How startups can secure investment and become the next UK unicorns

Synthesia, a UK-based AI video platform, recently secured $180 million (£144 million) in Series D funding and has become the country’s latest unicorn.

This shows that sizable investments are still within reach for UK startups.

A UK pound unicorn—a privately held startup valued at £1 billion or more—is a coveted milestone symbolising scale and success

However, despite being the world’s third-largest venture capital (VC) market, the UK continues to lag the US and India in producing them.

There is a funding disparity in the UK, often referred to by VCs and startup observers as the “unicorn gap”, which means high-growth companies may struggle to sustain momentum on their scaling journey.

In this article, we explore why this unicorn gap persists and what you can do to secure the funding and support needed for your startup to thrive on the global stage.

Here’s what we cover:

Rethinking the funding landscape

British Business Bank Chief Economist Matt Adey explains: “Compared to the US, UK startups often face smaller deal sizes and more fragmented funding rounds, requiring startups to ‘prove themselves’ at every stage.”

Can strategic alignment across funding, operations, and policy change the narrative?

At a scale-up investment event in London held by tech trade association TechUK, industry experts tackled these challenges head-on, offering invaluable insights to help tech founders navigate the complexities of scaling.

Sean Williams founded Autogen AI, which has secured institutional investment, including a $20 million funding round from US-based investors.

Sean said: “The key is alignment—between your product, operations, and the market.

“You need a product that solves a real problem, operational systems that can handle rapid growth, and a clear understanding of your market dynamics.”

From addressing funding constraints to leveraging technology and advocating for policy reforms, this roadmap for startups aspiring to achieve unicorn status will help you identify opportunities faster.

The UK can learn from global success stories

The UK is less efficient than key competitor countries in producing world-class scale-up companies, according to data from the British Business Bank.

• In absolute terms, the UK ranks fourth in producing unicorn companies.
• Adjusted for market size, the UK is less efficient in producing unicorns than the US, India, China, Israel, Germany, Singapore, Canada, and France.

One key challenge lies in smaller deal sizes and funding constraints.

Early stage and growth-stage funding in the UK must catch up, as it forces many promising startups to seek investment abroad or scale more conservatively.

The US offers abundant venture capital at all stages, backed by pension funds, corporate venture arms, and a culture that celebrates risk-taking, supporting founders in pursuing aggressive growth strategies.

By matching the US in funding availability, the UK can retain top innovators while driving economic growth, job creation, and global competitiveness—ultimately benefiting both entrepreneurs and the broader ecosystem.

India has a rapidly growing, mobile-first market that provides fertile ground for fast expansion and cost-effective customer acquisition.

Learning from these models can help the UK refine its funding environment and accelerate its path to creating more unicorns.

The UK’s hidden strengths

Emerging sectors such as fintech, green tech, and deep tech are thriving in the UK, supported by targeted investments and innovative solutions.

• Fintech provides financial services tech solutions, such as digital banking, mobile payments, and blockchain technology, making finance more accessible and efficient. Global money transfer business Wise, founded in London in 2011, is an example of a publicly listed fintech unicorn.
• Green tech focuses on sustainability and developing tech such as renewable energy systems, carbon capture, and energy-efficient solutions to combat climate change. Octopus Energy is an example of a green tech unicorn founded in 2015 to supply renewable energy across the UK.
• Deep tech is centred on fixing complex problems with cutting-edge advancements such as quantum computing, robotics, and advanced materials. In 2021, Tractable, which uses AI tech to assess damage to property and vehicles, announced a venture round to become a unicorn.

With globally renowned universities acting as innovation hubs, the UK benefits from a steady pipeline of cutting-edge research and entrepreneurial talent.

These institutions drive tech advancements and foster successful university spinouts, which collectively raised £1.3 billion in 2023, according to British Business Bank data.

The UK’s vibrant regional tech clusters, such as the Golden Triangle (London, Cambridge, and Oxford) and Manchester and Edinburgh hubs, provide fertile ground for collaboration, knowledge sharing, and scaling opportunities.

These unique ecosystems position the UK as a leader in developing transformative technologies while offering investors access to a diverse range of high-growth startups.

Fintech triumphs

Take Monzo and Revolut, two prominent and established fintech unicorns (surpassing the £1 billion valuation mark relatively early), as examples.

Both emerged from London’s fintech ecosystem, combining progressive regulatory frameworks, open banking standards, and deep engineering and entrepreneurial talent.

Starting as mobile-only banking services, they quickly built strong customer bases by focusing on user-friendly interfaces, transparent fees, and data-driven product development.

As they grew, Monzo and Revolut secured sizable funding rounds from UK-based and international investors. The money was attracted by their ability to meet strict regulatory requirements, deliver reliable unit economics, and scale operationally.

Scale-up success stories show that even in a competitive global market, the UK’s supportive environment has potential to help startups overcome funding blockers, attract high-quality investors, and transform local momentum into international expansion.

But as we’ve outlined, we’re not making enough unicorns.

