Unleashing Regional Startup Investment
Startup Coalition has launched its Funding the Underfunded campaign with a new report: Unleashing Regional Startup Investment, which makes six recommendations to make it easier for potential founders in the regions and nations outside of London to start, raise funds for and grow their businesses.
There have been positive efforts to build local clusters. For example, Birmingham and Liverpool have seen VC investment increase by over 1000% and 650% respectively in just four years. This momentum has often been driven by local pioneers, building ecosystems from the ground up, transforming their cities into hubs of entrepreneurial creativity, and generating new economic opportunities for their communities.
Despite these pockets of success, founding and scaling a startup outside of London continues to present unique challenges. Access to critical investment remains heavily concentrated in the capital, leaving many regional entrepreneurs struggling to secure the funding they need to grow.
Data shows the disparity in flows of funding throughout the UK, and experiences from our founders highlight the frustrations with the added difficulties of founding and growing a business outside of London:
Nearly half of all UK startups that have raised over £100k are based in London. Of those startups founded in 2023 and 2024, 72% of all investment went to London-based firms, according to Beahurst data.
80% of UK VC funds are based in London, with 69% of their investments going to London and South East companies.
Our recommendations to improve opportunities for growth across Britain focus on access to finance, as this is the area most founders outside of London describe as their major blocker to progress:
Boost Regional Business Growth: Empower the British Business Bank to tailor its regional funding programs to better meet the needs of local businesses.
Connect Investors with Innovators: Require venture funds backed by the Enterprise Capital Funds (ECF) scheme to attend demo days, showcasing regional and national startup talent.
Invest in Local Talent: Launch mission-driven talent development programs across the UK to nurture skills and jobs where they’re most needed.
Champion Regional Expertise: Create sector-specific investment funds to drive growth in regional hubs beyond London, Oxford, and Cambridge.
Unlock Local Financing Power: Collaborate with local authorities to introduce innovative regional bonds, inspired by the successful US municipal bonds model.
Turn Research into Results: Strengthen the UK’s spinout ecosystem to transform cutting-edge research into thriving businesses and jobs.