IP Insights from RAEng’s State of UK Deep Tech 2025 Report
2025
5 mins
Written by: Jamie Timman and Annabelle Carver
The UK has entered a phase of unprecedented activity in deep technology, with over 50 UK deep tech firms reaching valuations of over $1 billion and/or revenues above £100 million.
UK deep tech companies continue to lead from the front in industries such as pharmaceuticals and quantum technologies and are helping to shape the artificial intelligence industry as it continues to grow.
Underpinning all the innovation within UK deep tech is the protection of intellectual property (IP). Deep tech startups rely heavily on the protection of their IP to secure funding from investors, protect themselves from competitors and secure market share. The Royal Academy of Engineering’s State of UK Deep Tech 2025 report explores this topic in greater detail.
Whilst the UK’s deep tech sector continues to expand at pace, many of the industry’s underlying challenges remain unresolved.
Current Deep Tech Investment Landscape
The overall value of the UK’s deep tech sector has reached $155 billion, almost a 5x increase from 2019, which places the UK third on a global leaderboard, behind superpowers US and China. In particular, the quantum sector continues to grow and is quickly becoming one of the UK’s strongest sectors, with growth in 2025 outstripping the growth in 2020 by over 600%.
Despite these promising signs, the progression of startups to series C and D still lags the US considerably, where competitors routinely raise 10 times more at equivalent stages. A key reason for this lack of late-stage progression is a lack of UK investor participation in later stages, forcing UK companies to rely on international investors. For example, UK companies rely on US investors for 59% of large rounds.
It is not just in the late-stage investment rounds that the UK may be underperforming. In a table outlining the value of acquisitions in a multitude of regions, the UK ranked seventh, falling behind not only the world-leading US, but also European counterparts Germany and France. This statistic underscores the general trend of other European countries investing heavily into their deep tech sectors. Whilst the UK still holds the crown in 2025, the gap separating the UK from the rest of Europe is narrowing.
Furthermore, funding sources remain uneven with venture capital (VC) accounting for more than half of all UK deep tech equity, followed by corporate investment. While VC plays a vital role in early expansion, deep tech ventures frequently require years to reach maturity and conflict with the faster return cycles typical of venture investment.
The Role of Intellectual Property in Deep Tech
In the UK’s deep tech ecosystem, IP is the primary mechanism through which years of R&D can be converted into commercial success. Deep tech ventures emerge from complex, multi-year R&D cycles and rely on their IP as the cornerstone of their competitive advantage.
A strong IP portfolio not only boosts investor confidence, particularly in early-stage funding rounds, but also helps secure a defensible market position by preventing competitors from leveraging similar technologies. In addition, well-managed IP can unlock strategic opportunities such as licensing deals and international expansion.
In the current deep tech ecosystem, UK companies benefit from strong academic institutions, with universities producing many strong spinouts. For example, the “Golden Triangle” of London, Cambridge, and Oxford, attracts 77% of UK deep tech venture capital. In fact, Oxford Ionics and OrganOx, two spinouts from Oxford University, are listed in the top 5 highest value exits of UK deep tech startups in 2025 thus far. Whilst Universities inarguably provide the foundation for many startups to grow, some IP agreements with Universities owning large stakes in their spinouts, can slow the long-term growth of the startups or complicate commercialisation efforts. This accounts for one of the difficulties deep tech companies face regarding their IP.
Challenges in Deep Tech Intellectual Property
Whilst the advantages of protecting IP are clear, it is not always a straightforward task for deep tech companies to obtain IP protection. Patent applications can be especially complex and require technical expertise to interpret and document. This complexity feeds into a wider cost paradox where investors can be reluctant to back startups without protected IP because of the heightened risk, yet those same startups typically want investor funding to begin the patenting process. Moreover, as the global deep tech market accelerates and new regions beyond China and the US emerge as competitors, UK companies must increasingly consider jurisdictions abroad when filing patents, adding further pressure to already resource-constrained founders.
In addition to these commercial challenges, deep tech companies must also navigate an increasingly stringent regulatory environment around the handling of IP. Recent updates to UK export-control and dual-use rules mean that not only physical technologies but also certain forms of IP may now require export licences before being shared internationally. With expanded control categories in 2025 covering areas like quantum systems, semiconductors, and additive manufacturing, founders must ensure that routine activities such as collaborating with overseas partners, licensing technology, or even transferring knowledge across borders do not inadvertently breach these regulations.
Regulatory scrutiny has also intensified under the UK’s National Security & Investment Act (NSIA), which gives the government broad powers to review and, if necessary, intervene in acquisitions or transactions involving sensitive assets, including IP itself. For many deep tech ventures operating in high-risk sectors such as advanced materials and quantum, this means that investment rounds, licensing arrangements, and even internal restructuring may trigger mandatory notifications or detailed government assessments. While the NSIA aims to safeguard the UK’s technological base, it can introduce delays and uncertainty in deals, particularly where overseas investors are involved.
The Future of Deep Tech Intellectual Property
Looking ahead, the report makes clear that the UK’s continued leadership in deep tech will depend on decisive action to close the structural gaps that hinder companies as they scale. Strengthening late-stage capital remains the most urgent priority, with full delivery of the Mansion House reforms essential to reversing the sharp fall in domestic investor participation and reducing reliance on overseas backers. At the same time, the UK must be prepared to support early-stage innovation for longer, recognising that deep tech companies often require extended R&D stages before reaching commercial viability. Modernising tech transfer processes is equally critical, ensuring that university spinouts can progress at the pace required without unnecessary friction over IP, timelines, or terms. With targeted policy execution across capital, commercialisation, regulation and infrastructure, the UK can shift from being primarily a generator of world-leading scientific IP to becoming a global home for scaled deep tech companies.
For the UK’s deep tech ecosystem to continue to thrive, a more strategic approach to IP needs to be implemented by companies. IP underpins investor confidence, market advantage and long-term growth, and a strong portfolio could unlock the potential of UK startups to reach Series C and D.
At Mathys & Squire LLP, we understand the unique challenges and intricacies entailed in protecting cutting-edge innovations for deep tech startups. For more information, please reach out to a member of our Scaleup Quarter team.