So how can we make more?

While the UK has unique challenges, its tech ecosystem offers opportunities in key growth sectors if policymakers, investors, and industry leaders align around common objectives.

By working together on shared goals such as funding, mentorship, and regulatory support, the UK can unlock its full potential to produce globally competitive startups.

How to become investor ready

Positioning your startup for investment success needs much more than a compelling product. It demands meticulous preparation, operational readiness, and alignment with investor expectations.

Here are three key strategies you can adopt to achieve these goals.

1. A clear growth path

Scaling a startup isn’t only about raising capital—you must prove your ability to grow exponentially.

Ian Merricks, founder and proposition lead at VenturePath, stated: “VCs aren’t there to ease your working capital burdens—they want to invest in businesses that clearly show a path to making three to five times their money back.

“This means having the right team, credible financial forecasts, and a product-market fit that drives consistent traction.”

2. Transparency and honesty

Investors value transparency and honesty. Startups should present a compelling narrative while acknowledging their challenges.

Sean Williams of Autogen AI advised: “Investors respect transparency. They know no business is perfect, but they want to see you’ve thought through potential risks and have a plan to address them.”

Similarly, Aitian Li, an investment associate at Calculus, emphasised the importance of demonstrating real traction: “It’s okay to show ambition, but investors want to see that you’ve already solved real problems for customers and that your business model works.”

3. Timing and fundamentals

Seeking investment prematurely can undermine your credibility.

Marco Cerrone from The FSE Group warned: “If your product-market fit isn’t proven or your operational processes aren’t scalable, it’s hard to convince investors.

“Founders need to nail down their business fundamentals before seeking external capital.”

Be audit ready

Being audit-ready ensures investors see a startup as disciplined and scalable.

Marco Cerrone stressed: “We see a lot of hockey-stick growth projections, but what matters is the rationale behind those numbers. Show us the unit economics and how they scale—be conservative but grounded.”

Mark Shepherdson, director of business development at Santander UK, added: “Investors look for businesses that can toggle between growth and profitability.

“A clear financial model with realistic assumptions goes a long way. And don’t shy away from challenges. Investors respect honesty.”

How you can scale tech and operations

Operational readiness is fundamental to scaling successfully.

Align your processes, metrics, and systems with growth objectives while using cutting-edge tools to enhance efficiency and decision-making.

Marvin Fletcher Rogers, principal consultant and private equity lead at Sage, emphasised: “Operational and financial discipline are non-negotiable.

“Founders need robust metrics like customer acquisition costs, lifetime value, and predictable pipelines. Show where the gaps are and have a clear plan to address them. It’s about building trust.”

“Use your data wisely. Your strongest asset is a solid financial story backed by credible numbers. Investors want to see that you’re prepared and capable of executing at scale.”

The role of technology

Tech is pivotal in scaling efficiently and appealing to investors. It optimises operations, enhances decision-making, and demonstrates a startup’s scalability.

Sean Williams noted: “Use technology strategically. AI and data-driven tools can be game-changers for operational efficiency, customer insights, or scaling processes. It’s not just about having tech—it’s about using it well.”

AI-driven analytics and platforms such as Sage Intacct can improve your finance processes and offer data-driven insights into customer behaviour, operational performance, and financial health.

In today’s competitive market, upgrading your technology isn’t optional—it’s vital. The right tech enhances efficiency, helps you strengthen market positioning and signals readiness for growth.

Aitian Li said: “Stay focused on efficiency. Investors reward businesses that demonstrate smart resource use—whether it’s cash flow management, customer acquisition, or scaling operations.”

Integrating scalable, tech-driven solutions into your operations can build a solid foundation for long-term success while appealing to investors seeking low-risk, high-growth opportunities.

Encouragingly, the British Business Bank reported a 25% increase in funding for British growth-stage companies in late 2023, signalling a favourable environment for well-prepared startups.

Policy and ecosystem support

Creating a thriving environment for unicorns in the UK requires addressing systemic funding, policy, and ecosystem support challenges.

Matt Adey, from the British Business Bank, said: “There is a need for stronger policy support, including enhanced tax incentives and government-backed initiatives, to close funding gaps in growth and late-stage funding.”

What this would mean for you

• More funding options: if policy support increases, your scaling business could benefit from new avenues of capital at crucial growth stages.

• Reduced financial barriers: enhanced incentives might reduce the cost and difficulty of securing the backing you need to expand.

Policy reforms

Marvin Fletcher Rogers at Sage believes UK businesses must focus more on late-stage funding.

He said: “The gap between Series A and Series B is where we lose many startups. Policies incentivising institutional investment in growth-stage businesses could make a huge difference.”

Tax incentives, particularly the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), could be changed to support growth-stage companies.

This might mean a smoother transition from early-stage seed investment to later, larger rounds.

