The UK has spent years talking about the need to improve its growth-capital ecosystem. More recently, it’s started acting on it.
The Government has widened the scope of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), expanded Enterprise Management Incentives (EMI), introduced UK Listing Relief and committed the British Business Bank to putting more capital behind growth-stage businesses.
The direction of travel is clear: make it easier for ambitious companies to raise money, attract talent and stay in Britain as they grow. There is just one problem: the pipeline those reforms are designed to support is showing signs of weakness.
Our UK Scaleup Report 2026, based on the latest Office for National Statistics business population data, found that the number of UK scaleups fell for the third consecutive year in 2025.
There were 129,080 scaleups at the 2023 peak. By 2024, that had fallen to 128,960, and by 2025 it had reached 128,760.
The decline is modest in percentage terms, but the direction is hard to ignore, and it should not be ignored...
This is happening against a backdrop in which the overall number of businesses in the UK is still increasing. The number of businesses rose from 2,726,830 in 2023 to 2,734,620 in 2025, while the scaleup population moved in the opposite direction.
The House of Lords Science and Technology Committee has already described the UK's failure to scale businesses in unusually stark terms, warning that the economy is "bleed[ing] to death" and that the problem has reached "crisis point".
Our report raises the same concern, from a different angle: fewer companies are making the transition into scaleup territory.
Early-stage companies can attract considerable attention. There is no shortage of founders, ideas or new businesses looking for their first institutional capital.
But the investable universe changes as companies mature. Growth-stage businesses with established products, meaningful revenues, expanding teams, and a credible route to scale are a different proposition from an early-stage venture.
If fewer companies are reaching that point, the consequences eventually work their way through the investment ecosystem.
Fewer businesses may seek larger growth rounds. Fewer potential candidates for private equity investment. Fewer companies progressing towards public markets. And, ultimately, fewer opportunities for investors looking for businesses with a demonstrated track record rather than an unproven proposition.
That does not mean the UK is running out of good companies, far from it. But it does mean the conversion rate from promising business to established scaleup deserves much closer attention.
There is some irony in the timing.
From 6 April 2026, the Government doubled the EIS and VCT annual company investment limits to £10 million, increased the lifetime limit to £24 million and raised the gross-assets thresholds. VCT income tax relief was reduced from 30% to 20%, but the changes were designed to allow schemes to support companies longer as they grow.
The Government has also introduced UK Listing Relief, removing the 0.5% Stamp Duty Reserve Tax charge on transfers of securities for the first three years after a company lists on a UK-regulated market.
The stated aim is to support newly listed companies, improve trading volumes and make UK markets more attractive to scaleups taking the next step.
There is logic to all of this. Capital matters: a company cannot scale on ambition alone. It needs money to hire, develop products, enter new markets and build the infrastructure required to move beyond its early stages.
The Government estimates that its entrepreneurship package could unlock around £100 million of additional investment a year. At the same time, the British Business Bank has committed to investing in growth-stage funds and scaleup companies.
But capital supply is only one side of the equation. If the number of businesses capable of absorbing that capital is shrinking, simply increasing the amount available will not solve the whole problem.
This is perhaps the most important point in the data: investors cannot create a scaleup pipeline entirely on their own.
By the time a company is raising a substantial growth round, many of the conditions determining whether it can scale have already been established. That suggests the policy conversation cannot stop at investment incentives.
The question is: how do we make it easier for more businesses to become genuinely investable growth companies in the first place? The UK creating more businesses while producing fewer scaleups is the clearest evidence that the answer sits upstream of capital.
The Government's reforms are therefore arriving at an important moment. EIS and VCT expansion can help companies access capital. Listing Relief may make the public markets more attractive. Greater institutional participation could strengthen the growth-capital ecosystem.
But none of these measures can substitute for a healthy pipeline of businesses ready to use them. For investors, that makes the scaleup numbers more than an economic health check: they are an early indicator of what the opportunity set might look like further down the road.
If the economy really is "bleeding to death", as the House of Lords put it, the answer cannot be to focus only on the blood supply.
It has to address what is causing the bleeding in the first place.
If fewer companies are making the leap to genuine scaleups, those that do need all the support they can get.
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