2025 marked a pivotal year for the UK and European venture capital market, with exit activity returning to the spotlight. Here’s what Shoosmiths saw in the market in the last 12 months, and what may be in store as we look ahead to 2026.

Published 15 January 2026

Shoosmiths advised on a number of high profile VC-backed exits, reflecting a maturing ecosystem, renewed appetite from strategic buyers and secondary investors and a strong desire from funds to seek returns for their LPs.

Key trends from Shoosmiths’ ECVC deal data

• surge in exit activity: Shoosmiths supported landmark exits including BGF’s successful exit from Panthera Biopartners Limited – a leading UK site management organisation for clinical trials. Deals have highlighted the growing momentum for founders and investors seeking liquidity and new growth partners.
• diverse exit routes: Exits were achieved through trade sales, secondary buyouts, and recapitalisations. Many transactions featured a blend of primary and secondary components, enabling early investors to realise returns while new capital fuelled further growth.
• international buyer appetite: A significant proportion of exits involved overseas buyers, underlining the global appeal of UK and European innovation.
• mixed returns: A number of exits were achieved which secured jobs and the future of companies, but with limited or low profile returns for investors – but did enable returns to be made to LPs and for portfolios to be refreshed and refocused.
• sector hotspots: In 2025, AI, data analytics, healthtech and clean energy emerged as the standout sectors in global venture capital, each attracting significant investor attention and robust deal activity. AI and data analytics dominated the landscape, accounting for over half of global VC funding, with major rounds for companies such as Anthropic, xAI, and Mistral AI, and the UK establishing itself as a leading hub for AI investment. Healthtech maintained strong momentum, driven by ongoing pressures in healthcare systems, workforce shortages, and the need for digital transformation, with venture funding stabilising at high levels and innovation focused on AI-powered clinical and administrative solutions. Clean energy also reached record investment highs, surpassing traditional energy sectors for the first time, with solar PV and battery storage leading the way and AI playing a crucial role in optimising power generation and grid management. These trends are consistently highlighted across leading industry reports, including KPMG’s Venture Pulse Q3 2025, PitchBook, Forbes, Deloitte and  J.P. Morgan - all of which confirm that these sectors are at the forefront of investor interest and are driving the next wave of innovation and growth in the market.

Shoosmiths ECVC deal metrics: what’s shaping the market?

Shoosmiths’ 2025 ECVC data reveals several key metrics and trends that shaped dealmaking and exits:

Liquidation preferences

• In both 2024 and 2025, approximately 70% of all recorded Shoosmiths’ ECVC deals used a 1x liquidation preference, confirming it remains the clear market standard in VC deals. Participating preference and deals with no liquidation preference were present in the data but with no significant shift, indicating a stable market following the atypical volatility of 2021/2022.

Warranties

• warrantors: The vast majority of deals at the pre-seed and seed stage required company and founder warranties with investors still wanting to ensure that founders have “skin in the game” – but this significantly falls away from Series A onwards.

Bridge financing

• form: Convertible loan notes were used in the vast majority of bridge finance transactions although just under a third of deals used advance subscription agreements (ASAs), simple agreements for future equity (SAFEs) or a mixture of those alongside CLNs.
• valuation caps: Around half of bridging transactions included a valuation cap protecting investors from unexpected valuation jumps prior to conversion when there capital may have been introduced at a risker time for the business.

Looking ahead, the outlook for VC exits remains positive, but the landscape is evolving:

• continued exit momentum:
  A strong pipeline of scale-ups and renewed interest from corporates and private equity will keep exit activity robust.
• IPO window opening?
  Improving market sentiment, on the back of IPOs for the likes of Klarna, could see the IPO route further reopen for high-growth tech and health companies.

Conclusion

While 2025 did not reach the extraordinary highs of the atypical 2021/2022 boom, it marked a period of renewed momentum for the venture capital market. The year was characterised by increased exit activity, robust deal flow, and growing international interest. Investors demonstrated greater flexibility in deal structures, prioritised alignment between founders and backers, and showed a strong appetite for innovation across sectors such as AI, healthtech and sustainability.

As we look to 2026, the outlook remains challenging but dynamic for those well positioned to take advantage of the market conditions. Founders and investors should anticipate continued competition for high-quality assets, evolving exit routes, including IPOs, trade sales, and secondaries, and a sustained emphasis on governance, founder incentives, and global connectivity. Adaptability, sector focus, and readiness for cross-border opportunities will be key to success in the year ahead.