Capital Hasn’t Disappeared, It’s Become More Selective
Today I was up in Liverpool meeting the founders of a really exciting healthcare business being developed out of Liverpool University. It was one of those meetings that reminds me why I enjoy this work so much. A passionate founding team, innovative technology with genuine commercial potential and, most importantly, a willingness to think beyond simply building a product and towards building a long-term business.
Our discussion wasn’t just about raising investment. It was about building a capital strategy that could support the business over the next three, five and even ten years. Which funding instruments are appropriate at each stage? Where does equity make sense? When should lending be considered? Could strategic investors add more value than financial investors? Are there alternative funding structures that become relevant as the business matures? Those are the conversations that excite me because they help businesses think beyond the next funding round and focus instead on sustainable growth.
It also rounded off another incredibly busy week at Kognise. We’ve spent the last few days working with businesses across healthcare, life sciences, clean technology, battery storage, AI, software, retail, sustainable construction and social impact projects, while holding discussions with venture funds, family offices, ultra-high-net-worth investors, specialist lenders and organisations exploring more innovative funding structures. If there’s one thing this week has reinforced, it’s that the market is far healthier than many people believe.
The Market Says Otherwise
Turn on the news and it’s easy to conclude that capital has dried up, investors have disappeared and growing businesses have little chance of securing finance. The figures tell a very different story.
UK venture-backed businesses attracted around $23.7 billion of investment during 2025, representing a 33% increase on the previous year and the first significant recovery after several years of declining activity. That momentum has continued into 2026, with more than $17 billion invested during the first half of the year, leaving the UK as Europe’s largest venture capital market and attracting close to 40% of all European venture investment.
Equally significant is the amount of capital still waiting to be deployed. Across Europe, private capital funds are estimated to be holding more than €450 billion of available capital, often referred to as “dry powder”. Investors haven’t stopped investing; they’re simply becoming more selective about where that money goes.
The challenge today isn’t finding capital. The challenge is presenting businesses that are genuinely ready to receive it.
What We’re Seeing on the Ground
That changing market is exactly what we’re seeing at Kognise.
Founders are becoming increasingly aware that a single funding round is rarely enough to support an ambitious business. Equally, investors are asking more searching questions about governance, commercial models, routes to market and long-term financial planning before making investment decisions.
As a result, our conversations are changing. Rather than simply discussing how to raise investment, we’re helping businesses build capital strategies that evolve alongside their growth. Every business is different, and so is every funding solution.
Some businesses may be best suited to ultra-high-net-worth individuals or family offices during their early stages. Others are better aligned with angel investors, venture capital or strategic corporate investment. Alongside equity, we’re increasingly discussing specialist lending, asset-backed finance, ASA structures, convertible instruments and bond programmes where they provide a better fit for the business. In many cases the answer isn’t choosing one funding route; it’s understanding how different funding instruments can work together over a number of years.
The same thinking applies to investors. We spend considerable time understanding where individual investors or funds sit within their own investment cycle, their appetite for risk, sector preferences and portfolio objectives. Matching a business to the right investor is rarely about who has the deepest pockets. It’s about finding the right long-term fit for both parties.
Why Great Businesses Are Born in Tough Markets
Economic uncertainty understandably makes founders nervous. Rising costs, tighter lending conditions and more cautious investors can easily dominate the conversation. Yet history consistently demonstrates that difficult markets often produce exceptional businesses.
The Walt Disney Company expanded during the Great Depression, offering affordable entertainment at a time when optimism was in short supply. Walmart built its reputation by delivering value during periods of economic pressure. Apple was founded during the challenging economic conditions of the 1970s before transforming multiple industries over the following decades. Closer to home, many of today’s successful UK technology businesses emerged following the financial crisis, taking advantage of changing customer behaviour and rapid advances in digital technology.
None of these businesses succeeded because markets were easy. They succeeded because challenging conditions forced them to become sharper, more disciplined and more focused on solving genuine customer problems. Difficult markets expose weak business models, but they also create opportunities for innovative businesses that can move faster than established competitors burdened by legacy systems and slower decision-making.
Today’s market feels remarkably similar. Investors may be asking harder questions, but they’re still actively looking for businesses capable of creating sustainable value.
Funding Is a Journey, Not a Transaction
One of the biggest misconceptions we still encounter is that fundraising begins with a pitch deck.
In reality, a pitch deck is simply the outcome of much earlier thinking. Before any business approaches the market, it should have a clear understanding of where it wants to be over the next three, five and ten years, the milestones it expects to reach and the capital required to achieve them.
That’s where capital strategy becomes so important.
Businesses rarely fail because they can’t raise money once. More often, they struggle because they raise the wrong type of capital, at the wrong time, or without considering how today’s decisions affect tomorrow’s opportunities. A well-designed capital strategy provides flexibility, protects shareholders where appropriate and ensures that future funding rounds become easier rather than harder.
For investors, the same principles apply. Capital isn’t simply allocated to interesting ideas. It’s allocated to businesses demonstrating commercial discipline, realistic financial planning, credible management teams and a proposition capable of delivering long-term returns. That’s why preparation has become one of the most valuable investments any founder can make before approaching the market.
Looking Ahead
As I head into the weekend, it’s difficult not to feel optimistic about the months ahead.
Yes, the market has changed. Investors are undoubtedly more disciplined than they were a few years ago, and founders need to be better prepared before seeking investment. Personally, I think that’s healthy. Good businesses deserve good capital, and good investors deserve businesses that have genuinely prepared for growth.
The conversations we’re having today are becoming less about chasing the next funding round and more about building businesses capable of thriving over the long term. That’s good news for founders, good news for investors and, ultimately, good news for the wider economy.
For all the noise surrounding economic uncertainty, this week has been another reminder that innovation hasn’t slowed, entrepreneurial ambition certainly hasn’t disappeared and capital remains available for businesses that approach growth with clarity, preparation and a well-structured strategy.
