Most tech founders in the UK say they are struggling to grow because they cannot get enough funding. The 2025 Tech Nation Report, nearly 74% of founders list access to growth capital as their biggest obstacle. This issue is more of a problem for those at the early stage of building a company.
Peter Kyle, UK technology secretary, said: “We must secure our position as creators and builders of new technology instead of just being swept along by the waves of economic and societal change it drives. That is the only way to make sure that working people can truly benefit.”
The UK’s tax environment and the difficulty of finding skilled workers are also blocking growth. Around 44% of founders say the tax system creates problems. Another 33% say a shortage of talent is slowing them down. This all affects both early and growth-stage founders, though larger companies start to worry more about regulations and public markets.
Even though the UK has a strong venture capital network, founders say it does not help enough once a company starts to scale. Some leave the UK entirely once they need more serious funding. Many feel there are too few local investors who understand how to back innovative companies in the long term.
What Do Investors Say Would Help?
Investors are also unsure about the later stages of the market. While 3 in 4 investors say they like putting money into early stage UK startups, only 36% feel confident about backing companies that are further along. Just 1 in 5 think the UK is a good place to raise money for a fund.
Many investors want better tax incentives… Around half say this would lead them to put in more money. Some say that British pension funds have pulled away from long term investments like venture capital. This has made it harder to grow the kind of companies that bring large returns.
There is also a worry that UK companies are exiting abroad too often. This has led to lost opportunities for local growth and jobs. Investors want easier access to European markets, better links with US capital, and less red tape from the Financial Conduct Authority.
Simon Colvin at Pinsent Masons said, “It’s positive to see such emphasis being placed on these sectors of technology and the proposed investment in infrastructure, skills and training. Setting the UK ahead in key areas such as AI, data sharing and cybersecurity will be important for investors as well as citizens.”
How Is The Government Responding?
The government has promised that the UK will become one of the top 3 countries for fast growing tech businesses by 2035. It released a new industrial strategy that includes support for AI, cybersecurity, semiconductors, and advanced connectivity.
The plan sets aside money for things like a new supercomputer in Edinburgh and a dedicated UK Semiconductor Centre. There is also a pledge of £1 billion to boost AI research and £500 million for a Sovereign AI Unit.
Ministers hope to attract more private capital by backing infrastructure, data centres, and training. One example is the launch of AI growth zones that will help speed up data use and research. The government also wants to improve the way data is shared between institutions to support innovation across the country.
Sarah Cameron, from Pinsent Masons, commented, “The government has invested over £1.1bn in the national quantum technologies programme in the last 10 years and it has now signalled its intention to consolidate the UK’s position with commitments to its five national quantum ‘missions’ and a 10-year funding commitment to the National Quantum Computing Centre.
“Its skills plan proposal will be essential to ensure the UK can capitalise on the opportunities the different quantum technologies present. The UK must, however, also do more to educate and support businesses to prepare for the threats as well as the opportunities, in particular by helping them get on track to migrate to post-quantum cryptography.”
What Do Experts Think The UK Should Do To Remain A Tech Hub?
Experts have shared their takes on how the uK can remain a global tech hub, as the government intends. They have contributed comments on how startups, government, businesses, and others can ensure this:
Our Experts:
- James Fisher, Chief Strategy Officer, Qlik
- Nnamdi Emelifeonwu, CEO and Co-founder, Definely
- Leo Feinberg, Co-Founder and CEO, Verax AI
- Kyle Hill, CTO, ANS
- Steven Athwal, CEO and Founder, The Big Phone Store
- Nicolai Chamizo, Founder & CEO, Incore Invest
James Fisher, Chief Strategy Officer, Qlik
“It’s encouraging, but overdue, to see the UK Government recognise data as a core economic asset as part of its Industrial Strategy; what’s long been missing is a concrete plan to unlock its value at scale. The proposed data valuation framework and investment in data-sharing infrastructure are welcome steps, but the real challenge lies in execution. A strong, interoperable data foundation is the bedrock of the UK’s AI ambitions and essential to unlock greater economic productivity.
“As the Government commits over £500 million to sovereign AI and lays the groundwork for AI Growth Zones, it must ensure that UK businesses have access to high-quality, well-governed data. Without it, AI investment risks failing to translate into real-world value or competitive advantage.”