• Increasing annual investment limits or adding a growth-stage enhancement—where tax relief improves as companies hit operational milestones—would align incentives with long-term scaling ambitions.
• In addition to early-stage incentives, the UK could consider targeted grants or tax relief for Series B and beyond, mirroring Germany’s high-tech Gründerfonds model.

What this would mean for you

• More substantial late-stage support: if you’re moving from Series A to B, refined EIS and SEIS programmes could make investors more eager to stay on board.

• Reduced risk of relocation: if UK-based programmes fill the gap, you might not feel pressured to seek funding internationally.

Public-private partnerships

Government-backed initiatives to bolster late-stage funding are crucial. Policies encouraging venture capital investment, particularly in the growth and scale-up phases, are also needed.

Marco Cerrone of FSE Group said: “Pension fund participation in venture funding could unlock significant capital for scale-ups. In the US, this is already happening. The UK needs to make similar moves to retain high-growth companies.”

The government can create an ecosystem that nurtures high-growth startups by providing stable financial frameworks and incentivising institutional investors.

Collaborations between government agencies, industry bodies, and accelerators could improve mentorship, talent, and infrastructure access.

What this would mean for you

• New investor pools: pension funds and other institutional investors could become fresh sources of capital for your growth rounds.
• Easier path to scale: you could scale faster and more efficiently with improved mentorship and infrastructure.

A global perspective

The UK must actively compete with countries like the US and India to retain its high-growth startups. If you want to become a unicorn, you’ve probably looked abroad for larger deal sizes and better funding opportunities.

However, strategic policy changes could encourage you—and your peers—to stay local.

Santander’s Mark Shepherdson said: “Retention is key. Too many startups move to the US or other markets for better opportunities. We need stronger incentives to keep businesses scaling here in the UK.”

What this would mean for you:

• Reduced temptation to relocate: policy changes—such as enhancements to EIS/SEIS, improved R&D tax credits, grants for later-stage funding, and supportive regulations (e.g. streamlined incorporation, faster skilled-visa processes)—could make it easier for startups to operate and grow within the UK.
• Stronger global positioning: competing with significant tech hubs in other countries might increase your startup’s visibility on the world stage.

What needs to happen

A collaborative effort between policymakers, investors, and the private sector is essential to unlock the UK’s unicorn potential, giving you more funding options.

All stakeholders must work together:

• Policymakers can refine funding and regulatory frameworks for scale-ups
• Investors should commit to backing truly high-potential ventures (primarily through later-stage financing),
• Private-sector leaders can foster innovation and operational excellence.

Together, these efforts form an ecosystem that better supports your business as it grows.

Bridging policy and ecosystem gaps, for example, by refining tax incentives and encouraging later-stage VC participation—helps the UK retain top-tier talent and move closer to global leadership in unicorn creation.

Strengthening these policy and ecosystem elements means more eyes on the UK, increasing your startup’s odds of securing vital growth capital.

How this would make a difference

• Streamlined scaling: with more targeted policies—such as simplified regulations for late-stage deals or extended tax incentives—you’ll face fewer administrative hurdles, speeding up your path to growth capital.
• Growth-focused support: by expanding mentorship programmes, improving infrastructure, and connecting you to high-calibre investor networks, you’ll have more avenues for strategic guidance and capital—ultimately offering a more straightforward path to unicorn status.

By tailoring policy reforms and ecosystem enhancements to address the specific needs of late-stage startups, the UK can retain top entrepreneurial talent—founders and skilled employees who power high-growth companies—allowing you to build, scale, and thrive without having to relocate.

The end goal?

A more potent, vibrant UK tech scene where your business can reach its full (potentially unicorn) potential.

A roadmap to unicorn creation

Achieving unicorn status demands precision, preparation, and persistence.

Here are some actionable steps in navigating the complexities of scaling your startup.

Develop and validate market-fit products

• Prioritise customer-centric innovation to ensure your product solves a real problem.
• Gather feedback and iterate quickly to align your offerings with market demand.

Achieve financial and operational readiness

• Prepare realistic financial models with clear assumptions and detailed forecasts.
• Implement robust operational systems that can handle growth.

Build strong relationships with investors

• Network strategically to connect with investors who are aligned with your vision.
• Be audit-ready with clear metrics and a compelling narrative to instil confidence.

Adopt scalable technologies

• Use tools such as automation to enhance efficiency, streamline processes, and support rapid scaling.
• Use innovative solutions, such as AI, to bolster decision-making and operational execution.

Final thoughts

Scaling to unicorn status is achievable for startups that embrace innovation, strategic preparation, and systemic support.

However, it requires a shift in mindset.

Sean Williams of Autogen AI said: “Think big. In Silicon Valley, selling your company for £50 million could be considered a failure, but it’s celebrated in the UK.

“Shifting to a mindset of building global, billion-pound businesses can unlock new opportunities.”

With the proper alignment, the UK’s tech ecosystem is ripe with opportunity.

By addressing funding gaps, enhancing policy incentives, and fostering strong investor relationships, your startup can unlock its full potential and contribute to building a more robust innovation landscape.