Which UK Tech Sector Is Gaining The Most VC Investment?

At the start of this year, headlines were generated by research showing that the value of the UK tech industry had crossed the USD 1.2 tn mark. This was a 20% increase since 2023, confirming the impressive resilience of the British market in the face of considerable countervailing factors such as inflationary pressures, geopolitical turbulence and post-pandemic caution on the part of investors.

Now, a little deeper into 2025, the picture continues to be a rosy one, with news that the amount of venture capital raised in the UK in the first quarter was USD 4.2bn. Not only is this 8% higher than what was amassed in Q1 2024, but it’s also bigger than what has so far been raised in Germany, France and Spain combined. 

But which specific sector has been a particular magnet for venture funding in the UK? The kneejerk assumption might be fintech, which is so often trumpeted as one of Britain’s most lucrative and fertile tech ecosystems. In actual fact, fintech has trailed well behind the leading segment, healthtech, which has raised USD 1.8bn this year so far. This dwarfs the USD 724m raised by joint-second-place sectors fintech and enterprise software.

This healthtech surge has been driven by megarounds involving a few particularly talked-about startups, as well as significant interest in companies leveraging AI to optimise everything from how drugs are discovered to how patient data is managed and how diseases are detected. 

Moreover, the UK is naturally well placed to be a global leader in healthtech innovation thanks to its wealth of top-tier research institutions and the presence of the NHS, a key buyer of innovative healthtech whose vast datasets are an invaluable resource for healthtech companies.

The startups which have been reaping the rewards of investor interest in 2025 include:

AI-powered drug discovery startup Isomorphic Labs boasts one of the UK’s most remarkable scientists and entrepreneurs as a co-founder. Sir Demis Hassabis was a child chess prodigy who became a prominent video games coder at just 17, then launched his own games studio before pivoting to neuroscience, achieving international notice for his groundbreaking work on human memory. 

After founding the AI research firm DeepMind, which was acquired by Google in a blockbuster deal, he won a Nobel Prize in Chemistry for his work on an AI model which has solved a long-standing scientific problem by being able to predict protein structures from amino acid sequences.

This technology, known as AlphaFold, underpins the drug discovery and genomics solutions being implemented by Isomorphic Labs, a DeepMind spin-out which aims to “solve all disease” using AI. The company closed a USD 600m round in March, and has secured partnerships with pharma giants Eli Lilly and Novartis.   

The rise of Ozempic as a weight loss drug has been one of the biggest and most influential pharmaceutical success stories of recent years. British healthtech Verdiva Bio has now entered the race to develop oral and injectable “magic bullet” therapies for people living with obesity and related complications like cardiovascular disease, launching in January with USD 411m in funding under its belt.

The arrival of Verdiva Bio came one year after its leadership team sold off a previous biotechnology startup – asthma-focused firm Aiolos Bio – to GSK for USD 1bn. This new venture takes the team into one of the most competitive healthtech subsectors, with a whole array of obesity drug startups having launched over the past year.

It will be interesting to see if the fragmented nature of this space will spur a consolidation wave, further fuelling healthtech M&A volumes in the near future.

February saw a milestone moment in the UK tech industry, when Level Zero Health secured USD 6.9m in pre-seed funding – the largest ever such round for a female-founded startup in Europe. The company specialises in wearable tech – specifically, skin patches which can track hormones in the body in real-time, just as other devices can track heart rate and step counts. This can aid in the management of hormone and reproductive health.

“We're not just a ‘women's health’ company but building a clinical-grade data platform for everyone,” emphasised its co-founder Ula Rustamova, who like Sir Demis Hassabis had an early start as an entrepreneur, having launched a wearable tech company aged 16. 

Level Zero’s innovative technology, which uses synthetic, single-stranded DNA molecules to track hormones in the body’s interstitial fluid, is currently aimed at B2B clinical applications, but the company also has its sights set on the B2C market further down the line. 

Investment windfalls like these underscore how healthtech is very much in the cross-hairs of investors right now. If you’re a founder or senior decision maker for a healthtech startup, whether based in the UK or mainland Europe, this may well be an opportune moment to take the next steps towards an exit. Our Managing Director and healthtech expert Tom Schmähling would be delighted to learn more about your goals, so say hello to get the ball rolling.

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