Majority of firms raising capital for first time are outside London

London's dominance in first-time equity fundraising has eroded significantly, with the capital now accounting for less than half of all inaugural capital-raising transactions in the UK. According to The Times analysis, London's share has fallen to 44.6%—a material decline that signals a rebalancing of venture and growth capital distribution across the country. This shift represents a departure from historical patterns where the capital concentrated a disproportionate share of early-stage equity activity.

The contraction extends beyond geography to deal economics. The average first-time equity deal has compressed to £1.7 million, reflecting tighter valuations and smaller capital requirements for emerging fundraisers. This compression may indicate heightened capital discipline among investors or an increase in the proportion of smaller, earlier-stage companies accessing equity markets outside traditional financial hubs.

Regional strength is emerging in specific geographies. Reading and Cambridge have established themselves as meaningful centers for equity-investable small firms, with both markets exceeding 1% penetration rates—a threshold that distinguishes them as viable alternative poles for capital formation alongside London. The data suggests that improved infrastructure, sectoral clusters, and potentially lower operating costs in regional centers are attracting both founders and capital providers away from the London-centric model that characterized UK venture capital for decades.

The pattern of steady pre-pandemic growth outside London—where deal numbers in regional markets were expanding at 5% annually compared to 4% in London—has evidently persisted or accelerated through the current period. This decentralization reflects broader economic shifts, improved digital infrastructure enabling remote capital deployment, and investor appetite for exposure to growth markets beyond the southeast.