- New report based on more than 2,000 of the UK’s most exciting high growth companies, including leading AI and quantum startups, reveals optimism and a belief in Britain despite systemic challenges scaling in the UK
- Businesses warn that infrastructure shortcomings, regulatory burdens, talent shortages, political uncertainty and difficulties accessing funding risks a startup exodus, compounding the £100 billion pounds of value that left London’s capital markets in 2024
- Entrepreneurs call on government to create the “environment to match our ambition” by prioritising agile regulation, capital incentives, future-proof digital networks, AI-ready talent and long-term certainty
Despite two-thirds (64%) of startups planning to increase investment and 85% wanting to stay in Britain, one in five of the UK’s fastest growing companies could leave the UK within the next three years without action, a major new report from Virgin Media O2 has today warned.
The findings, coming just weeks ahead of the Budget, form part of a new report, “Growth Signals: What the UK’s fastest-growing companies reveal about unlocking economic growth”. Based on insights from more than 2,000 companies, including those working at the forefront of industries like AI and quantum computing, it offers a roadmap for government on how best to retain and nurture UK startups.
While the UK has no shortage of world class ideas and ambitions entrepreneurs, the report reveals the infrastructure, regulatory, political, funding and talent challenges that are driving an exodus of capital from the UK and threatening to derail the government’s growth agenda.
Virgin Media O2’s analysis reveals that in 2024 alone, £100 billion was wiped from UK stock markets, as exits outpaced IPOs and listings nearly five to one.
With the AI technological revolution already reshaping global competition, businesses have warned the UK is at a pivotal crossroads. They argue unless barriers are removed ‘businesses like ours [will] leave.’
While the vast majority of fast-growing startups (85%) would like to keep their business base in the UK, regulatory burdens (58%), political uncertainty (54%) and difficulties accessing funding (52%) are holding them back.
Twice as many startups see the US (68%) as a better place to grow their business compared to the UK (35%), which lags other major markets including Singapore (44%) and the EU (38%).
However encouragingly, there remains a clear belief in Britain. Nearly half (47%) of startups remain optimistic about the country’s long-term economic prospects, citing high-quality research institutions (65%), international business environment (48%) and strong legal and regulatory frameworks (46%) as key strengths.
To capitalise on this, the report identifies five key areas businesses believe government should focus on in order to ensure the UK can thrive as a global hub for innovation and technology:
- Agile regulation – responsive frameworks that keep pace with emerging technologies
- Capital incentives – patient funding to bridge the gap from idea to export
- Future-proofed digital networks – innovation now demands low-latency, high-capacity infrastructure
- AI-ready talent – a diverse, adaptable workforce that can power digital transformation
- Long-term certainty – a clear industrial vision that encourages investment and strategic risk-taking
Lutz Schüler, CEO of Virgin Media O2, said: “Bold and innovative businesses are created here in Britain because it cultivates home-grown talent with the ambition to match. But too many of the fastest growing companies can’t see a route to scale in the UK and are now looking to prosper abroad.
“With the country at an inflexion point, the time to act is now. Digital connectivity is vital to enabling innovation, and Virgin Media O2 is investing billions in next-generation networks, but that’s only part of the solution. We need agile regulation, patient capital, a strong talent pipeline, and long-term policy stability to unlock growth for the long term.
“With an AI powered economic revolution already underway, the question is now whether Britain leads or follows. Decline is not inevitable. This is a country that can maintain its place on the world economic stage and win if it fixes the frictions founders face every day.”
Daniel Kim, CFO at AI video creator Synthesia and a contributor to the report, said: “Britain is home to one of the strongest startup ecosystems in the world, but barriers are holding too many innovators back from scaling into global success stories – the kinds of businesses our economy needs to drive economic growth.”
“The good news is these challenges are fixable. By unlocking access to later-stage capital, encouraging UK businesses to adopt AI faster so our workforce is equipped with skills for the future, investing in digital infrastructure, and modernising regulation so it keeps up with rapid technological change, we can create the conditions for more UK-born unicorns to thrive on the global stage.”
Conrad Ford, Chief Product & Strategy Officer at Allica Bank, said: “We have one of the best environments for startups anywhere in the world, from our world-class talent and education institutions to the stability and confidence provided by our rule of law. But challenges still exist in the form of regulatory agility, regional differences in digital infrastructure, and the funding gap between early-stage and commercialisation. Overcoming these is key to creating the best possible environment for businesses, particularly those in the tech sector, to grow.”
Roy Hotrabhvanon, Co-founder and CEO at PlayerData, said: “The UK has solid foundations to support tech startups, but other countries are moving faster in key areas, like digital infrastructure and adoption. Failing to follow suit risks seeing the UK fall behind.”
Jacob Ayres-Thomson, Co-Founder and CEO of 3AI, said: “The UK excels at creating startups, but when it comes to scaling, they’re often driven overseas. We have to start equipping people with the skills to work with technologies like AI from an early stage, meaning that as businesses scale, there is a broad, capable workforce ready to take on the skilled roles they create. Otherwise, we risk losing out to international competitors that are already moving ahead of us.”
Virgin Media O2 is one of the biggest investors in the UK, undertaking a £10bn programme fixed and mobile networks and services investment to provide consumers and businesses across the UK with cutting edge connectivity.
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