Nnamdi Emelifeonwu, CEO and Co-founder, Definely
“UK founders are underestimated and that’s a secret weapon. UK founders build capital-efficient businesses out of necessity. We’ve operated with tighter budgets, less hype, and more scrutiny. That forces focus, resilience and product obsession. When the market shifts to valuing substance over noise — we’re already there.
“We must build a UK startup ecosystem where global category leaders don’t need to leave London to scale. This means we need more repeat founders, more operator-turned-angels, and more deep tech. We need to see a cultural shift that celebrates ambition without self-deprecation, and of course, more opportunities for diverse founders within the startup ecosystem. The infrastructure’s catching up — now we just need to believe it.”
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Leo Feinberg, Co-Founder and CEO, Verax AI
“The UK has a lot going for it in the tech space, but there are many things that need to come together to create and support a thriving ecosystem. In the case of AI, for example, these include infrastructure, AI research talent, engineering talent, experience and know-how in building global businesses, as well as local early-stage investors, willing to take significant financial risks on pre-revenue companies, to name just a few.
“Of these key components, the only ‘natural resource’ the UK has is world-class AI researchers, mostly as a result of the UK having world-class universities. All the other pieces are lacking or missing, and until they are in place, growing a thriving AI ecosystem may be a challenge.”
Kyle Hill, CTO, ANS
“The UK Government’s plans to roll out AI in the public sector is a key strategic move forward to make the UK a global AI leader. Technological development is the backbone of national resilience, and the public sector stands to gain the most.
“AI will change the game for sectors like education and healthcare. It will transform data processing, making it faster, more efficient, and freeing up time – which we know is extremely crucial for these industries.
“AI transformation has the potential for astronomical tangible benefits to society. In healthcare for example, AI can automate efficiency by managing waiting lists and appointment scheduling, saving countless hours in GP surgeries and hospitals across the country.
“Despite the huge potential, the government must face the critical challenge of adopting AI responsibility. The technology’s ability to collect vast amounts of sensitive consumer and organisation data presents a major ethical challenge.
“To avoid flawed outcomes or leaks, data fed into AI systems must be clean, accurate, and relevant. Having the right cloud and security measures in place is also essential when adopting AI, enabling efficiency, security, and long-term success in the public sector.
“Getting AI ready doesn’t just mean being technologically prepared. With mass adoption on the cards, the government needs to ensure its people are prepped as well. Wider AI adoption can create new jobs, but we first need to face the AI skills gap head-on. Training needs to be put into the hands of those who will be using AI, so they can use AI safely and securely.
“Embracing AI in a sustainable, responsible, and considerable way will put the UK at the top of the AI leaderboard.”
He continued…
“The Labour Government’s £2 billion investment into the UK’s AI Action Plan is a bold but essential step towards making Britain a global AI powerhouse. As the AI race speeds up, putting the UK on the map as an AI leader will require both financial backing and business support for adoption.
“With 27% of UK firms held back on AI adoption by a lack of expertise, we must address the AI skills gap now. Investment must go hand-in-hand with training. The Government’s TechFirst programme will lead on training in the classroom, but support for businesses to upskill their current workforces will be key to ensuring AI is adopted safely and securely.
“We must embrace AI in a sustainable, responsible, and considerable way to put the UK at the top of the AI leaderboard.”
Steven Athwal, CEO and Founder, The Big Phone Store
“If the UK wants to maintain a status as a leading tech hub, we must focus more towards more circular initiatives. Building a tech ecosystem that prioritises reuse, recycling, and repair. It’s not always the easiest path. Many businesses hesitate because the upfront costs can be significant, and can blindside profits. But over the long term, this approach leads to cleaner, and more sustainable technology and energy systems.
“Encouraging the right to repair, reducing electronic waste, and continually upgrading within a circular model, makes tech more accessible. It boosts innovation.
“Placing sustainability at the heart of our tech strategy means we’re advancing the industry and doing so in a way that benefits people and the planet alike.”
Nicolai Chamizo, Founder & CEO, Incore Invest
“If the UK wants to remain competitive, especially in emerging fields like AI and climate tech, it needs to reduce friction in talent mobility and send a clear message that global innovators are not just welcome, but essential to its growth.
“To remain a leading global tech hub, the UK must rebuild trust with international professionals already contributing to its economy. That means clarity in immigration policy, consistency in its application, and recognition of the value foreign talent brings. Without that shift, founders risk falling behind in the global race for talent.”
