Startups love the UK. Its IPO market? Not so much

U.K. capital markets are at a crossroads. The country’s startups raised $8 billion in the first six months of the year, according to a report from Dealroom and HSBC Innovation Banking — more than France and Germany combined.

It also found that the U.K. was Europe’s top destination for venture capital for the 30th consecutive quarter, claiming 30% of all capital raised across the continent so far this year.

But there’s a flip side.

Dealogic data shows fundraising from London IPOs in the first half of 2025 fell to its lowest level since data was first collected in 1995. Just five companies made their debut on the London market in the first six months of the year, raising £160 million.

The dismal figures follow a number of high-profile blows for the London Stock Exchange. These include money transfer firm Wise’s decision last month to move its primary listing location to the U.S., and reports that British pharma giant AstraZeneca could follow suit.

Peter Specht, general partner at Creandum, one of Europe’s most successful early-stage VCs, said he sees some momentum in the IPO market, but called for much greater collaboration between the different stakeholders.

“I think what’s most important is the dialogue between the tech leaders that are soon going to IPO and the next generation that will do so in a few years, and the regulator,” he told CNBC’s “Squawk Box Europe” Thursday.

“I think we need to foster that discussion even more and act on it, because what we need in the U.K. and Europe is make it as attractive as possible for companies to IPO here.”

The Confederation of British Industry has called for a new narrative around the LSE and publicly listed companies, saying that “bold action” is required to revitalize U.K. public equity markets.

London Stock Exchange CEO Julia Hoggett told CNBC that “a language of risk” has been created in the U.K. over the last 30 years, “rather than the language of the opportunity that comes from investing.” 

She called on the government to think with an investment mindset, saying “we’ve so protected people from the downside, we haven’t exposed them to the upside, and as a nation, we haven’t had a conversation about the opportunity cost of that.” 

This risk-averse approach is something Edward Knight, president at VC firm Antler, has witnessed, telling CNBC that the appetite for risk that exists in some corners of the world “certainly doesn’t exist” in the UK.

He urged the country to learn from the past, saying: “We had the opportunity to welcome crypto into our arms when the SEC under Gary Gensler was rejecting it, but we passed up that opportunity. We let it go … Let’s not do the same thing again on AI.”

In its report, the CBI called for policies that would improve liquidity and competitiveness, while strengthening the IPO pipeline. The London Stock Exchange’s Julia Hoggett has hailed its reform agenda in recent years, telling CNBC, “we have really made our markets match fit.”

Meanwhile, Nigel Morris, managing partner at fintech VC platform QED Investors, told CNBC via email that the U.K. government is working to address concerns from U.K. business leaders. These include “the current tax scheme, which some say punishes employees of growth stage companies, or the limited ability to access capital for scaling fintechs.”

So where does all of this leave the outlook for London IPOs?

Hoggett says the pipeline for listings is growing. “It’s a bit like an iceberg below the surface … but that pipeline is building very rapidly, and from around the world, because I think the reforms that we’ve seen in the U.K. have actually enabled the U.K. to be a really compelling proposition.”

Norwegian software giant Visma has chosen London for its IPO next year, according to news first reported in the Financial Times, but the pipeline beyond that appears to be quiet.

“I think the founders of these businesses have to have a long, hard think about where they think their interests are best going to be served by going public,” said Antler’s Knight.

“And there’s a lot of complications and dynamics to being a public company, and so they need to discuss these with their boards, go through this with their investments, find out where those interests are best served.”