The New Frontier - Your weekly science and innovation update - 13th July 2026

Fewer and bigger

Knight Frank analysis, using PitchBook data finds that in the first half of 2026, UK venture capital deal volumes fell 44% year-on-year, yet capital invested surged 83% to £14.5 billion, already exceeding the total for the whole of 2025.  Of the £14.5 billion raised, 52% flowed to just ten companies. At the top of the league table sits Nscale, a London-based AI infrastructure company that hoovered up £2.5 billion. Close behind came Isomorphic Labs with £1.55 billion and Wayve, the autonomous driving pioneer, at just under £1 billion. As previously discussed, some of these companies are beneficiaries of government backing through the British Business Bank and the Sovereign AI fund.  These funds are designed to back the UK's most promising companies. Following the money should therefore identify the businesses most likely to expand, and with them the next wave of real estate demand.

The UK dominated the European VC landscape, capturing 41% of Europe’s VC, more than France, Germany, Sweden, Spain, and the Netherlands combined. London's gravitational pull remains formidable, capturing 74% of total investment value and hosting eight of the ten largest funding rounds. Yet the capital's dominance should not obscure the strength of regional innovation clusters. Cambridge continues to excel in life sciences, while Reading's emerging quantum computing ecosystem, anchored by Oxford Quantum Circuits' £251 million raise, demonstrates the potential for deep tech growth beyond traditional hubs.

AI's dominance continues unabated. Companies classified under AI and Machine Learning attracted £10.3 billion, accounting for more than two-thirds of all capital invested during the period. The sector has moved beyond being a technology vertical in its own right to become the principal driver of UK venture funding.  AI investment is spread across various sectors as AI converges with more traditional industries.  

Beneath the headline-grabbing mega-rounds, however, the funding environment remains challenging for many startups. 43% of all deals were worth less than £1 million, highlighting a market characterised by a small number of exceptionally large raises and a long tail of early-stage companies competing for seed capital. The result is a venture capital landscape that is both active and highly concentrated, with a handful of AI and deep tech champions accounting for an outsized share of investment activity.

Demand for flex, incubator and small-footprint lab space remains critical to accommodate early-stage tenants, but covenant strength will be thin, and churn will be high. Landlords should expect a two-track market: a small number of well-funded scaleups driving demand, alongside a broad base of early-stage occupiers needing flexible, affordable and short-lease space.

Industrial Strategy: One year on

Two documents landed this week: the UK Industrial Strategy year one report and the latest quarterly update. Together, they offer the clearest read yet on whether ambition is translating into delivery.

The headline numbers are striking. The eight priority sectors have attracted more than £380 billion of private investment and £38 billion of export announcements, supporting over 155,000 jobs. More than £9 billion has been committed to research and commercialisation, over £1 billion to skills, and £8.5 billion of priority investment projects unlocked through faster grid connections. Q2 alone brought over £25 billion of fresh commitments and more than 35,000 associated jobs.

Place is doing much of the heavy lifting. 13 Local Growth Plans have been published, setting out ten-year economic visions and investment pipelines. 22 Industrial Strategy Zones have been designated, and the £500 million Local Innovation Partnerships Fund is backing 17 strategic locations. Mayors of established Mayoral Strategic Authorities have been given greater spending control. A £50 million Defence Growth Deal covers five strategic clusters. The Strategic Sites Accelerator, aimed at bringing more investible sites to market, has appointed CBRE as its National Delivery Partner, with a first wave of site decisions due in the coming months. Regional investments include Convatec's £500 million Manchester R&D hub and AstraZeneca's £300 million investment in Cambridge and Macclesfield.

Life sciences alone secured over £3 billion, including via the Life Sciences Innovative Manufacturing Fund, alongside faster clinical trial set-up times, easier access to healthcare data, streamlined regulation, and partnerships with Eli Lilly, BioNTech and Moderna.

Many of the real estate implications were laid out in our Invest 2035 report; however, a year on, the Strategy is now translating into a defined pipeline of investible land and buildings, with clear locational signals. The combination of Industrial Strategy Zones, Local Growth Plans and the Strategic Sites Accelerator give developers, investors and occupiers a clearer map of where public capital and planning support will concentrate, sharpening the case for early positioning in these locations.

