Compute drives success for UK's deep tech sector

The UK's deep tech sector is booming, pulling in £32 billion in equity investment between 2015 and 2024, driven largely by compute.

According to a new report from AlbionVC and data platform Beauhurst, this sub-sector – comprising quantum, photonic, neuromorphic, and semiconductor technologies – saw investment grow from £3 million in 2015 to £284 million in 2024, with the total reaching £1.53 million over the decade.

"In 2015, no equity deals in Future of Compute exceeded £10 million, but by 2024, nearly 40% did," said the researchers.

"This marks a notable transition towards larger investments, as deals under £100,000 have steadily declined, representing just 3% of all transactions in 2024. The trend highlights investors’ preference for fewer, higher-value deals and the capital-intensive nature of computing innovation."

These firms secure, on average, £5.3 million more per deal than their deep tech counterparts, reflecting this field’s higher infrastructure, talent and R&D costs.​

In 2023/24, there were 64 deals, with leading investors including Parkwalk Advisors, which participated in eight deals worth over £2 million between 2023 and 2024, as well as Oxford Science Enterprises and AlbionVC, which provided follow-on investments.

Notably, said the researchers, the largest funding recipients were all quantum computing companies. Oxford Quantum Circuits led with £79.5 million raised, followed by Riverlane with £73.6 million and Quantum Motion with £42.5 million.

Many of these firms are university spinouts: eight from the University of Oxford, six from Imperial College London and University College London (UCL) combined, and another six from the University of Cambridge.

The report highlights the need to ensure sustained investment in universities and early-stage research, however, if momentum is to be maintained.

"Despite strong private investment in a sector that’s vital to the UK economy, grant funding has seen a decline, with only £28.9 million secured in 2024, down from £34.3 million in 2023," the researchers warned.

"Without adequate support, the UK could face challenges in maintaining its competitive edge in this sector."

In terms of deep tech generally, automated driving company Wayve received the largest investment between 2023 and 2024, raising a total of £833 million. Self-described decision intelligence firm Quantexa, meanwhile, got the biggest single deal at £104 million.

"Quantexa is a standout British deep tech success story, combining a visionary founder, a cuing-edge product, and strong market demand for AI-driven decision intelligence in both enterprise and the public sector," said Ed Lascelles, a partner with AlbionVC, who led the first institutional investment in the firm.

Earlier this year, science minister Patrick Vallance launched a new Science and Technology Venture Capital Fellowship. The government-backed program, run by the Royal Academy of Engineering and Imperial College London is aimed at improving investors’ knowledge and experience in the deep tech and life science sectors to stimulate investment.

The launch followed the publication of the 2024 State of UK Deep Tech report by the Royal Academy of Engineering Enterprise Hub, which found that higher interest rates, post-pandemic inflation and lagging productivity growth were hindering investment in the sector.

"Continued success cannot be taken for granted. We must ensure we remain an attractive place for entrepreneurs to start up new deeptech companies from our extraordinary science and engineering R&D base," said Sir John Lazar, president of the RAEng.

"It is also essential that we unlock investment at scale to enable growing companies to remain here, rather than relocating overseas."