UK private capital is being increasingly invested outside of London, driven by key tech and science hubs in the South East, East of England and the North. VCs can access untapped regional LPs by engaging local angel networks and leveraging successful exited founders as connectors.
Where is venture capital being invested in the UK outside of London?
The flow of capital has shifted regionally in the last few years. The key investment hotspots are:
- The South East, driven by the Oxford tech and biotech cluster.
- The East of England, driven by the Cambridge science ecosystem.
- The North West, the most popular base for VC funds outside London and a major destination for investment, particularly into Manchester-based startups.
- Scotland is a significant hub for funds and investment, with strong startup ecosystems in Glasgow and Edinburgh.
How can a VC find Limited Partners (LPs) in the UK regions?
UK VC funds raise only about 40% of their capital from domestic investors, indicating a large, untapped pool of potential LPs. The most receptive regional LPs for new managers are High-Net-Worth Individuals (HNWIs) and Family Offices.
A step-by-step guide to finding them:
- Engage regional angel networks: This is the most direct route to aggregated local capital. Key networks include South East Angels (“Most Active Investor in the Regions”), Lifted Ventures (focused on the North), and new UKBAA hubs in cities like Exeter.
- Leverage connectors: The best way to get warm introductions is through well-connected local individuals. Successful exited founders from a specific region are the most powerful connectors - they can offer direct access and credibility with the local HNWIs who previously backed them.
- Partner with regional GPs: Build relationships with the VCs already based in Manchester, Edinburgh, and other hubs. They can be valuable sources for co-investment and LP introductions.