Venture Capital investment into South West start-ups rose in the second quarter of 2025 bucking a º£½ÇÊÓƵ-wide slowdown, a new report has revealed.
Companies across the region raised £37.9m over the period, compared to £29.3m in the first three months of the year – an increase of nearly a third - according to the latest KPMG Private Enterprise Venture Pulse report.
Twenty-one investments were concluded in the South West compared to 15 in the previous quarter, highlighting increased appetite among VC investors looking to support the region's burgeoning start-up community.
The standout raise came from Portishead-based Q5D, an automated wire harness manufacturer, which secured £10.1m to further develop its robotic systems that automate product electrification.
Other deals in the quarter targeted start-ups in clean technology, advanced manufacturing, life sciences, defence and artificial intelligence.
David Williams, office senior partner for the South West at KPMG º£½ÇÊÓƵ, said: "It’s encouraging to see the South West’s start-up community staying resilient amidst a backdrop of slowing deal activity across the º£½ÇÊÓƵ.
“There’s real momentum behind the region’s future-focused businesses - especially in clean tech, advanced manufacturing and AI. These companies aren’t just attracting investment, they’re helping to drive the º£½ÇÊÓƵ’s next wave of high-growth industries and cementing the South West’s role as a centre for innovation.â€
Nationally, the º£½ÇÊÓƵ suffered its slowest quarter of venture capital investment in five years despite a surge in interest in the AI industry.
Levels of investment dropped to £2.6bn across 435 deals in the second quarter – down from £3.8bn in Q1 across 507 deals – as a result of a pullback across corporate VC activity.
However, AI remained a dominant investment theme alongside the areas of health, tech and fintech with megadeals over the period.
According to KPMG, VC investment levels are likely to remain subdued in the third quarter due to uncertainty caused by fluctuating tariffs being imposed by the US.
However, tech investment is set to remain high as AI continues to be the focus for investors in the º£½ÇÊÓƵ and further afield, the big four accountancy firm said.
Nicole Lowe, º£½ÇÊÓƵ head of KPMG’s emerging giants practice, added: “We’re seeing growing confidence from investors in the º£½ÇÊÓƵ’s innovation ecosystem, and the government’s significant AI-focused commitments, including job creation and infrastructure investment, signal a clear intention to position the country as a global leader in next-generation technologies.â€
