unique ecosystem. Yet he admitted that challenges in selling into public sector organisations such as the NHS had become a brake on growth. That concern was shared by Rebecca Simmons, COO of 52 North, who said the lack of meaningful public sector opportunities had been “disappointing” for scaling firms.

The paradox is clear: the UK is producing globally significant companies, but the growth phase capital and scale-up infrastructure they need too often sits across the Atlantic.

Lessons for founders

For early-stage founders weighing their options, the US offers both opportunity and complexity.

• Market access: The US remains the largest single customer market for tech startups. Building relationships there early can open doors that are harder to unlock later.
• Funding depth: With more “mega-round” capital available, US investors can back companies through multiple stages.
• Cultural fit: US VCs tend to move faster and lean more heavily on vision than traction. Founders should be ready for higher expectations on ambition and speed.
• Legal structure: Incorporating in Delaware — or doing a “Delaware flip” — can remove barriers but requires planning.
• Dual presence: Maintaining R&D and a team in the UK while opening a US office is becoming a common model.

Looking forward

The rise of US investment into UK startups is not a sign of weakness but of attractiveness. Britain’s strengths in AI, clean energy, and healthtech are precisely what draw heavyweight US investors across the Atlantic.

But the trend raises a sharper question: can the UK retain its champions, or will it become primarily a source of early innovation for others to scale?

At a national level, the flow of capital is set to deepen. In 2025, US firms pledged £150 billion in UK investment as part of a new tech partnership deal, underlining Britain’s continued appeal to American capital⁷.

As Patrick Smith from zally reflected, “Manchester will always remain our home. But to build a world-leading company, we need a strong US presence.” The implication is clear: unless UK capital learns to match not just the money but the ambition, more founders will continue to follow the same path.

References

1. TechCrunch (2025) – a16z backs UK startup Dex – https://techcrunch.com/2025/04/29/a16z-backs-uk-startup-dex-to-scale-ai-talent-agent-and-recruitment-matchmaker
2. Tech.eu (2025) – StackOne raises $20m Series A led by GV – https://tech.eu/2025/05/06/stackone-raises-20m-for-easier-api-integration-led-by-big-tech-backers
3. Small Business Equity Tracker 2025 | British Business Bank/Beauhurst – https://ukbaa.org.uk/policy-and-research/
4. Q1 2025 State of Pre-Seed | Carta – https://carta.com/uk/en/data/state-of-pre-seed-q1-2025/
5. Unlocking the UK’s Growth Potential 2025 | Tech Nation – https://report.technation.io
6. UK Innovation Update Q2 2025 | Dealroom – https://dealroom.co/uploaded/2025/07/UK-Q2-2025-2.pdf?x95901
7. BBC (2025) – US firms pledge £150bn investment in UK – https://www.bbc.co.uk/news/articles/cx2nllgl3q7o

‍

‍