For life sciences, the government has published its Life Sciences Jobs Plan, a workforce and skills strategy for the sector. It forecasts a need for 66,000 additional highly skilled roles by 2035, alongside 52,000 replacement hires in priority occupations. For life sciences companies, this signals a tightening labour market and intensified competition for specialist talent, particularly given that 28 of the 31 priority occupations overlap with other Industrial Strategy sectors, notably digital and technology.

The plan sets out four key challenges: inadequate training pipelines, limited practical experience among graduates and new entrants, the need for skills provision to keep pace with emerging technologies, and SMEs struggling to invest in training or compete for specialist talent against larger players.

Key actions include improved sector coordination through a proposed industry-led body, skills system reform prioritising apprenticeship routes and new qualifications, and government funding to cover training costs for 16- to 24-year-old apprentices.

The scale of hiring implied points to sustained demand for suitable space (the plan includes a more granular forecast). Location decisions will increasingly hinge on proximity to technical colleges alongside more traditional universities, as well as on whether regions can build training infrastructure that delivers a talent pipeline aligned with industry needs.

Biopharma's mood lifts, but the jobs picture splits

Endpoints' Q2 Global Biopharma Sentiment Index climbed to 96, its highest reading since the post-pandemic slump, up from 78 in Q4 2025 and 90 in Q1 2026. Dealmaking is the standout driver, cited as the single biggest reason for optimism this quarter.

Hiring intentions have turned positive for the first time, though the sector is pulling in two directions. Half of biotech respondents expect to add headcount over the next year, against just 16% bracing for cuts. Big pharma tells the opposite story: layoffs are three times more likely than hiring.

Artificial intelligence remains a top three reason for optimism, with 74% expecting it to accelerate drug discovery in 2026. Its workforce impact looks more benign than feared.  41% of respondents expect no change from AI, 37% foresee a mix of hiring and elimination, 14% see net cuts and 7% net gains. Here too, the split is stark: Big Pharma is more than twice as likely as biotech to expect AI-driven layoffs.

Improving sentiment, active dealmaking and firmer hiring intentions point to renewed demand for suitable space, with consolidation adding a further layer of activity, though not always translating into net take-up. The survey is global rather than UK-specific, so caution applies. More structurally, the growing convergence of AI and biopharma will concentrate demand in locations where industry strengths, collaborative networks, infrastructure and talent align.

Other reads this week

Kraken Technology, the Fareham-based developer of autonomous maritime platforms, has secured £130 million in funding to support international growth, including the expansion of localised manufacturing facilities in key global markets. The funding makes the company the latest UK unicorn. In last week’s note I provided an overview of the rising defence tech sector. In an op-ed this week in The Times Andy Burnham pledged to strengthen the defence sector in the UK, saying that defence investment should serve as an engine for reindustrialisation.

Dogtooth Technologies, a Cambridge-based agritech company, has raised more than £14 million in growth capital to accelerate the commercial rollout of its AI-powered robotic fruit harvesting technology.

Axle Energy, headquartered in London, has secured $25 million (£18.7 million) in Series A funding to scale its virtual power plant (VPP) software platform across the UK and international markets.

Novartis is set to acquire UK biotech Myricx Bio in a $1.5 billion deal. The oncology-focused company was spun out of Imperial College and the Francis Crick Institute in 2019.

Students at Bassaleg School in Newport can now study towards a semiconductor qualification, a national first in STEM education. The qualification provides students with classroom learning and practical skills. The South Wales compound semiconductors cluster directly employed 1,914 people in 2025 and the qualification will play a role in the cluster’s ambition to double its workforce to 6,000 jobs by 2030.

According to the Financial Times, Andy Burnham's economic agenda is centred on supporting small businesses, with proposals reportedly including cuts to National Insurance contributions for SME employers, although any such measure would require Treasury backing. The case for support is reinforced by the latest British Chambers of Commerce (BCC) economic survey, whose respondents are predominantly SMEs (92%).

The survey points to weakening business confidence and investment intentions. Just 17% of firms plan to increase investment in plant, machinery and equipment, down from 21% in Q1 and the lowest level since the pandemic, while a quarter expect to reduce investment. Rising fuel costs have added to cost pressures, while labour costs remain the most significant driver of price increases, highlighted by 70% of respondents.

The government has announced regulatory reforms to help businesses test and commercialise new products faster. Plans include new statutory sandboxing powers, allowing businesses to test innovative products and services in controlled real-world environments.