Health tech and life sciences lead the way for UK VC investment in Q3

Health and life sciences is one of the fastest growing sectors for UK venture capital (VC), according to new analysis from HSBC Innovation Banking UK and Dealroom. Homegrown startups in the health and life sciences sector collectively raised $2.3B so far in 2024, including nearly $1 billion in Q3 alone. This marks the highest investment in any UK sector this quarter, placing health and life sciences in joint second place with enterprise software and behind fintech for the year to date, up from fifth in Q2.

Three of the largest VC funding rounds in Q3 2024 came from the biotech industry, with Myricx Bio, ViceBio, and F2G securing significant investments. Half of the unicorns created in the UK in 2024 so far operate in the health and life sciences space, including notable names such as EyeBio, IntraBio, and IIElevenLabs.

The UK has emerged as the undisputed leader in European femtech, with the sector attracting $652.9 million of VC funding since 2019. UK femtechs have secured more investment than their peers in Germany, Belgium, and France combined during this 5-year period.

Newly-minted femtech unicorn Flo raised $200 million in Q3 2024, marking the largest UK VC round of the quarter. This ranks it as the fourth-largest femtech round ever globally, and makes Flo Europe’s first femtech unicorn, with a valuation surpassing $1 billion.

Overall, UK startups raised $2.9 billion in fresh funding in Q3 2024, with the largest share raised across Series B and C rounds. This represents a drop from Q2, however, is in line with typical seasonal trends of reduced investment activity over the summer period.

Despite the slowdown in deals closed in Q3, UK-based venture capital firms are on track to raise a record $12.2 billion in additional dry powder by the end of 2024. This would surpass the previous record of $11.5 billion raised in 2021 during the height of the pandemic boom years, suggesting a buoyant outlook for the UK’s VC market into 2025.

So far this year, $9 billion of dry powder has been raised by UK VCs, driven by the launch of new funds from investors including Index Ventures, Atomico, and Balderton Capital, among others.

The UK ($12.4 billion) remains the number one destination in Europe for startup innovation and investment this year, having raised almost as much VC funding as Germany and France combined ($13.2 billion). London-based startups alone attracted $8.7 billion, reasserting its status as Europe’s premiere innovation ecosystem. Outside the capital, Cambridge and Oxford have been top destinations for VC investment, while Edinburgh, Manchester, and Nottingham have seen over 100% growth, driven by investments in sectors like biotech and sustainability.

Foreign investors, particularly from the US, continue to play a significant role in supporting UK startups, and account for over 70% of VC investment in UK companies in 2024 – one of the highest shares to date.

Simon Bumfrey, Head of Technology and Life Sciences at HSBC Innovation Banking UK said: “2024 has seen several top global funds actively raising capital to be deployed in UK start-ups and scale-ups at all stages of growth, with UK-based funds anticipated to raise at record levels. This deep pool of liquidity is testament to the opportunity that many see in the UK innovation ecosystem and signals a buoyant outlook for 2025 and beyond.”

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