Reviewing 2025 and what startups and investors should look out for in 2026

2025 was a tough year for early-stage startups, and it became materially harder to raise capital at the earliest stages. At the same time, the pace of technological change and the quality of what small teams can build is accelerating quickly. That combination makes 2026 one of the most interesting set ups we have seen in years.

This time last year, I expected 2025 to be a tough year for early-stage venture capital. The lack of liquidity and capital concentrating in fewer funds would mean reduced funding options for early-stage startups. No doubt it did become much harder for early-stage startups to secure funding. While late-stage funding stayed flat in the UK, early-stage investment dropped 22%.

At the same time, I believed the reset of venture capital would create space for a stronger cohort of new startups to emerge. Looking back at 2025, what we saw at Outward was deeply encouraging. Our seven new investments were in founding teams with deep domain expertise, many of whom leveraged AI to build and ship with unprecedented speed, quality and capital efficiency. More generally, confidence in the UK was reinforced by NVDIA’s £2 billion commitment to the UK’s AI startup ecosystem.

It seems impossible until it’s done. 2025 offered several reminders of this. Operating in over 50 countries with tens of millions of customers and billions in revenue, Revolut is barely ten years old. If, in 2015, someone had told you that Deutsche Bank would one day move into Revolut’s Canary Wharf building, what would you have said? Similarly, the Warner Bros’ board recommending a takeover offer from Netflix would have sounded implausible not so long ago.

If the Blitzscaling by startups such as Revolut and Netflix was impressive, wait for this generation of AI driven start-ups.

AI is transforming everything, with two particularly important shifts.

1. Information discovery and decision-making are being reshaped

We have gone from reading stories on news outlets to getting information from other people on social media, to trusting conversational AI for information and analyses on any domain. This is transforming the speed and basis of decision-making by corporate teams and consumers.

In 2025, we invested in start-ups that facilitate as well as govern the new ways in which decisions are made. Monq is re-inventing how large enterprises negotiate complex supplier contracts. Adclear is helping finance brands to promote services and products while staying compliant within complex regulatory frameworks.

2. A step-change in automation

By understanding context, AI agents don’t lose their way and adapt dynamically when user interfaces change. This makes AI agents far more powerful than the automation we have seen to date.

We are seeing this play out in areas where domain context is crucial. In real estate legal services, Orbital is transforming how transactions are conducted, and in insurance, Veridox is helping leading insurers combat fraud.

So, the success of startups in 2026 will hinge on how they harness AI. But we need to be thoughtful about how we go about this. For all its promise, AI remains far from human intelligence. It can make things up and, crucially, it neither understands ethics nor cultural nuance. From the provision of healthcare to advising on tax, humans will continue to be a core part of the value proposition, whether as oversight, assurance, or the final decision-maker.

Equally important to the success of startups is building the right culture. In an age where AI brings amazing speed, consistency and a sense of perfection, it becomes even more important for startups to build the right team and the right culture. Balancing technological leverage and human judgment will be something to look at closely in the year ahead.

We’re excited about 2026 and aiming to help even more ambitious early-stage founders breakthrough in 2026. If this sounds like you, let us know now.