UK Startups Face Funding Crisis: Why Founders Are Considering Moving to the US

Summary:

UK startups raised only £16.2 billion in funding last year compared to £65 billion in Silicon Valley.
57% of global venture capital funding went to U.S. startups in 2024, a record high.
Founders are considering relocating to the U.S. due to a lack of capital in the UK.
Many UK startups are adopting Delaware corporation structures to attract American investors.
Barney Hussey-Yeo highlights the worsening funding crisis in the UK.

The Funding Gap

According to Dealroom data cited by the Financial Times, British start-ups raised just £16.2 billion last year, significantly lower than the £65 billion raised by Silicon Valley counterparts during the same period. This trend shows that the U.S. is pulling ahead, with 57% of global venture capital funding going to U.S. startups in 2024, marking the first time this share has exceeded 50% in over a decade.

Growing Frustration Among UK Founders

This widening gap has not gone unnoticed by UK founders. Many are contemplating relocating abroad as they recognize the challenges of securing funding in the UK. Mati Staniszewski, co-founder of London-based AI company ElevenLabs, mentioned that they opted to set up as a Delaware corporation, a structure preferred by American investors.

Barney Hussey-Yeo, founder and CEO of Cleo, stated, "You get to a certain size where there is no capital in the U.K. And the problem is getting worse." He spends four months a year in San Francisco and is seriously considering making the move permanent, emphasizing that the situation in the UK is dire if not addressed.

London's Big Ben clock tower and British flag Image Credits: Getty Images