Artificial intelligence (AI) companies attracted significantly larger equity investments than the broader UK market in 2024, according to the British Business Bank’s Small Business Equity Tracker, published today. The report reveals that AI deals averaged £8.3 million — more than 40% above the UK-wide average of £5.7 million — signalling investors’ strong confidence in the sector despite a cooling equity market overall.
At the growth stage, the gap widened further, with average AI deal sizes reaching £36.3 million — 2.5 times the market average — underlining AI’s position as a driver of high-value investment in the UK startup ecosystem.
Equity market cools but innovation remains resilient
Overall equity investment in the UK declined by 2% in 2024 to £10.8 billion, while the number of deals fell 15% to 2,048, reflecting a shift toward fewer, larger transactions. Still, the market remains robust by historical standards, with 2024 ranking as the fifth-highest year on record for small business equity investment.
One notable area of resilience was university spinouts, which secured £1.9 billion in equity funding and accounted for 12% of all deals — a record share. The average deal size for these spinouts, which often commercialise cutting-edge academic research, was £8.0 million, more than a third above the UK average. The British Business Bank played a prominent role, backing nearly one in four university spinout deals between 2022 and 2024.
Early-stage investment under pressure
Despite strong performance in areas like AI and university innovation, early-stage businesses faced tougher conditions. The number of UK seed-stage and venture-stage deals fell by 15% and 17% respectively in 2024. However, the British Business Bank remained a key source of support, with 48% of its deals at seed stage and 41% at venture stage during the 2022–2024 period — highlighting its role in sustaining early-stage innovation.
Regional investment landscape shifts
London’s share of equity investment continued to decline, falling to 61% in 2024 from a peak of 73% in 2020. The capital also experienced a sharper contraction in deal activity than the UK overall, with a 21% drop year-on-year.
Meanwhile, investment grew in other regions, including Scotland, the North West, and the East Midlands, where both deal volume and value increased. The Bank’s Nations and Regions Investment Funds and Regional Angels Programme have helped bolster these areas, with seven of the 12 UK nations and regions seeing above-average British Business Bank deal activity.
Bridging the gap with the US
The UK’s venture capital investment remains below US levels, with the UK investing 0.68% of GDP compared to the US — 1.1x less between 2022–2024. While the UK outperformed the US in sectors such as financial services and clean energy, more targeted support is needed to close the gap in life sciences and advanced manufacturing — two key areas for future economic growth under the UK’s industrial strategy.
Angel investment remains critical
Business angels continue to be vital players in the early-stage market. The report found that 70% of UK angels are backing startups at the earliest stages, and nearly two-thirds maintained or increased their investments from 2023 to 2024.
Angel investors are also driving inclusion: 26% of angel-backed businesses in 2024 were led by all-female founding teams — more than double the 12% figure in 2019. Entrepreneurs from underrepresented backgrounds, including ethnic minorities, are also seeing growing interest from investors focused on social impact alongside returns.

Leandros Kalisperas, Chief Investment Officer at the British Business Bank, said: “2024 was a challenging year for the UK equity finance market as investment values and deals declined.
However, it is encouraging to see that university spinouts have raised £1.9bn in 2024 and that the appetite for AI drives value across the UK equity finance market with large deal sizes.
“The UK venture capital market continues to perform well internationally, as it outperforms the US in financial services and clean energy, though more support is needed to close the gap in key sectors like life sciences and advanced manufacturing.”