Ross Morrison, partner, primary investments at Adams Street Partners, on the UK venture market and the big opportunity for LGPS investors.
The UK is already one of the world’s leading innovation economies and a significant source of venture-backed global technology companies.
Its innovation ecosystem has expanded approximately sevenfold over the past decade to reach $1.7tn[1]. That growth has substantially outpaced the 57% expansion of the wider UK economy over the same period, as measured by nominal GDP[2]. Although the measures are not directly comparable, they illustrate the exceptional scale and momentum of UK innovation.
A venture market at scale
Venture investment into UK startups more than doubled year-on-year to $17bn in the first half of 2026, according to Dealroom[3]—the fastest growth among Europe’s leading markets. The UK attracted 39% of all European venture investment, exceeding the next three largest markets combined[4].
For Local Government Pension Scheme (LGPS) investors, the UK therefore offers a substantial home-market opportunity: access to a mature venture ecosystem capable of producing and scaling globally competitive businesses.
Artificial intelligence (AI) is a powerful example. AI companies accounted for 74% of UK venture funding in the first half of 2026, raising $12.6bn and surpassing the previous annual record in only six months[5]. London-based Isomorphic Labs raised a $2.1bn Series B—one of the largest AI drug-discovery rounds to date[6]—while autonomous-driving company Wayve secured a major Series D backed by investors including Microsoft and NVIDIA[7].
The UK has long been the engine of the European venture market, accounting for approximately one-third of the continent’s deal value over the past decade[8]. Two-fifths of new European unicorns were created in the UK in the first half of 2026, taking the total to 205, versus 88 in Germany and 53 in France[1].
London sits firmly within the top tier of global technology centres. Dealroom’s 2026 Global Tech Ecosystem Index ranks it alongside the Bay Area, New York and Boston, with a combined enterprise value of $714bn and major companies including Revolut, Wise and ElevenLabs[10].
Strength beyond London
The UK opportunity extends well beyond the capital. The East of England has become a major technology hub, with enterprise value increasing fourfold over five years to $511bn, supported by ARM’s $417bn valuation[11]. Oxford, Cambridge, Reading and Edinburgh attract significant deep-tech and AI investment, while Norwich, Manchester, Belfast and Stroud add further breadth to the national ecosystem.
This geographic reach is supported by a deep pipeline of new businesses. Approximately 1,600 UK companies raise a first venture round each year—24% of Europe’s total—and the country is home to around 13,300 startups, 2,000 breakout companies and 455 scaleups[12].
Successful companies also nurture the talent and expertise behind the next generation. Fifty-four UK-founded unicorns have already produced 464 startups across Europe[13], creating a powerful cycle of entrepreneurial reinvestment.
Depth across sectors
The UK’s strength is not confined to a single theme. Alongside the $12.6bn raised by AI companies in the first half of 2026, enterprise software attracted $5.2bn and healthcare $2.6bn[14].
The UK also secured 41% of European deep-tech and life-sciences funding—$10.3bn in total—including $3.4bn for biotechnology and $1.4bn for autonomous technologies[15].
Semiconductors, quantum computing and other advanced technologies further demonstrate the scientific and commercial depth underpinning the market.
Despite this position, many institutional venture portfolios remain underweight the UK and consequently remain heavily concentrated in the US. A deliberate allocation to UK venture can broaden geographic exposure while potentially providing access to a number of companies operating at the frontier of globally important technologies.
The wider European opportunity
The UK sits at the centre of a wider European opportunity that should not be overlooked. The combined enterprise value of European venture-backed technology companies has increased almost 24-fold since 2010 to nearly $4tn[16], while annual venture investment has tripled over the past decade[17].
Europe produced 25% of new global venture-backed unicorns in 2025[18], and exit value reached €67.8bn—the second-highest annual total on record[19]. World-class universities, research institutions and AI laboratories such as DeepMind continue to supply the technical talent behind new companies, while established successes increasingly act as founder factories.
This opportunity is widely distributed. More than 600 unicorns have emerged across 66 European cities[20], including UiPath in Romania, Spotify in Sweden, Celonis in Germany and Veriff in Estonia[21].
Access and manager selection matter
Together, the UK and Europe offer complementary exposure to companies that many in the industry expect will be among the next generation of global technology leaders. We think the UK’s scale, sector breadth and demonstrated record support a more meaningful role in institutional portfolios, while the wider European ecosystem adds geographic and thematic diversification.
Venture returns, however, remain highly dispersed across managers and companies. Capturing the opportunity requires more than allocating capital: it depends on specialist selection, longstanding local relationships and consistent access to the strongest managers and founders.
For LGPS investors, combining a significant UK allocation with selective exposure across Europe can reduce geographic concentration and provide access to innovation already producing globally important companies.
Ross Morrison is a Partner on the Primary Investments team in London at Adams Street, a global private markets investment manager based in Chicago with $76bn in assets under management.
[1] Dealroom.co, UK Innovation Update H1 2026, HSBC Innovation Banking
UK, July 2026, p. 21
[2] Nominal
UK GDP in current US dollars increased from $2.717 trillion in 2016 to $4.265
trillion in 202, an increase of 57%, calculated as (($4.265T ÷ $2.717T) − 1) ×
100. GDP figures: Worldometer, “United Kingdom GDP (2026)”, historical series
attributed to the IMF World Economic Outlook
[3] Dealroom.co,
UK Innovation Update H1 2026, HSBC Innovation Banking UK, July 2026, pp 5, 6
[4] Dealroom.co,
UK Innovation Update H1 2026, HSBC Innovation Banking UK, July 2026, p. 6
[5]
Dealroom.co, UK Innovation Update H1 2026, HSBC Innovation Banking UK, July
2026, pp. 2, 15
[6] Isomorphic
Labs, “Isomorphic Labs secures $2.1 Billion funding to scale its
AI drug design engine,” May 12, 2026.
[7] Wayve,
“Wayve secures $1.5B to deploy its global autonomy platform,” 25
February 2026
[8] PitchBook
Q2 2026 European Venture Report
[9] Dealroom.co,
Unicorns by country, as of September 1, 2026 — dealroom.co/unicorns
[10] Dealroom,
The Global Tech Ecosystem Index 2026, dealroom.co.
[11]
Dealroom.co, UK H1 2026 Innovation Update, HSBC Innovation Banking UK, July
2026, p. 23
[12]
Dealroom.co, UK H1 2026 Innovation Update, HSBC Innovation Banking UK, July
2026, p. 27
[13]
Dealroom.co, UK H1 2026 Innovation Update, HSBC Innovation Banking UK, July
2026, pp. 27–28
[14]
Dealroom.co, UK H1 2026 Innovation Update, HSBC Innovation Banking UK, July
2026, p. 2
[15]
Dealroom.co, UK H1 2026 Innovation Update, HSBC Innovation Banking UK, July
2026, p. 19
[16]
Dealroom.co, data for European venture-backed technology companies founded or
headquartered in Europe, as presented in Figure 1 of Ross Morrison (Adams
Street Partners), “European
and UK venture capital – a vibrant, thriving ecosystem,”
Room 151, 14 April 2026
[17]
Dealroom.co, data as of 18 November 2025; Europe includes Israel
[18] Ibid
[19] PitchBook,
2025 Annual European Venture Report, 2026
[20] Dealroom.co and
LocalGlobe, data as of 23 May 2025
[21] Dealroom.co, data as
of 31 March 2025
[1] Dealroom.co, Unicorns by country, as of September 1, 2026 — dealroom.co/unicorns
