Innovation
Sector pulse: Early-stage biotech momentum, AI funding trends, and more
- Innovation
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- 4 minutes read
Every month, our early-stage relationship management team takes the temperature of one sector. What are early-stage founders and investors thinking? What news and data is getting the market excited? This month we’re looking at biotech, covering significant raises, analysing overall fundraising momentum, and much more from around the ecosystem.
- Fundraising momentum is building: UK biotech funding rose 18% in Q1 2026 vs Q4¹, but investors are more selective and want outcome-led clinical narratives.
- AI is reshaping the sector: Health ranked #2 for AI investment in H1 2026 (behind enterprise software)², with tools behaving like "science OS" platforms accelerating R&D. Of course, this is raising the bar for smaller startups.
- Big, bold bets are back: Standout rounds include BioOrbit’s £9.8m seed (in-space biomanufacturing) and Apoha's £26.7m Series A, both of which signal a clear appetite for ambitious AI-enabled drug and materials innovation businesses.
Welcome to this regular sector pulse from our early-stage team.
This time, I caught up with Davide Bommarito, our early-stage banking relationship management lead for biotech and life sciences startups.
Davide, let’s start with a temperature check. What’s the sentiment been among biotech founders in the last month or so?
DAVIDE: It's been a mixed story all in all.
On one hand, there is clear momentum from a fundraising perspective. The BioIndustry Association recently found that biotech funding in Q1 2026 was 18% higher than the previous quarter³, while the second volume of our Venture Capital Term Sheet Guide confirmed that the biotech and life sciences verticals are still core to overall UK venture investment.
That's because life sciences are rightly seen as one of the areas where AI could really deliver transformational results fastest. That was reflected in our latest innovation update, released in partnership with Dealroom, which found that health was behind only enterprise software in terms of the overall level of AI investment committed in the first half of 2026.
But founders are also reporting increased investor caution, with VCs prioritising the companies that can demonstrate clear outcome-driven stories from their clinical data.
That pressure is sending more founders over to the US for fundraising discussions, where the feeling is that VCs are happier to take big bets on startups that might still be several years away from trial results or even from meaningful data.
Have any noteworthy biotech funding rounds that caught your eye lately, and what do they signal?
DAVIDE: One phenomenal fundraise was the £9.8m ($13.2m) seed round raised by BioOrbit – the world's largest seed round for in-space bio manufacturing.
BioOrbit's mission is to use the microgravity environment found in low-earth orbit to reformulate drugs. It's an extremely bold project at the intersection between drug development, manufacturing, space technology and patient care.
I was also excited to see the news of Apoha's £26.7m ($36m) Series A in June. Apoha is a dual-headquartered startup (based between London and San Francisco) building AI models for the development of new drugs and new materials. AI analyses wave patterns that materials generate when they are suspended in liquid and stressed, to predict properties like drug stability. They have already partnered with pharma giants like Boehringer Ingelheim and the future looks very bright in this space.
What was the most valuable biotech conference, roundtable or event you attended in the last few months?
DAVIDE: It's been a whirlwind! In June alone the team and I attended the R&D and Science Investment Summit at the Royal Society, joined Global Tech Advocates at Venture Café London for a discussion on funding pathways for healthtech innovators, explored in-vivo CAR-T therapies with Cancer Research Horizons, and swung by 22 Bishopsgate for The Forum 2026 with Nucleate UK (an event that we proudly supported and co-sponsored). And amid all that we even squeezed in a visit to London Tech Week.
Davide Bommarito, Early-stage banking relationship manager, HSBC Innovation Banking"The volume and quality of events in the first half of the year has once again underscored how valuable the UK biotech and life sciences community really is."
Each event has been fantastic in learning about new technology being developed to support patient care.
Biotech continues to build momentum
Clearly there's a lot of incredible innovation happening here in the UK and more broadly in the biotech communication.
Thanks to Davide for his insights on the latest in the UK's biotech and life sciences sector. See you in August for the next sector pulse from our relationship management team.
Building in biotech and keen to discuss fundraising? Reach out to your relationship manager, or head over to our Resources page for insights on how to go about fundraising, scaling, and navigating the path to building something extraordinary.
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