London status as Europe’s top tech hub could be on the rocks.
While the UK capital still sees the highest number of equity funding rounds in Europe, Sifted data shows that deal count fell by 4% between mid-2024 and 2025.
Part of the UK’s broader funding dip can be attributed to investors shifting focus to AI, says Edward Keelan, partner at Octopus Ventures, with only 11.9% of London’s funding rounds raised by AI-native startups, compared to 17.4% and 16.7% of funding rounds raised in Berlin and Amsterdam.
That said, there are still plenty of opportunities for VCs to get their teeth into. To find out which startups in the city are catching VCs’ attention right now Sifted asked investors at Balderton Capital, Phoenix Court Group, Seedcamp and Episode 1 Ventures to nominate the non-portfolio, London-based startups they think could be set for big things.
Laura McGinnis, principal at Balderton Capital
Balderton Capital is a London-based VC which mostly invests at Series A. Its previously backed Revolut and autonomous vehicle developer Wayve.
Gizmo AI
Gizmo is an AI learning app that turns any source, from YouTube videos to lecture notes, into personalised, gamified study experiences. I’ve used it to learn oil painting techniques and even memorised some Arsenal trivia to impress my brother. It feels like the first study tool that actually fits into how we consume content now: fast, social and mobile-first.
Auar
Globally, urban housing markets are broken. Costs are climbing, materials are scarce and there are fewer builders than before. Auar tackles this head-on by designing robotic micro-factories that locally produce modular timber homes, with multiple factories running and a growing pipeline.
CEO Molly Claypool, a former architecture professor at The Bartlett School of Architecture, UCL, brings deep academic rigour and practical vision to solving this massive structural problem.
Motives AI
Consumer brands can find it difficult to conduct customer research and then turn the data into action. Motives makes that entire workflow effortless. It’s a tool for e-commerce and consumer product teams to run targeted, in-depth video interviews and then turn them into clear, actionable reports within 48 hours, no quality experience needed.
Will Bennett, associate at Seedcamp
Seedcamp is a London-based seed VC which invested in the likes of insurance startup Wefox, fintech giants Revolut and Wise and robotic automation software company UiPath
Qfex
Qfex is a financial exchange which builds full stack infrastructure to act as an all-in-one clearing house, venue and broker. When traders invest in a traditional market, brokers and clearing houses act as third parties between whom information and capital is passed. They are effectively ledgers to settle the books and their operating hours are the constraint that means a market must “close” at the end of the day. Qfex is an exchange which initiates payments and ledger updates with a simple API call to allow 24/7 trading — similar to how crypto markets operate today.
Tracebit
Tracebit is a security platform to catch intruders who have already passed the first lines of defence. Tracebit sets up decoy resources — imagine an Amazon storage bucket — that are designed to attract the attention of attackers. Whereas traditional security tools set off hundreds of alerts every week, an alert on a Tracebit decoy is meaningful; an employee is extremely unlikely to accidentally set off an alert by interacting with a resource that contains no business value.
Anam
Anam is building multipurpose personas (AI avatars) with super low latency that feel as natural as interacting with a human. An Anam persona can be generated from a simple image upload and deployed to settings like sales, customer support and lots more. Personas can be customised for multiple different settings to deliver an ace customer experience with photo realistic interactions.
OpenInfo
OpenInfo provides automation solutions for B2B food and drink wholesalers. When B2B wholesalers accept an order, it is typically over the phone or WhatsApp and teams of people enter this data into ERPs for order execution. OpenInfo has taken a multimodal approach to integrate all incoming orders directly into a system of record to generate impressive efficiency gains across all order processing.
Millan Suri, principal at Episode 1 Ventures
Episode 1 Ventures is a London-based VC which invests mostly in UK-based B2B startups. Investments include car marketplace Carwow, logistics platform Huboo and legaltech startup Robin AI.
Klara
Klara is a tool for compliance operations teams at financial institutions to automate parts of their workflow. By helping analyse transaction data and automating team communications, Klara aims to reduce case resolution time, improve consistency in decision-making and flag potential compliance issues so they can be addressed quickly.
Cofide
Non-human identities (NHIs) like microservices and AI agents are growing exponentially, creating significant security risks due to static secrets (like passwords that remain the same for a long period of time) and inadequate identity management. Cofide addresses this by issuing cryptographic identities to workloads, eliminating reliance on static secrets and vaults. The product integrates easily into Kubernetes-native and multi-cloud environments, ensuring secure authentication and authorisation with low developer friction.
Augur
The world is full of IoT devices capturing and emitting data. Most of them are running tech stacks that are out of date, are poorly maintained and monitored and are not integrated into any particularly useful models or analysis. Augur is a web-based tool which mobilises this data across CCTV, IoT and spatial models, in a given particular area, to track movement across big environments in order to predict and respond to situations.
Julia Hawkins and Mish Mashkautsan, general partners at LocalGlobe and Latitude
Apian
Apian is an autonomous logistics platform, expanding London’s NHS drone network and integrating ground robots for last-metre deliveries.
It’s completed more than 6,000 patient sample deliveries, growing from Guy’s and St Thomas’ to Great Ormond Street Hospital, where journeys are automated from first to last metre.
CoMind
CoMind is developing a neuro monitoring device that uses photonics to measure brain activity non-invasively, aiming to replace traditional invasive techniques. It’s already demonstrated the ability to acquire these signals in hospital patients and is conducting large-scale clinical trials in the US. Early data is highly promising, and FDA approval is on track for Q1 2026.
Phasecraft
Phasecraft is a UK quantum‑software startup designing efficient algorithms to run real‑world applications on today’s noisy near‑term quantum hardware. It bridges the gap between quantum theory and commercial utility with high levels of algorithmic efficiency, and has partnered with IBM, Google, Rigetti, QuEra (and more) to accelerate practical quantum advantage in materials, drug discovery, optimisation and beyond.
Gradient Labs
Gradient Labs is building a customer ops AI agent that automates customer service for regulated sectors, particularly financial services. It’s an incredibly exciting company as it’s delivering near-human quality at scale, drastically reducing costs and compliance risk, backed by rapid traction and their founder team have deep domain expertise.
Read the orginal article: https://sifted.eu/articles/london-based-startups-to-watch/
