HSBC Innovation Banking Life Sciences’ UK & Europe

Following the release of HSBC Innovation Banking Life Sciences’ UK & Europe: Life Sciences & Healthcare Venture Financing Report for FY25, we sit down with Paula Burke, Director, HealthTech and Medical Devices, and Dominick Kennerson, Director, Business Development, Life Sciences and Healthcare, who highlight renewed investor confidence in the sector, evolving funding strategies, and the growing role of artificial intelligence in shaping the future of healthcare.

With the release of HSBC Innovation Banking Life Sciences’ UK & Europe: Life Sciences & Healthcare Venture Financing Report, which presents key findings from the 2025 financial year, a renewed sense of momentum can be felt across life sciences in the UK and Europe, bolstered by increasing deal activity and larger funding rounds.

For Dominick Kennerson, Director, Business Development, Life Sciences and Healthcare, these signals indicate not just recovery, but a more resilient and sustainable funding environment.

“There are a few things that point to a very healthy market – first is the sheer size and scale of funding,” Kennerson opens.

In 2025, a number of mega-rounds took place, with significant activity across the BioTech, BioPharma, and TechBio fields.

Notably, many of these rounds are occurring at the pre-clinical and Phase 1 stages, reinforcing investor confidence in early-stage innovation.

This pipeline of funding activity is complemented by strong investor appetites around emerging technologies, particularly artificial intelligence (AI).

“We are also witnessing strong investor appetite for TechBio platforms – particularly those built around AI-driven models.

“Investors don’t want to miss the opportunities presented by these technologies,” he outlines.

CRITICAL RELATIONSHIP-BUILDING

Beyond capital availability, Kennerson highlights relationship-building as one of the most underutilised opportunities for scaling companies within the HealthTech sector.

As companies progress into later funding stages – particularly Series B and C – the need for international investor syndicates and collaboration becomes more pronounced.

“A best practice for companies looking to raise larger scale-up rounds is to start building those relationships well before they need capital,” Kennerson explains.

This is a dynamic that’s reinforced by how deals are sourced within the sector.

“I spoke recently with a US investor who said 95 percent of their inbound deal flow is referral-led, meaning one investor introducing another,” he reveals.

As such, relationship-building at this level is not just beneficial – it’s critical to unlocking capital.

MAJOR GROWTH DRIVER

As it continues to emerge as a major growth driver within the UK healthcare market, HealthTech tends to fall into two categories.

These are businesses focused on improving NHS efficiency statistics, as well as those aimed at treating patients’ needs as early as possible through preventative and consumer-led care – a dual approach reflected in recent high-profile funding rounds.

“Some of the largest HealthTech rounds in 2025 came from companies such as Neko Health, which is building an expanded clinic model and now operates more than a half-dozen clinics across the UK, having raised around £210 million to build out this infrastructure,” Kennerson highlights.

Another major funding round came from Cera Care (Cera), which is focused on home health services, demonstrating the importance of treating people at home where possible to reduce pressures on the NHS, whilst supporting the UK’s demographic trend to ageing.

Elsewhere, Kennerson has noticed an important shift taking place at the early stage.

“We are seeing companies operating something close to a bootstrap-blitzscale model,” he insights.

Indeed, rather than raising capital early on, many have found themselves building revenue and strengthening fundamentals before seeking institutional investment – a shift reflected at early-stage funding.

“The average first financing in HealthTech in FY25 was £5.8 million. The year before that it was around £3.7 million, and in 2023 it was around £3.3 million,” Kennerson points out.

As a result, companies are entering Series A rounds with stronger fundamental financial metrics and larger sums, contributing to the emergence of what Kennerson calls the “new Series A company”.

This evolution has also given rise to the possibility of a ‘one-and-done’ funding round where a single, well-capitalised raise may be efficient to scale to profitability and potential exit.

COLLABORATION AT SCALE

For Paula Burke, Director, HealthTech and Medical Devices at HSBC Innovation Banking Life Sciences, collaboration is defining the next phase of healthcare innovation – particularly where AI, data, and biology intersect.

“The partnerships I’m most excited to see are those bringing together data, AI, and biology with clinical workflow at scale,” she tells us.

These collaborations are becoming increasingly sophisticated, with recent examples including Tempus, AstraZeneca, and Pathos AI’s multi-year, strategic partnership to accelerate cancer drug discovery and precision medicine, and Isomorphic Labs’ partnerships with both Eli Lilly and Novartis to revolutionise drug discovery using AI.

