Growth Capital Update: Q3 2025
Private equity stalls as public markets strengthen
193
deals completed
£5.18 million
average deal size
£1.0 billion
growth capital raised
Our view of the market
2025 has not been the most active year for the UK’s growth capital market, with Q3 continuing the decline in activity. While global public markets exhibited strong growth in the quarter, UK private equity investors were more cautious. They were reluctant to invest when questions remain around the strength of the UK economy and what measures, particularly increased taxes on businesses, might be announced in the budget.
According to our research into UK private companies raising between £1 million and £20 million of growth equity capital, 193 UK businesses raised a total of £1.0 billion this quarter. The average deal size was £5.18 million.
Our Q3 figures reveal a 4% decrease in the number of deals completing, and a 6% decrease in the overall amount of growth capital being raised, compared with Q2’s 200 deals raising £1.067 billion. 193 deals in one quarter is the lowest since Q2 2020, which was mid-pandemic. However, the average deal size of £5.18 million remains comparatively high, confirming that growth capital investors are placing fewer bets in these uncertain times but willing to invest larger amounts in later-stage companies.
Technology remains the primary driver of UK growth capital activity, with deal volumes in this space demonstrating notable resilience. Growth continues to be underpinned by strong demand for digital infrastructure, cyber security solutions and artificial intelligence applications. The UK retains its position as a global leader in technology investment, with private equity firms increasingly concentrating capital on digital-first assets.
Quarterly number of deals and average deal size
Q3 2025 deal volume and value by deal type
Technology sector
The technology sector retained its position as the top choice for investors, representing 43% of all transactions by volume and 46% by value. While the UK growth capital market has shrunk as a whole, technology deals are holding up well, reflecting the wealth of opportunities for new and growing businesses coming from disruptive technologies such as AI.
The UK government recently issued a press release highlighting that a record £2.9 billion was invested in UK AI companies last year, and stating that UK AI companies currently contribute £11.8 billion to the domestic economy. In a speech to city bosses and tech firms at Mansion House in September, Technology Secretary Peter Kyle called on industry to step up and match the UK government’s ambition when it comes to AI – in a bid to drum up further investment and see more AI companies call the UK home.
The US President’s state visit to the UK in September saw Donald Trump and Sir Keir Starmer sign an agreement dubbed the ‘tech prosperity deal’ which the UK government said would lead to £150 billion worth of US investment in the UK tech sector in the coming years. £90 billion of the £150 billion promised will come from US PE house Blackstone, and the deal will see the UK and US cooperating in the AI, quantum computing and nuclear power sectors among others.
Notable tech sector deals
In September, London fintech business Zilo announced it had secured £20 million in a Series A round led by Toronto-based Portage Ventures alongside US bank State Street. Zilo, which specialises in asset and wealth management software, said the funding would be used to support its expansion into new markets, including the US, as well as launching new proprietary, AI-powered tools for customers.
Q3 2025 deal volume and value by sector
Also in September, London-based process intelligence company Mimica announced it had raised a $26.2 million Series B funding round, led by Paladin Capital Group. The investment will accelerate Mimica’s mission to be the bridge between how work is done in enterprises today and how it can be done with AI, giving organisations the process knowledge they need to train and operate AI agents reliably, compliantly and at scale.
Tuhin Chakraborty, Mimica’s CEO, commented: “In enterprise, AI capability means nothing without context. The agents that will win are the ones that understand the work.” Nazo Moosa, MD at Paladin Capital Group, added: “AI is poised to be the most transformative force in enterprise over the next decade – but only if it’s built on a foundation of trust.”
“The UK’s growth capital market is navigating a complex environment shaped by macroeconomic pressures, emerging opportunities and evolving investor priorities. Although transaction volumes have slowed throughout the year, the sector’s underlying fundamentals remain resilient.”
John Cowie, Head of Growth Capital, Moore Kingston Smith
Trending: B2C
The B2C sector was the second most popular with investors, having been fourth in the previous quarter. Consumer products and services deals accounted for 19% of all transactions by volume, and 14% by value. Seen as more risky investment propositions than B2B owing to the challenges of predicting consumer demand and the potential for high marketing costs, successful B2C companies often have broad customer bases and scalable models, making them attractive to investors seeking significant growth and market impact.
The Moore Kingston Smith corporate finance team was busy in the B2C space, advising Lumina Media, a London-based IP-led media and venture group, on its investment in Arcade Media. Founded in 2021, Arcade manages The Sidemen, a British YouTube collective, one of YouTube’s most popular brands.
Notable B2C deals
In August, UK board game publisher Big Potato Games announced it had raised £16.2 million from Mobeus Equity Partners, which it intends to use to accelerate the launch of new titles, invest in digital distribution and expand the business internationally.
In September, UK online education platform MyEdSpace announced it had raised £11.5 million in Series A funding to hire additional teachers, introduce new subjects and develop its AI-powered learning tools to improve the experience for students. The round was led by White Star Capital.
Active investors
Foresight Group topped our most active growth capital investor table, with the completion of seven transactions. Maven Capital Partners came second, with six deals.
Foresight’s investments included:
-
- participating in a $6.8 million Series A funding round for healthtech platform, Bitfount;
- co-leading a £5.4 million seed funding round for Spaceflux, enabling the company to fast-track the growth of its proprietary global telescope network and push forward innovative space situational awareness technologies;
- investing £3 million in immersive technology specialist Aircards;
- investing £7 million in TEC Electric Motors, a distributor of electric motors, gearboxes and inverters.
Maven’s Q3 investments included:
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- leading a £5 million funding round for mobile app security software business, Approov;
- investing £2.6 million in PowerPhotonic, an advanced laser systems company;
- investing £1.5 million in Bath cyber security business Blueskytec;
Q3 2025 top investors
Outlook
A key challenge currently facing the UK private equity market is the pronounced slowdown in exit activity. Exit volumes fell to a five-year low in 2024, with investors strongly preferring full exits rather than partial divestments. At the same time, secondary transactions have gained momentum as firms seek to realise value in an environment where IPOs and trade sales remain less favourable.
Fundraising presents an even more significant headwind. Globally, the first quarter of 2025 marked the first period in over a decade without a single buy-out fund exceeding $5 billion in commitments. This trend highlights a broader sense of investor caution and has created a more challenging landscape for new entrants attempting to secure capital.
Nevertheless, these dynamics also generate opportunities. With fewer funds competing for assets, UK firms able to raise capital in the current environment benefit from reduced competition and more attractive valuations. For agile investors, the prospect of market consolidation presents the potential for meaningful value creation in the medium term.
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Methodology
Moore Kingston Smith has analysed transactions by UK-based companies that involve the issue of less than 50% of equity share capital to third parties and funds raised of between £1 million and £20 million. Accordingly, these numbers do not include senior debt and mezzanine debt fund raisings and smaller fund raisings by companies and start-up funding unless more than £1 million is raised. Start-up funding is generally significantly less than this amount.
The research aims to capture all transactions by UK companies that fall within the criteria. Inevitably there will be transactions that have taken place but have not been captured. The research is based on data extracted from Pitchbook.
