Capital insights
Companies looking to spend to avoid costly cyber attacks
UK technology businesses plan to increase cybersecurity investment next year, following a series of high-profile attacks and official data showing that 43% of businesses experienced a breach or attack in the past 12 months. Cyber security budgets are the new electricity bill of old. It is no longer a back-office IT issue, it’s a core business risk that shapes boardroom strategy. Funds that would previously have been spent on product development and sales and marketing are now being prioritised for security. Though this is a positive for the UK’s cyber security firms, businesses spending more on defence than growth is a significant barrier to progress.
Beyond cyber security, businesses are looking to spend in a wide range of areas. Office space (29%), sales and marketing (29%), international expansion (28%) and R&D (27%) are all high on the agenda, all areas vital for growth that have likely been on the back burner as businesses tightened their belts in recent years.
How businesses plan to spend new funding
Businesses are struggling to find capital to fund their growth plans
Just over half of respondents (54%) were able to access funds in the UK in the past year, down from 73% last year. Only 26% described the process of obtaining funds as easy.
Despite those challenges, tech businesses were more likely to secure funding from the UK and Europe than the US. Venture capital and private equity were also more commonly secured than debt funding.
57% of businesses would choose to list in the UK, compared to 26% who would pick the US
Sources of funding over last 12 months
The cost of capital is coming down and businesses are ramping up for growth
Businesses have faced high interest rates and a higher cost of capital since 2021. After a period of reducing debt to protect balance sheets, debt levels are now stabilising.
Most businesses (85%) are satisfied with their debt or expect it to increase over the next 12 months as they borrow to fund growth again. Over a third (37%) of respondents have already increased borrowing from six months ago, and almost half of respondents (44%) are considering a debt fundraising in the next two years.
Anticipated debt change over the next 12 months
of respondents are satisfied with their debt or expect it to increase over the next 12 months
Many UK tech companies have aspirations to list in the UK
A significant number of businesses are considering listing on the public markets within the next five years. Of those with aspirations to become a public company, over half (57%) would choose to list in the UK, an increase from last year (53%).
This appetite for IPOs is a surefire sign that businesses are confident in their ability to scale and grow.
The UK has experienced a notable decline in technology sector listings, with IPO fundraising falling to a 30-year low during the first half of 2025. Against this backdrop, the indication that technology businesses are considering public listings is a positive development. Although the IPO market remained largely stagnant throughout 2025, early signs suggest a potential recovery in 2026. This is evidenced by the recent listing of The Beauty Tech Group and the provisional announcement by Visma, the Hg-backed Nordic software group, of its intention to pursue a London IPO in 2026. A successful transaction of this scale would represent a landmark event and could serve as a catalyst for renewed confidence in the UK market, potentially reopening the window for further technology IPOs.
Our view
While economic conditions show signs of improvement, companies should remain disciplined when deploying funds.
Our outlook for 2026 is cautiously optimistic, supported by expected interest rate easing, strong markets, and record levels of private equity dry powder, which will drive pressure to deploy capital and release deals from ageing portfolios. Even with these tailwinds, investors are likely to remain selective, with buyer pools deepening but concentrating around the strongest assets. AI has become one of the main filters in European dealmaking, particularly for tech and data-rich businesses, and investors continue to favour AI-native and AI-enabled companies. Businesses planning an exit within 12 months should prepare now, as deal-ready companies will move fastest as confidence returns. Although interest in UK listings is encouraging, further government incentives are needed to enhance the UK’s attractiveness for IPOs.
