It’s no surprise that the dominance of Artificial Intelligence (AI) looks set to continue but if we don’t bridge the AI skills gap, the UK is at risk of losing vital venture capital investment.
KPMG’s Private Enterprise Venture Pulse shows that the UK’s attractivenessregarding AI is a key reason why investors across the globe continue to eye opportunities here when it comes to start-ups.
Yet our recent research with the University of Melbourne showed that almost three quarters (73%) of people in the UK have had no AI training or education – a statistic that needs to improve rapidly in 2026 for so many reasons.
These findings, along with insights from data, trends, and conversations withclients and investors, makes the situation clear: we now need to do more to adopt AI more widely to ensure everyone has the necessary skills for the UK to become a powerhouse of innovation in this field.
We need people not only to engage with AI training and education, but also make sure they are adopting and implementing this UK borne innovation in their lives and workplaces. This will enable start-ups to build momentum, keep pace, and ensure that vital venture capital investment continues to flow into the UK.
In recent weeks, when speaking about the pros and cons of AI, Mayor of London Sadiq Khan outlined plans for a taskforce to support people by offering free AI training to ensure we harness AI’s benefits in the best possibleway.
If this country continues to develop initiatives like this, 2026 could be a standout year for the UK to lead on tech innovation while remaining attractiveto venture capital investors.
This is particularly important following a turbulent year for investment in 2025. A disappointing start was eventually offset by a strong finish, enabling the UK to secure the top position in Europe with more than £16 billion invested across 1,900 deals.
Europe’s venture capital market continues to benefit from its geographic and sectoral diversity, with investment activity well distributed across countries and industries. On a country basis, the UK led investment in Q4’25 with $6.8 billion deployed, followed by Germany ($2.4 billion), France ($2.3 billion), and Israel ($1.5 billion), underscoring the depth of the region’s innovation ecosystem beyond any single market.
Following a thirteen-quarter high in Q3’25, venture capital investment in the UK moderated in Q4’25, even with a near £3 billion funding round by Revolut contributing significantly to the quarter’s total. The fintech sector continued to attract strong investor interest.
Companies such as generative AI firm Synthesia and legal workflow platform Navys, secured meaningful funding rounds, underscoring sustained appetite for AI-driven innovation.
Excitingly, we believe that this strong end to the year could serve as the catalyst for an even more successful 2026 –driven by sustained interest in AI – which could help trigger an investment boost.
This comes as globally the venture capital market closed the year with strong momentum, as Q4’25 investment reached over £130 billion — the highest level in 14 quarters — pushing annual VC investment from over £390 billion in 2024 to more than £500 billion in 2025. This increase occurred despite a sharp decline in deal activity, underscoring a market increasingly driven by fewer, larger transactions. Year-over-year growth in VC investment was fuelled almost entirely by surging capital deployment into AI-focused companies.
Heading into Q1’26, investors in Europe are expected to remain focused on high quality investments – putting more money into startups with proven fundamentals, clear unit economics, and realistic paths to scale. AI and defensetech are expected to be very hot sectors for investment in 2026, while fintech, healthtech, and cleantech will likely continue to attract interest. Quantum computing is also expected to see an increasing level of VC investment over the next year.
And the UK has been highlighted as a world leader in AI due to the ongoing rapid evolution within the sector, as growing numbers of startups strive to transform industries and everyday activities.
We see lots of activity from universities, corporates, and emerging startups, all exploring how they can shift the dial on AI. Universities, in particular, continue to play a central role in nurturing the AI ecosystem, serving as important hubs for research, talent development, and the commercialisation of next-generation AI solutions.
This forward–thinking approach means it is likely we will continue to gain ground as investors recognise this positive intent and see how the UK can carve out a niche in finding the best ways to put AI to work, particularly at an industry level.
However, we believe this will only be possible if people from all walks of life – from business to government, educators to investors – recognise the talent challenge, embrace the adoption of AI, and work together to ensure we have enough innovators with the right skills to ignite a wave of AI investment in the UK.
