UK Biotech Investment Rises 17% as European Coalition Tackles Funding Crisis

UK biotech financing surged to £552 million in the first quarter of 2026, a 17% increase from the previous quarter, securing a 57% share of all European venture capital in the sector, according to the UK BioIndustry Association (BIA). The rise comes as a new coalition of European venture capital firms launches to tackle a structural funding crisis that has left the continent with only 7% of global life sciences venture capital.

The UK's total was up from £466 million in the fourth quarter of 2025, an £86 million increase, with venture capital comprising £516 million or more than 93% of all equity financing. Deal activity increased significantly, with 25 VC transactions recorded, a rise of more than two-thirds year-on-year, which the BIA said pointed to a healthier, more active funding environment even though deal sizes were more moderate. While the Q1 2026 figure is substantially lower than the £924 million posted in the same period a year earlier, the BIA noted that the Q1 2025 result was inflated by a few mega-rounds.

The managing director of the BIA commented: "It comes as great relief to see those green shoots that started showing end of 2025 grow into a more sustained and healthier shift in market dynamics in the first quarter of 2026. While headline figures often fluctuate based on the presence of a few megadeals, the underlying story of Q1 is one of accelerating momentum." The UK’s success in capturing 57% of European biotech venture capital indicated the ongoing strength of the national market, she added, while calling on the Government to translate political support into further action.

The European Life Science Coalition (ELSC), an advocacy group that is not an investment vehicle, launched in collaboration with Invest Europe, bringing together investment firms managing over €24 billion ($28 billion) in life sciences assets. Members include Sofinnova Partners, Novo Holdings, and Omega Funds, whose portfolios have backed or established more than 1,400 life sciences companies.

Coalition leaders highlighted that European life sciences VC now accounts for just 7% of the global market, compared with 63% in the United States and 14% in China. The chair of the ELSC explained that EU pension funds allocate approximately 0.02% of assets to VC, versus nearly 2% in the U.S., resulting in sub-scale European funds and limited growth capital for companies. Fragmented capital markets and slow, non-harmonized regulatory processes further hinder scaling.

In the past six years, 66 of 67 European biotech initial public offerings have listed outside Europe. A senior partner at Novo Holdings warned that companies listing on Nasdaq often emigrate, taking management, capital, and economic benefits with them, calling it a strategic weakness. “Any continent that cannot scale its key industries and provide the means to do so independently is vulnerable to external factors,” the senior partner said. The coalition emphasized that while companies currently can access Nasdaq, Europe lacks the domestic infrastructure to retain high-growth life sciences firms.

The coalition is focusing on mobilizing both private and public capital and removing structural barriers. Its members aim to foster the emergence of a European stock exchange capable of retaining high-growth biotechs, drawing comparisons to the European Investment Fund’s role 25 years ago in seeding new venture investment firms. The coalition will provide technical feedback to EU institutions on capital market barriers and regulatory bottlenecks as the Biotech Act moves through the legislative process. Success will be measured by increased institutional allocations to European life sciences VC, stronger long-term financing conditions, improved retention of European companies within European markets, and a stronger pipeline of scalable European life sciences companies.

Separately, Spanish investment holding company CriteriaCaixa plans to invest €300 million in early-stage biotechnology and technology companies by 2030 through its two venture funds, Criteria Bio Ventures and Criteria Venture Tech. The capital will be managed by Criteria Capital Risc, the renamed venture capital arm previously known as Caixa Capital Risc, and will primarily target Spain and Portugal, with selective investments elsewhere in Europe and North America. Spanish companies currently account for almost 70% of the value of Criteria Capital Risc’s portfolio. The company confirmed that the €300 million is new and not part of a previously announced investment, though the exact split between life sciences and technology will depend on the attractiveness of projects.

Existing portfolio companies of Criteria Bio Ventures include rare disease biotech Minoryx Therapeutics, immuno-oncology firms Adaptam Therapeutics and Cytospire, autoimmune disease specialist Aboleris Pharma, neurodegeneration-focused NRG Therapeutics, and immune-aging company Tolerance Bio. The investment forms part of CriteriaCaixa’s broader 2030 strategy to expand its alternative assets while keeping them below 10% of the holding company’s gross asset value.