Record tech startup numbers meet a funding market built for scale

More UK technology companies were incorporated in 2025 than in any previous year. RSM UK counted 56,615 new tech incorporations, up 17% from 48,518 in 2024 and 47% higher than five years earlier, according to analysis the audit, tax and consulting firm published on 15 January.

The same day, HSBC Innovation Banking and data provider Dealroom reported that UK startups raised $23.6bn (£17.6bn) in venture capital in 2025, up 35% from $17.5bn in 2024. It was the first annual increase in four years and the third-highest total on record.

Taken together, the two releases suggest that UK tech enters 2026 with more new companies than ever and venture funding growing again. The question for founders and chief executives of young tech businesses is how much of that capital is likely to reach them, and what to do if it doesn’t.

A record year for new companies

RSM’s figures show the growth was spread widely. Nearly every UK region recorded its highest number of tech incorporations, the South East being the exception. Wales had the biggest rise, up 79% from 924 to 1,657. The West Midlands rose 27% to 3,341, and the East of England and the North West both grew 24%.

London still dominates in absolute terms. Its 27,164 incorporations, up 11%, were close to half of the UK total. But the capital grew more slowly than every other region except the North East, which rose 10%.

RSM linked the South East’s performance to skills shortages that “may be holding back growth”. Georgie Bole, director at RSM UK, was otherwise upbeat: “The record number of new tech incorporations in 2025 is a clear sign of the strength and underlying confidence in UK tech,” she said. The firm also cited its own Technology Industry Outlook survey, in which 76% of tech business leaders said they were confident their business would grow under the current government.

An incorporation is not a business, of course. Some of these companies are likely to be contractors’ vehicles, side projects or holding entities that never trade at scale, so the figure is best read as a measure of intent, not of output.

A funding rebound led from the top

The venture data tells a different kind of story. HSBC Innovation Banking said the recovery was driven by 36 megarounds of $100m (£75m) or more, the most since the 2021–22 peak, and by record investment into AI startups.

AI companies raised $7.9bn, up 80% on 2024, with $2.7bn of that in the fourth quarter alone, the highest quarter on record for UK AI investment. On HSBC’s figures, AI accounted for about a third of all UK venture funding in 2025.

The bank also counted 16 new unicorns in 2025, taking the UK past 200, and 239 companies it calls ‘Thoroughbreds’: startups generating more than $100m in annual revenue. It put the combined value of the UK’s innovation economy at $1.3tn, up $100bn on 2024 and seven times its level a decade ago.

Simon Bumfrey, head of banking at HSBC Innovation Banking UK, argued that the gains were not confined to the largest deals. “Growth was evident across all stages of funding, with strong late-stage activity complemented by sustained momentum at the breakout and early stages,” he said.

The headline figures published with the review do not show how many companies raised money, or how the total split between seed, early and late stages. Without that, founders should be careful about reading a 35% rise in the total as a 35% rise in their own odds.

What the numbers mean for founders

Put the two datasets side by side and the scale of the gap is plain. More than 56,000 new tech companies were incorporated in one year. Sixteen companies became unicorns. The two numbers measure different cohorts, but the comparison is a reminder that venture capital funds a very small share of the companies the UK creates.

That is not new, but the shape of the 2025 rebound sharpens it. When a large part of the recovery comes from a few dozen rounds of $100m or more, and a third of all funding goes to AI, investors are signaling where they want concentration. A founder outside AI, or one with a business that will never need a $100m round, is competing for attention in a market whose headline numbers are being set by companies unlike their own.

HSBC’s count of 239 Thoroughbreds points to the other route. These are companies defined by revenue, not valuation. For most founders of new tech companies, especially the many building services, software and specialist products for other businesses, revenue is the more realistic yardstick and the one that keeps their options open.

The regional data is also worth a second look. Growth outside London was faster in almost every region in 2025. Founders who set up away from the capital are, on RSM’s numbers, part of a widening base rather than outliers.

A tighter limit on skills

Bole’s strongest warning was about people. “However, one area that UK is falling short on is attracting and retaining the right skills and talent in tech,” she said. “Failure to address this could hinder UK tech advancement.” She called for barriers to overseas recruitment to be removed and for tech graduates to be encouraged to stay in the UK.

For a founder deciding how to spend a first round or the first year’s revenue, that is a practical point. If the number of tech companies keeps rising faster than the pool of people able to build them, competition for engineers and technical sellers is likely to intensify, even as more capital becomes available.

Founders would do well to plan as if the funding recovery will not reach them: set revenue milestones that do not depend on the next round, treat AI as a product decision rather than a fundraising label, and spend early on the hires that will be hardest to replace. Those who raise on top of that are likely to do so on better terms.