As U.S. tech investment continues to soar, British startups are increasingly looking across the Atlantic for growth opportunities. With domestic funding hitting its lowest level since 2020, many U.K. founders are incorporating in the U.S. to tap into a more vibrant venture capital ecosystem—marking a significant shift in the global startup landscape.
With British capital drying up, founders shift focus to the U.S. to secure growth and innovation support
Funding Woes Drive Shift in Strategy
A growing number of British startups are setting their sights on the United States as U.S. tech investment surges while U.K. funding dwindles. According to data from Dealroom, cited by the Financial Times, U.K. startups raised just £16.2 billion ($21.1 billion) in 2024—their lowest total since 2020. In sharp contrast, American tech startups secured over £65 billion, a 71% increase compared to the previous year.
This stark funding gap is prompting founders to explore more investor-friendly environments, with many choosing to incorporate their companies in the U.S., even while remaining physically based in the U.K.
Startups Reincorporate to Tap Into U.S. Tech Investment
Mati Staniszewski, co-founder of AI startup ElevenLabs, highlighted how aligning with U.S. tech investment strategies helped boost his company’s prospects. “Recognizing that most venture funding comes from the U.S., we set up as a Delaware corporation—the preferred and familiar structure for U.S. investors,” he said. ElevenLabs recently achieved a $3.3 billion valuation following a successful funding round in January.
This move is not an isolated case. The FT reports that of 70 U.K.-founded, venture-backed tech startups now based in the U.S., nearly 20% incorporated there after 2020—a sign that the trend is accelerating.
Domestic Challenges Limit Growth at Home
Despite government ambitions to make the U.K. a global leader in AI, British startups face serious headwinds in securing growth capital. Founders argue that the limited pool of local investment makes it hard to compete with global peers, especially as early exits and acquisitions by international giants remain the norm—Google’s acquisition of DeepMind being a notable example.
Without greater access to domestic funding, many startups feel their only option is to align with the robust U.S. tech investment ecosystem.
U.S. Lawmakers Look to Expand Investment Access
While British startups seek opportunity abroad, U.S. lawmakers are pushing to further strengthen the country’s position as a magnet for innovation. The House Financial Services Committee (HFSC) recently reviewed 40 bills aimed at expanding access to funding for startups, with a focus on reforming outdated financial regulations and making public offerings more viable.
“Our capital markets should work for everyone,” said HFSC Chairman French Hill. “That means reducing barriers for startups to access funding, incentivizing investment in regional businesses, and ensuring broader investor participation.”
Committee members point out that most venture capital is currently concentrated in a few U.S. states, and that only 19% of American households qualified as accredited investors in 2022—limitations they aim to address.
A Global Realignment in Innovation Funding
The surge in U.S. tech investment is reshaping the startup landscape, drawing in companies from around the world, including the U.K. As long as American investors remain more active and accessible than their British counterparts, this trend is likely to continue—potentially at the expense of Britain’s long-term tech leadership.
