While US tech giants like Microsoft, IBM, and Google battle for dominance in emerging technologies, a new report reveals that UK university spinouts are quietly transforming research breakthroughs into deeptech startups, often securing tens of millions in backing months after launch.

Fresh research from AlbionVC and Beauhurst has revealed that the UK’s deeptech ecosystem is entering a pivotal phase, with Future of Compute – which focuses on advanced tech like quantum, neuromorphic, and photonic computing – emerging as a standout focus amid a broader trend toward larger, high-stakes deals.

AlbionVC’s Deep Tech and Future of Compute Report found that investment in Future of Compute has exploded over the last ten years, going from just £3 million in 2015 to a quarter of a billion last year, with nearly 40% of deals attracting more than £10 million.

According to the data, companies in the Future of Compute space secure, on average, £5.3 million more per deal than their deeptech counterparts, giving UK companies access to the capital needed to scale independently for the first time, and paving the way for a self-sustaining deeptech ecosystem in the UK.

The report identified over 5,000 active deeptech firms in the UK, including sixty-nine in Future of Compute, which have raised £32 billion in equity funding across more than 11,700 deals in the last decade, around 3,300 of which were made between 2023 and 2024. 

Among the sixty-four Future of Compute deals tracked in 2023/24, the largest funding recipients were all quantum computing companies, highlighting that sector’s ongoing pull, with Oxford Quantum Circuits leading the way at £79.5 million raised, followed by Riverlane with £73.6 million, and Quantum Motion securing £42.5 million.

The Oxford-Cambridge-London ‘Golden Triangle’ has become the quantum computing capital of Europe, with the University of Oxford alone having successfully spun out eight Future of Compute companies since 2015, while the London ecosystem (Imperial College and UCL) and Cambridge have each produced six spinouts.

Although London might remain the dominant force in UK deeptech, Scotland still ranks highly in terms of active deeptech companies, being home to 391 firms, the most of any region outside the south-east, with Edinburgh being one of the top local authorities for deeptech firms outside of London. 

With Future of Compute being largely driven by university-led innovation, AlbionVC argues there is a pressing need to ensure sustained investment in universities and early-stage research to maintain momentum.

Despite strong private investment in the sector, grant funding has seen a decline, with only £28.9 million secured in 2024, down from £34.3 million in 2023, meaning the UK could soon face challenges in maintaining its competitive edge.

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“The rapid growth in larger deal sizes, over £10 million, showcases the UK’s potential to build a sovereign deeptech ecosystem, with the capital base to scale companies into global leaders,” said David Grimm, partner at AlbionVC. 

“It demonstrates the need to back the UK’s exceptional engineering talent and sustain support for early-stage research to ensure we remain at the forefront of the next wave of deeptech and quantum breakthroughs. 

“The recent reduction in grant funding risks slowing down innovation at its earliest stages, where these breakthroughs often emerge.”