Investor appetite is changing — so should our expectations

For the last ten years or so, I have been working more and more with Venture Capital and Private Equity firms, helping both investors and their boards with financially stressed situations. The challenge of finding solutions on an accelerated timeline has always appealed to me. But it has also highlighted the changing nature of the market over this time.

There has been a shift in investor mood in recent years. The conversations that used to buzz with growth, pace and scale now carry a slightly different tone — a little more cautious, a little more curious.

Because the old playbook — “chase the next unicorn and ride the valuation wave” — isn’t working like it used to. Especially in the world of VCTs and tech investing, where sentiment has evolved from “how fast can you grow?” to “how stable is the growth?” 

Gone are the days when series A, B and C fundraising are all but guaranteed, because everyone is betting on the next big thing – now more than ever, there appear to be two things that need to stick in order to continue to secure funding:

1. If it isn’t AI, it isn’t relevant – the AI boom seems to be taking over not just AI-based business but every other aspect of business. Fighting for funding whilst not impossible, is difficult in the current climate outside this bubble.
2. Revenue generation – the profit and loss needs to make sense after seeding and series A rounds. Or at least show a good sign of making sense. 

The era of disciplined optimism

Five years ago, investors were driven by FOMO. Capital was cheap, tech was hot, and any pitch deck alluding to AI would generate excitement. 

Now? Not so much. This is largely due to a post-COVID market correction in expectations. 

Investors are still optimistic — but it’s a disciplined optimism. They’re looking for sustainable growth stories, not just shiny forecasts.

VCT managers are under pressure to demonstrate an evolving approach to resilience – not simply potential. Founders who once led with vision are now being grilled on unit economics, runway, and governance.

This might sound like investor basics to anyone outside the industry – but much like politics, the environment is always shifting to the latest trend, and right now this is a shift to a much more refreshing model.

Because we’re seeing the start of a healthier, more grounded investment ecosystem — one built on value, not just valuation.

The human side of changing investor sentiment

If you’ve sat across the table from an investor recently, you’ll know that appetite hasn’t disappeared, it’s just become more emotionally intelligent.

Why? Like anything else in today’s world, there’s a desire for trust — for alignment of values, not just returns. Investors are asking deeper questions about culture, ethics, and real-world impact.

In the tech sector especially, they’ve seen what happens when “growth at all costs” becomes “accountability at no cost.” So they’re pivoting. They want to back founders who balance innovation with integrity, who understand that how you build matters just as much as what you build.

With the challenges of the social, economic and political challenges of the last five years, comes a rebalancing of attitudes. A bit of old-fashioned caution and relationship integrity never hurt anyone. 

VCTs: the quiet rebrand

VCTs are also undergoing their own transformation. For years, they were seen as a tax-efficient niche for adventurous investors. But now they’re being reframed as vehicles for strategic national investment — engines of innovation that align private capital with public purpose.

Investors are realising they can support meaningful growth — in green tech, digital infrastructure, medtech, and AI — while still getting robust returns. It’s a more mature kind of appetite. Less adrenaline, more alignment. 

This might have seen some setbacks in recent months with the Trump administration and the fear of certain tech industries losing out as a result (carbon capture, renewable, mental health etc). But the alignment and demand to go with it is still very much alive and kicking.

How this feeds into the ongoing political agenda, and the much-anticipated Budget this week, remains to be seen. 

The opportunity: from hype to health

We’re witnessing a mindset shift from hype to health — in portfolios, in startups, and in investor psychology.

This doesn’t mean the era of bold ideas is over or indeed of high-risk high reward strategies. Far from it.

It just means that those ideas now have to stand on steadier ground — with clear purpose, sustainable economics, and leadership that can weather volatility.

In a way, the cooling of the market might be the best thing that’s happened to the UK tech ecosystem in years. It’s forcing all of us — founders, funders, and operators — to evolve.

What we have found in the restructuring world, is that those companies that have been unable to evolve their forecasting, their business principles and their vision of growth are often left for the first time in their corporate life, without further funding and very short cash runways in which to find a solution.

So, in closing – I think it’s safe to say we are seeing the following take place in the market:

1. Investor appetite hasn’t faded; it’s evolved.
2. It’s moved from the excitement of potential to the confidence of proof.
3. VCTs and tech companies that recognise this shift — that speak the language of resilience, responsibility, and real-world value — will find there’s still plenty of capital out there.
4. In this new landscape, investors aren’t just chasing returns. They’re looking for meaningful growth.

And that might just be the most exciting opportunity of all – for everyone and, most importantly, our struggling economy here at home.