UK Deep Tech investment
UK deep tech investment is on course to reach a record £12.8 billion in this calendar year, with a new high of 13 unicorns emerging this year. The UK retains its position as the world’s third-largest deep tech market, according to the Royal Academy of Engineering’s State of UK Deep Tech™ 2026 report, which provides a definitive overview of the UK deep tech landscape, tracking investment, emerging opportunities, and the UK's competitive position globally.
Since the start of 2026, investment has already reached £9.6 billion and deep tech now accounts for 54% of all UK venture capital investment, up from 30% in 2025. This reflects a global acceleration in capital flowing towards engineering and science-led technologies.
The UK’s 2,600 privately held deep tech companies are collectively valued at £155 billion, more than five times their 2020 value. The wider ecosystem, including acquired and publicly listed companies, is now worth £503 billion. The jobs created by UK VC-backed deep tech companies has more than tripled over the past six years and they now employ more than 140,000 people globally, up from 43,000 in 2020.
Beyond record venture investment, the report examines how the UK can capture, retain and reinvest more of the economic and technological value generated by its deep tech companies. UK investors provide 59% of early-stage capital but only 21% of later-stage funding, leaving many scaleups reliant on overseas investment, highlighting the importance of strengthening domestic investment as companies scale.
Unlocking domestic institutional investment is one of the clearest opportunities to help narrow the estimated £3.8-12 billion domestic growth capital gap. The report examines progress under the Mansion House reforms in mobilising UK pension but finds limited evidence that this is translating into deep tech investment at the pace and scale required. Realising the full potential of the reforms will require not only greater investment, but also the specialist expertise, investment practices and confidence needed to support technically complex, deep tech companies.
Beyond finance, the report identifies cumulative friction across the UK's deep tech ecosystem as a barrier to scaling. Fragmented support, limited access to specialist infrastructure, complex procurement pathways and difficulties securing early customers can together slow growth and influence where companies choose to scale. While many of the necessary ingredients are already in place, addressing the remaining barriers requires a more coordinated and effective ecosystem, actively removing avoidable friction and ensuring entrepreneurs can access the capital, expertise, infrastructure and commercial opportunities they need to grow and scale in the UK.
AI is driving investment
AI-related companies account for 71% of UK deep tech investment in 2026, up from 36% in 2025. Growth has been driven in part by three billion-dollar funding rounds (Isomorphic Labs, Wayve and Ineffable Intelligence), while investment across the remainder of UK deep tech remains broadly flat. The figures reveal an increasingly concentrated investment landscape, with record headline growth masking a more uneven picture across the wider ecosystem.
The report also examines the UK's wider commercial AI position, including companies beyond its core deep tech classification. Of the £33.5 billion invested across UK AI companies between 2020 and 2026, £26.6 billion - nearly 79% - has gone to AI applications. However, investment is broadening across the full AI stack: computing and model development attracted approximately £3.9 billion in 2026 alone, accounting for around 35% of UK AI investment this year.
The UK's share of global investment varies considerably across AI technologies. Between 2020 and 2026, UK companies attracted 44% of global funding in AI for materials and 21% in AI drug discovery, compared with 2.9% in AI chips and processors and 0.1% in generative AI foundation models. These differences offer insight into the UK's commercial strengths and dependencies, with implications for its technological sovereignty, national resilience and long-term competitiveness.
UK deep tech success is creating the next generation of global technology companies
The report also highlights how successful companies generate value far beyond financial returns, creating experienced founders, high value employment, technical expertise and networks that fuel future businesses. According to new analysis in the report, alumni of 63 venture-backed UK deep tech companies that achieved significant commercial outcomes have founded 160 subsequent businesses, collectively raising £10.5 billion, with 19 achieving unicorn status.
Google DeepMind provides a striking example, with former employees co-founding 57 startups that have raised at least $10 million, including Ineffable Intelligence, Isomorphic Labs and Recursive Superintelligence. However, only 15 of these new companies are based in the UK. This reflects the persistent barriers to scaling in the UK, which risk leaving UK value unrealised or seeing the resulting talent, technologies and capabilities accumulate elsewhere. This weakens the UK's ability to build on its success and develop the economic and industrial capabilities needed to compete globally.
State of UK Deep Tech Index
The report is accompanied by the State of UK Deep Tech Index, a dynamic platform developed with Dealroom that provides a real-time view of the health and growth of the UK's venture-backed deep tech ecosystem.
