British Startups Look to US as Homegrown Funding Grows Scarce

British startups are reportedly weighing a move to the U.S. as investment declines.

Startups in the U.K. took in just £16.2 billion ($21.1 billion) last year, the Financial Times (FT) reported Sunday (April 13), citing data from Dealroom. That figure, the report said, is the lowest since 2020. At the same time, American tech startups raised more than £65 billion during 2024, a 71% increase over the prior year.

Now, the CEOs of several U.K. startups tell the FT that their wish to entice American investors has led them to incorporate in the U.S., even though they are based in London.

“Recognizing that most venture funding comes from the U.S., we set up as a Delaware corporation — the preferred and familiar structure for U.S. investors,” said Mati Staniszewski, co-founder of artificial intelligence (AI) company ElevenLabs, which was valued at $3.3 billion after completing a funding round in late January.

The report added that of the 70 U.K.-founded, venture-backed tech startups now based in the U.S., nearly a fifth of them were incorporated after 2020.

The FT also noted that this trend is happening as the British government is pushing the growing AI sector as a possible engine for growth.

However, young companies warn that trouble in finding capital was hindering British businesses from competing with their global peers. The report also points to the tradition of leading U.K. tech companies being purchased by much larger international investors, like the now-Google-owned-DeepMind.

Meanwhile, U.S. lawmakers say they want to make it easier for companies to get funded, with the House Financial Services Committee (HSFC) recently taking up 40 bills aimed at that goal.

“Our capital markets should work for everyone,” HFSC Chairman French Hill, R-Ark., said in a news release. “That means reducing barriers for startups to access funding, incentivizing investment in regional businesses, and reforming outdated regulations that improve access to growth capital to ensure a public offering is a more viable option again.”

Members of the committee argue that most venture capital (VC) funding is concentrated in just a few states, that just 19% of American households were defined as accredited investors in 2022, and that the number of public company listings in the U.S. has declined.