“What’s interesting is these kinds of partnerships are no longer centred around a single asset but increasingly focused on AI platforms and data systems that can be applied across multiple programmes,” Burke adds.

AI is becoming increasingly embedded in everyday healthcare operations. For example, Burke cites Novo Nordisk’s collaboration with OpenAI to integrate advanced intelligence across the entire pharmaceutical value chain.

Developments such as these point to a broader shift in how innovation is being delivered.

FROM POTENTIAL TO IMPACT

With AI-enabled drug discovery and precision medicine already translating into real-world impact – albeit at different stages of maturity.

This is particularly evident in oncology, where genomic profiling and liquid biopsies are helping guide diagnoses and treatments.

Advances are also being seen in reducing treatment-related risks, with genetic testing to reduce avoidable side effects – including from typically invasive treatments such as chemotherapy.

AI-driven drug discovery, meanwhile, is gaining traction. Whilst still in its early stages, AI’s impact on trial speed, selection, and execution is already being keenly felt, with stronger clinical evidence expected in the near future.

“If precision medicine helps us choose the right treatment, AI can create more precise treatments in the first place,” Burke insights.

Indeed, AI can support target selection, the design of biomarker-led or mutation-specific therapies, and the identification of patient subgroups more likely to respond to treatment.

INNOVATING INTELLIGENT SOLUTIONS

Alongside HealthTech, MedTech is also undergoing rapid recent change, driven by advances in AI, connectivity, and data integration.

“MedTech devices are becoming more intelligent and connected to continuous patient data whilst being less invasive,” Burke outlines.

In neurology, for example, innovation is already improving outcomes, with AI-enabled stroke imaging tools improving early diagnosis and treatment decisions, helping clinicians detect issues earlier and intervene faster.

At the same time, continuous monitoring is reshaping care delivery, with long-term monitoring moving beyond the hospital.

“This helps support earlier intervention, better chronic disease management, and more care delivered at home,” she emphasises.

This shift is also evident in the convergence of consumer and clinical health technologies.

“Wearable fitness technology companies such as Oura and Whoop have evolved beyond fitness tracking into broader health platforms capable of generating continuous health data,” informs Burke.

Another area of rapid advancement is surgical robotics, with a new generation of robotics companies entering the market, making surgery more precise, less invasive, and more accessible.

STRUCTURAL STRENGTHS

Looking ahead, both Kennerson and Burke emphasise the structural strengths of the UK and Europe, particularly their academic ecosystems and talent base.

“The major advantage for the UK and Europe is the university system. The UK’s ‘Golden Triangle’ – including Oxford, Cambridge, and the London universities – offer an exceptional pipeline of talent.

“This is why innovative drug discovery companies such as Google DeepMind and Isomorphic Labs were created here in the UK – both of which are the brainchild of Sir Demis Hassabis, who graduated from University College London in 2019,” Kennerson details.

With funding options improving for start-ups and scale-ups – particularly in the £20 million to £50 million range – Q1 2026 has also seen healthier BioTech and BioPharma fundraising.

Burke notes how alternative financing structures are increasingly prominent, with more companies leveraging alternative financing alongside equity rounds to extend runway, support hiring, and accelerate commercial build-out.

As HSBC Innovation Banking is Europe’s most active debt provider in this space, supporting companies as they scale and helping regional players to thrive is deeply important.

REASON FOR OPTIMISM

Despite ongoing challenges, both Kennerson and Burke remain optimistic about the future of the sector.

For Kennerson, the emergence of a new generation of companies adopting more sophisticated funding strategies is part of a broader shift towards capital efficiency and optionality.

“The companies that are increasingly asking about non-dilutive financing and bank financing are thinking differently about growth and looking for smarter ways to fund it,” he observes.

Burke’s optimism, meanwhile, lies in the transformative potential of AI in what is one of the largest data generating industries in the world.

“The healthcare industry produces enormous volumes of data through electronic health records, wearable sensors, sequencing, and clinical trials.

“Historically underutilised, this data is now becoming actionable, with AI changing our ability to turn data into scalable insight,” she states.

From personalised medicine to preventative care and faster drug development, the implications are far-reaching.

“At scale, AI has the potential to democratise healthcare by extending better care outcomes to communities that have historically been underserved,” Burke confidently concludes.