Venture capital investment in the Midlands increases 78 per cent in fourth quarter

 The figure was up 78 per cent from the £39.3 million raised in quarter three, according to KPMG’s latest Venture Pulse report.

 Twenty two transactions were completed across the region, up from 18 in the previous quarter. Deals were spread evenly across the region, with the highest volumes taking place in Birmingham.

More broadly, the IT sector, specifically software companies, saw the highest investment volume in the Midlands, with £16.5 million invested into a total of eight companies, spanning financial, network management and communications software.

This latest data follows KPMG’s recent KPE Barometer, which revealed that at least one in five (23 per cent) of the Midlands’ private business owners see venture capital as a means to finance business diversification this year.

 Andy Bostock, Birmingham Office Senior Partner at KPMG, said: “It’s great to see Midlands firms continuing to attract significant VC interest during Q4, which is testament to the region’s thriving private business ecosystem. And while the massive increase in investment values has been shaped by one major deal, the underlying figures suggest good levels of investment across the board.

 “The quality of scaling businesses in the region remains as strong as ever, with investors remaining supportive and standing ready to inject capital into the most innovative companies.”

The UK attracted the highest level of VC investment in Europe in 2024, following a strong end to the year.

The UK raised a total of £15.5 billion VC investment after funding in Q4 jumped by more than a third from £3.1 billion to £4.4 billion. 

This was driven largely by $1.3 billion raised by Greenscale, a London-based AI data centre firm. A total of 569 businesses made up the £4.4 billion investment, including £409 million raised by Insider and £303 million raised by Lighthouse.

These results come just weeks after KPMG published its first ever KPE Barometer, which revealed that over 90% of Britain’s private business owners are confident of growth in 2025.

Nicole Lowe, UK Head of KPMG’s Emerging Giants practice, said: “After a difficult Q3, it’s great to see the UK end the year as the top destination in Europe for VC investment.

 “The strong rebound in Q4 has boosted optimism among investors looking ahead to the rest of 2025, with AI likely to remain at the forefront of those looking to invest.

 “However, the impact of both global and domestic events such as the UK Budget measures and the new US President taking office could still contribute to a level of investor caution.”