Beauhurst's 2026 spinout report shows UK grant awards fell to their lowest count since 2016, even as the average grant size rose 10.96% to £423,000 1. Fewer companies are receiving larger awards. The total grant pool is not collapsing, but its distribution is shifting toward mid-stage companies that can absorb bigger tickets.
For a university team seeking a small grant to test an early hypothesis, the narrowing is material. Proof-of-concept funding sits below the threshold of most state programmes. The new Innovate UK Velocity model favours companies with demonstrated team capability and technical breakthrough; by definition, the earliest-stage ventures cannot yet demonstrate either. The expanded £40m proof-of-concept fund (up from £20m over three years) partially addresses the gap but does not restore the volume of small grants available a decade ago.
All of this is happening while the government deploys growth-stage capital at record scale through the British Business Bank, the Sovereign AI Unit, and sector-specific funds. Almost all of it targets companies that have already survived the earliest stages. The pipeline that feeds those programmes is quietly thinning at its base.