Sir John Lazar CBE FREng, President of the Royal Academy of Engineering, said:
“Generating a record 13 unicorns in the UK this year is a remarkable achievement and a clear sign of the strength of UK deep tech. The challenge now is ensuring that more of these companies can grow to global scale from a UK base and that the value they create continues to strengthen our economy and innovation ecosystem.
“We must use this amazing momentum to build world-class companies that can compete on a global scale, while still retaining a crucial anchor in the UK. We want our companies to drive revenue everywhere, and we should celebrate when they attract foreign capital, but this has to be balanced with able sources of UK capital, such as those raised via Mansion House reforms, and a local ecosystem that reduces friction enough to make founders want to stay in the UK.”
Kanishka Narayan MP, UK Minister for Artificial Intelligence, said:
“Britain is already a great deep tech nation, with world-leading strengths in AI, quantum, life sciences and other technologies that will define our future.
“This report from the Royal Academy of Engineering clearly shows the extraordinary momentum behind AI in the UK, as it reshapes the deep tech landscape. Billions of pounds of investment are flowing into businesses developing and applying this transformative technology in a wide variety of ways.
“By combining AI with Britain’s strengths in science and engineering, from drug and materials discovery to robotics and autonomous systems, we can build new industries, grow globally competitive companies and ensure AI delivers prosperity across the UK.”
Ana Avaliani, Director of Enterprise and Place at the Royal Academy of Engineering, said:
“Deep tech is no longer simply an economic opportunity; it has become a strategic national capability. Capital is essential, but it is not enough. The UK must also provide access to specialist talent, infrastructure, procurement pathways, regulatory clarity and commercialisation support so that breakthrough technologies can scale, compete globally and remain anchored here.
“This report shows that world-class innovation is emerging across the UK. Through our Enterprise Hubs, we are working to close that gap and remove friction in the innovation ecosystem, connecting founders with the capital, networks and expertise they need to turn exceptional research and engineering into globally competitive companies.
“If the UK can unlock the full strength of its deep tech ecosystems, it can build an even stronger pipeline of successful businesses and capture more of the economic and strategic value they create.”
Dr Caroline Hargrove CBE FREng, Chair of the Royal Academy of Engineering Enterprise Committee and Chief Technology Officer of Ceres Power, said:
“The UK is brilliant at creating deep tech companies, but we need to match that with an ability to scale them. Keeping more of those startups growing here creates a virtuous circle: successful founders generate intellectual property, expertise and capital that go on to support the next generation. This is clearly demonstrated in the report, with the successful alumni of deep tech companies backing 160 subsequent businesses, collectively securing around £10.6 billion of investment.
"Many of these founders have made a conscious choice to build their companies in the UK, despite coming from all over the world. That reflects the UK's enduring appeal as a place to innovate, combining world-class research, engineering talent and a strong entrepreneurial culture. The UK has attracted £40.8 billion in deep tech venture capital since 2020, more than any other European country, but only 2.8% of our deep tech companies reach the highest levels of scale, compared with 6.5% in the US.
“In an increasingly competitive global market for talent and investment, the UK's ability to attract ambitious founders and persuade them to start companies here remains one of its greatest strengths. However, the UK must work to unlock higher long-term investment and create more of the conditions that persuade ambitious founders not just to start their businesses here, but to scale them here too. Only then can we turn the UK’s extraordinary deep tech innovation culture into lasting economic value for the country."
Notes for editors
- There is no universally accepted definition of deep tech but the Royal Academy of Engineering defines it as companies that build on the fundamental principles of engineering and science to create novel solutions that are capital & R&D intensive, have longer development timelines and are technologically complex. Being grounded in cutting-edge advances in engineering and science, deep tech offers solutions to the world’s most complex environmental, economic and societal challenges.
- The Royal Academy of Engineering’s State of UK Deep Tech™ 2026 report has been developed using data commissioned from Dealroom.
- The Royal Academy of Engineering creates and leads a community of outstanding experts and innovators to engineer better lives. As a charity and a Fellowship, we deliver public benefit from excellence in engineering and technology and convene leading businesspeople, entrepreneurs, innovators and academics across the profession. As a National Academy, we provide leadership for engineering and technology, and independent, expert advice to policymakers in the UK and beyond.