New research from HSBC Innovation Banking UK, the banking services provider, and Dealroom, the firm bringing B2B buyers and sellers together, has shown that UK innovation businesses ended 2024 with a combined $1.3trillion in enterprise value.
According to the research, this was a 20 per cent increase on 2023 and has increased nine times in a 10 year span. HSBC Innovation Banking revealed that half of this enterprise value lies in pre-exit companies. This signals the potential for significant untapped value realisation in the form of acquisitions or public listings in 2025 and beyond. In addition, nearly half of this value is from companies founded in the last 15 years.
This growth has helped to drive substantial job creation within the sector, both at home and abroad. Startups with a HQ in the UK now employ over 1.8 million people, double the level of 2020.
UK growth
The UK is the largest ecosystem in Europe and is only behind the US and China globally. Valued at $1.2trillion collectively, the UK innovation ecosystem is worth more than the French and German ecosystems combined.
UK startups raised $16.2billion in 2024, compared to $8.2billion for Germany and $7.8billion for France. The largest amount of funding was secured at the breakout stage, with series B and C rounds accounting for over $6.5billion.
At the late stage, the UK minted nine new unicorns in 2024, bringing the total to 181. This figure means the UK is now home to almost a third (31 per cent) of European startups valued at over $1billion. The founder flywheel is in full effect, with UK startups spawning dozens of new startups via staff turned alumni.
High levels of investment return
With more of the larger funds coming back to the market in 2024, UK-based venture capital firms raised $11.3billion in dry powder, a 59 per cent increase from last year’s $7.1billion, signalling a strong future for UK VC investment.
Meanwhile, an increasing share of investment in UK startups is being driven by international investors, with 68 per cent of funding rounds involving participation from overseas backers. This is particularly acute for late-stage rounds.
Simon Bumfrey, CEO, HSBC Innovation Banking UK said: “The UK innovation economy remained resilient in 2024, achieving record enterprise value and driving significant job creation across the ecosystem. AI continues to thrive, setting the stage for a wave of disruptive commercial solutions across the vast majority of sectors.
“With half of the UK’s enterprise value concentrated in pre-exit companies and dry powder levels reaching near-record highs, the commitment and confidence from domestic and international investors towards UK innovation businesses is strong. As we look to 2025, we remain committed to partnering with firms across the ecosystem to support and accelerate growth.”
Revitalised fintech
Analysing which subsector was leading the charge in the country, the report found that UK AI-focused venture-backed businesses raised $4.2billion in VC investment in 2024, a 31 per cent increase from $3.2billion in 2023. This meant that over a quarter (27 per cent) of all venture capital was raised by AI startups in 2024, its highest share to date. Additionally, AI companies closed five ‘mega rounds’ of over $100million, including a $1.1billion round from Wayve.
Overall, fintech was 2024’s most funded sector, attracting $3.9billion in VC investment, retaking the top spot from climate tech in 2023. This was driven by significant rounds including Monzo ($448million and $190million) and WorldRemit ($267million).
Health and enterprise software both raised $3.3billion in VC investment in 2024, with enterprise software raising $1billion in Q4 alone, 65 per cent more than in Q3. The strong quarter was driven by megarounds for Lighthouse, NScale and Tessl.
