The United Kingdom reportedly experienced its slowest quarter of venture capital investment in 5 years despite a rise in interest in the artificial intelligence ecosystem, KPMG’s report has unveiled.
The KPMG Private Enterprise Venture Pulse report showed levels of investment fell to “£2.6 billion across 435 deals in the second quarter of 2025 – down from £3.8 billion in quarter one across 507 deals – as a result of a pullback across corporate VC activity.”
But AI remained a key investment theme along with the areas of health tech and fintech with megadeals during the quarter including “£251 million for EV charging firm Believ (London), cloud computing business XY Miners (Brighton) securing £223 million and £148 million for health tech firm CMR Surgical (Cambridge).”
This meant that, despite the overall downturn, the UK reportedly “secured three of the top 10 deals across Europe.”
Looking ahead, trends expected for quarter three and beyond include a continuation of “subdued levels of VC investment, due to uncertainty being caused by fluctuating tariffs being imposed by the US, but one area of encouragement is that AI has been labelled as a ‘hot’ sector for growth by experts not just in the UK but across Europe and worldwide.”
International VC investment fell from £95 billion in quarter one to £75 billion in quarter two.
Despite the VC investment, global VC deal volume declined to a decade-low of 7,360 in quarter two, down from 9,314 in quarter one, as investors put brakes on activity outside of sectors such as AI, fintech, and defence tech.
The US led VC investment internationally, acquiring £54 billion—more than 70% of all funding during quarter two; of this amount, more than £52 billion came from the United States.
Europe came a very “distant” second, securing £11.3 billion across 1,737 deals. Asia, meanwhile, continued to lag, “pulling in just £9.5 billion across 2,022 deals.”
In Asia, VC investment remained relatively very weak in quarter two, despite a modest increase in overall investment from £9.3 billion in quarter one to £9.5 billion (still the second-lowest in more than 10 years).
Notably, overall deal volume in Asia fell from 2,663 in quarter one to 2,022 in quarter two.