The Deal H1 2026

H1 2026 saw £14.4bn deployed across 2,799 deals, with the average round reaching £5.4m, larger than the £4.5m average peak seen during the 2021 to H1 2022 boom. Three AI companies account for 29% of the capital raised this half, a concentration that explains much of the uplift in average deal size.

Investors have been committing capital selectively, backing fewer but substantially larger rounds. AI’s pull on the UK equity market is profound; as capital concentrates in these larger rounds, the number of deals across the market falls, leaving less for other sectors to draw on.

In nominal terms, H1 2026 sits 21% below the H1 2022 peak. Adjusted for inflation, that shortfall widens to 33%. Therefore, roughly a third of the ground apparently recovered since 2022 reflects price changes rather than investment behaviour.

H1 2026 represents strong growth compared to the real-terms low of £9.3b in H2 2024. The three halves since have rebuilt to between £11.7b and £14.4b, making H1 2026 the strongest half in real terms since H1 2022. This recovery coincided with easing inflation within H1 2026, with the CPI in June 2026 falling to 2.8%. Inflation is expected to rise in the coming months due to volatile oil and gas prices.

Venture valuations have eased to £5.3m, their lowest of the period and below the £6.0m to £7.6m band held throughout. Seed is the only stage to have gained ground, up 13% to £2.0m, leaving Growth to absorb most of the adjustment, down 23% from £25.9m.

Average pre-money into AI companies reached £70.2m in H1 2026 against a median of just £3.4m, a gap of composition rather than pricing, with a handful of very large rounds lifting the average while seed deals, now 70% of all AI rounds, hold the median down. This highlights AI’s grip across the whole market, with Seed AI companies around 25% higher than the wider Seed median pre-money.

Of the equity funding raised in 2021, 17% went to companies that have since exited, with 2022 at 16%. Both figures will rise over time, since exits take a median of four years from the funding round and only 36% happen within three.

More capital is also competing for each outcome, with the amount raised more than doubling to £32.2bn between 2017 and 2021 while exit events settled at 400 to 500 a year.

Conversion rises steeply with stage, from 2.8% of Seed rounds to 11.8% of Growth, while AI converts in line with the market rather than ahead of it despite its rising share of capital.