First-Time Equity Deals Move Outside London for the First Time Since 2022, Beauhurst Finds
Updated: 2 days ago
Recent research from Beauhurst, in collaboration with law firm Penningtons Manches Cooper, reveals a significant shift in the landscape of equity fundraising in the UK. For the first time since 2022, more companies raised equity outside London than within the capital during the first half of 2026.
Overview of First-Time Fundraising Trends
The State of UK First-time Investment 2026 report indicates that first-time fundraisings increased by 29.9 per cent in 2025. A total of 2,730 companies successfully raised a combined £4.4 billion. Notably, London's share of first-time deals decreased from 49.1 per cent in 2025 to 44.6 per cent in the first half of 2026. The West Midlands, Northern Ireland, and Scotland exhibited the strongest regional growth, with fundraising in the West Midlands nearly doubling year on year.
Average Deal Size Declines
Despite the increase in the number of first-time fundraisings, the average amount raised in these deals fell from £1.97 million to £1.67 million. Beauhurst's broader analysis indicates that the median first-time deal is approximately £290,000, with pre-money valuations decreasing by over 20 per cent. While more companies are successfully securing their first institutional or angel investment, the amounts involved are smaller, and the valuations are lower.
The Role of Artificial Intelligence
Artificial intelligence (AI) has been a significant driver behind the headline growth figures. In 2025, UK AI companies raised £1.45 billion in first-round equity. By the first half of 2026, AI accounted for 58.6 per cent of the total value of all first-time equity raised, a substantial increase from 32.9 per cent the previous year. London continues to dominate this sector, completing 392 first-time AI rounds compared to just 268 across the rest of the UK combined.
Implications for Founders and Investors
For founders outside London and the investors supporting them, the key takeaway is that while the fundraising funnel has widened, the average outcomes have not improved. Recent coverage by this publication highlights the British Business Bank's new £140 million East of England fund. This fund targets a region that produces 15 per cent of the UK's university spinouts but only attracts 9 per cent of its equity investment. Additionally, Beauhurst's findings indicate that UK company formation has declined for a second consecutive half-year, even as growth becomes concentrated in fewer postcodes.
The Intersection with Tokenisation
The implications of these findings intersect with the ongoing narrative surrounding tokenisation. This publication has been tracking how tokenised employee and founder shareholdings, when paired with PISCES trading windows, could evolve into a viable liquidity option. Regions that are generating more first-time deals but with smaller cheque sizes would benefit significantly from earlier and cheaper realisation options. Founders and early backers in these areas often lack access to the informal secondary networks that are prevalent in London's more established startup ecosystems.
Detailed Report Insights
The report encompasses investment data from 2016 through the first half of 2026, providing a comprehensive analysis of distribution by region, local authority, and sector. The Times has also reported on these findings, focusing on the notable shift of first-time fundraising activity outside London.
Behind the headline: a few very large rounds
The headline value figures are shaped by a small number of very large deals. Business Matters reports that Ineffable Intelligence, a London-headquartered AI company founded in late 2025 by David Silver, a University College London professor and former Google DeepMind researcher, raised £814m of first-time equity in the first half of 2026. That single round accounted for 39 per cent of the value of all first-time deals in the period, and the British Business Bank was among its backers. In 2025, the largest first rounds included Isomorphic Labs in London, which raised £464m in March 2025, and Edinburgh-based battery storage developer Fidra Energy, which secured £445m from its owner EIG alongside the National Wealth Fund.
For a typical company the picture is more modest. Pre-money valuations fell 20.3 per cent in 2025 to £1.5m, and the average for the first half of 2026 stood at £1.45m. Henry Whorwood, managing director of Beauhurst Insights, linked the rise in first-time raises to the reversal of a long-term decline, which he attributed to venture capital firms reserving more capital for their existing portfolio companies, and credited AI with driving the turnaround.
Regional growth at a glance
West Midlands: first-time equity investment roughly doubled in 2025, the fastest growth of any UK region outside London.
Northern Ireland: first-time fundraising up 73 per cent in 2025.
Scotland: first-time fundraising up 60 per cent in 2025.
London: first-time deal volumes up 27 per cent in 2025, slower than the leading regions.
AI rounds: London's 392 first-time AI rounds gave it about 60 per cent of the total, 11 percentage points above its share of the overall market.
AI share of first-time equity value: 17.0 per cent in 2024, 32.9 per cent in 2025 and 58.6 per cent in the first half of 2026.
What it means for founders outside London
Regional founders now have more public capital aimed at them. The British Business Bank's £140m East of England Investment Fund, launched in Norwich on 23 September 2026, offers loans of £25,000 to £2m, managed by Eastmeare, and equity investments of up to £5m, managed by Mercia Ventures, across Essex, Suffolk, Hertfordshire, Norfolk and Cambridgeshire.
On liquidity, PISCES (the Private Intermittent Securities and Capital Exchange System) is a five-year sandbox in force since June 2025 and running until June 2030. Approved platforms can run scheduled trading windows in existing shares of private companies, with the company deciding which investors may buy, when trading happens and at what price. Participants can include institutional, high-net-worth and sophisticated investors, as well as employees and directors; mainstream retail investors are excluded. For companies that raised smaller first rounds at lower valuations, these windows could give early backers and staff a route to partial liquidity without a full exit. Founders may want to take professional advice before relying on either route.
Further reading
Key Takeaways
First-time equity fundraisings outside London surpassed those within the capital for the first time since 2022, with London's share declining from 49.1 per cent to 44.6 per cent.
A total of 2,730 UK companies completed a first-time equity raise in 2025, representing a 29.9 per cent increase, but the average deal size decreased from £1.97 million to £1.67 million.
AI accounted for 58.6 per cent of the value of all first-time equity raised by the first half of 2026, with London maintaining a dominant position in first-time AI deals.
These findings align with other recent research, including the British Business Bank's new East of England fund and Beauhurst's observation of declining UK company formation, despite growth concentrating in fewer postcodes.
A wider funnel with lower valuations outside London reinforces the need for cheaper, earlier liquidity mechanisms for founders and early investors in these regions.
Sources
Frequently asked questions
Did more UK companies raise first-time equity outside London than inside it in 2026?
Yes. According to Beauhurst and Penningtons Manches Cooper, more first-time equity deals were completed outside London than inside it in the first half of 2026, the first time this has happened since 2022. London's share of first-time deals fell from 49.1 per cent in 2025 to 44.6 per cent.
How many UK companies raised equity for the first time in 2025?
Beauhurst's State of UK First-time Investment 2026 report found that 2,730 UK companies raised equity for the first time in 2025, a rise of 29.9 per cent, with a combined £4.4 billion raised.
Which UK regions saw the fastest growth in first-time fundraising?
The West Midlands, Northern Ireland and Scotland showed the strongest growth in 2025. First-time investment in the West Midlands roughly doubled, Northern Ireland rose 73 per cent and Scotland rose 60 per cent, while London deal volumes grew 27 per cent.
How much UK first-time equity went to AI companies?
AI accounted for 58.6 per cent of the value of all first-time equity raised in the first half of 2026, up from 32.9 per cent the previous year. London completed 392 first-time AI rounds, compared with 268 across the rest of the UK combined.
Are UK first-time equity deals getting smaller?
Yes. The average first-time deal fell from £1.97 million to £1.67 million, the median deal is about £290,000, and pre-money valuations fell by more than 20 per cent in 2025.
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