Healthtech, deeptech, and the shift toward high-conviction investing

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. Take 2 minutes to learn more.

Against a backdrop of increasing global tensions and cautious capital markets, the UK did something few expected: it outpaced every other European nation for venture capital investment in Q1 2025.  

The UK showed surprising resilience, proving that Britain still produces disciplined, credible, and innovative startups capable of attracting serious capital. It’s still early in 2025, but we are seeing a shift from fintech to healthtech, the government is doubling down on deeptech, and regional hubs outside of London are gaining momentum.  

The question, then, is what are investors looking for, and what does it mean for the next wave of founders? 

UK still leading 

The latest KPMG Private Enterprise Venture Pulse report shows that, in Q1, British startups raised £4.1 billion across 507 deals. This was a small drop from Q4 2024, but keeps the UK at the top of the leaderboard.  

The same can be said about dealflow, where we saw a small decrease in the overall number of deals as well. Interestingly the report suggests it is “driven by investor confidence currently being aligned with more established, proven start-ups given uncertain market conditions and ongoing lack of exits.” 

There is a shift to quality over quantity, which should lead to better outcomes for investors. Oxford Capital sees hundreds of deals a year but selects only 7-9, and it appears that other investors are starting to see the importance of that approach too. 

Compared to EU markets like Germany and France, the UK remains a massive draw for VC activity. 

Healthtech surpasses fintech for Q1 

Oxford Capital has supported several healthtech companies in recent years including HealthKey, HelloSelf, Log My Care, Blueberry Life, and Scan.com. We’re now seeing that focus mirrored across the wider VC landscape. 

In Q1 2025, over $1.8 billion was invested into UK healthtech, more than double the amount raised by fintech in the same period. The sector is gaining traction as investors respond to shifting demographics and growing demand from an ageing population. 

That said, deeper healthtech comes with long development cycles and the high cost of medical trials. The opportunity now is in backing companies that address critical health needs but operate on more realistic timeframes and capital requirements. 

The government’s strategic investment in deeptech 

Innovate UK has invested £1.6 million of public funding into the development of open architecture for quantum computing. The award was given to a consortium of quantum pioneers including Rigetti, Oxford Ionics, and others. 

On the surface this looks like a modest investment; it comes on the heels of the UK’s first AI growth zone being announced for Culham, Oxford. It signals that the government sees deeptech as a pillar of future competitiveness.  

What does this mean for emerging startups? 

Funding is still available, though we are seeing that this is going to credible, scalable propositions. Healthtech, biotech, and hardtech sectors are drawing the most attention, but one quarter doesn’t mean that fintech, AI, or Enterprise software should be ignored.  

The UK’s lead isn’t accidental. Our world-class universities, disciplined founders and “patient” capital are all factors that give us that edge. For early-stage founders this is both a challenge and an opportunity: the money is there but the bar is higher. 

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. Take 2 minutes to learn more.

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    1. If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
  2. You are unlikely to be protected if something goes wrong
    1. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    2. Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
  3. You won’t get your money back quickly
    1. Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    2. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    3. If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    1. Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    2. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
  5. The value of your investment can be reduced
    1. The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    2. These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.