VC firm Osney Capital has launched the UK’s first specialist cybersecurity seed fund in a bid to drive funding for startups at the seed and pre-seed stage.
A total of 30 firms will receive between £250,000 and £2.5 million, with the possibility of follow-on investments in Series A rounds. The fund is oversubscribed from its original target of £50 million.
The government’s economic development bank, the British Business Bank, has committed up to £36 million to the scheme through its Enterprise Capital Funds program.
"The UK is a leader in cybersecurity innovation but is experiencing a shortage in funding for cyber security companies from specialist investors at the pre-seed and seed stage," said Mark Sims, senior director, funds, at the British Business Bank.
"By committing to Osney Capital’s Fund 1 we are working to fill this equity gap, whilst backing businesses developing technologies to protect themselves, their customers and their products."
Other institutional and private investors include IronGate Capital Advisors, a US-based defense-focused fund of funds, and East X Ventures, the venture capital arm of East X, a London-based quantitative systematic research and investment firm operating across global commodity markets.
The fund has also raised capital from a number of exited UK entrepreneurs and senior leaders in the cyber and national security communities.
Challenges persist in the UK cybersecurity sector
According to government figures, the UK cybersecurity industry hit £13.2 billion in revenue this year, 12% up on 2024.
Investment in UK universities and the expansion of specialist computer science and cybersecurity programs have done a lot to boost the country’s talent pipeline.
However, Osney Capital said the early-stage cybersecurity startup ecosystem is structurally challenging for generalist capital to access due to its decentralized and closed nature.
Osney Capital said this gives it a unique opportunity to back these companies early, with tailored support and capital to help them scale and attract global investment.
"The UK’s cyber ecosystem is one of the country’s greatest untapped strengths. With world-class talent and the scale to produce the next generation of industry leaders, we have a unique opportunity to compete on the global stage," said Osney Capital partner Joshua Walter.
"Our mission with this fund is to identify and back the next wave of UK cyber founders — providing them with the specialist capital they need to build globally significant companies, products and technologies."
Osney Capital has already invested in several early-stage UK cyber companies.
These including MindGard, a Lancaster University spin-out that delivers AI security testing; Sitehop, a Sheffield-based hardware-enforced network security specialist, and London-based RevEng.AI, an AI powered binary analysis platform for reverse engineering and malware analysis.
This separate portfolio, said Osney Capital, is performing well and has since attracted investment from some of the largest global venture capital firms.
"Osney Capital’s fund is an opportunity for the UK to build on the UK’s strong advantage and excellence in cybersecurity," said Dame Fiona Murray, who serves on the prime minister’s Council for Science and Technology and is vice-chair of the board of directors of the NATO Innovation Fund.
"In times of global uncertainty, we must foster a safe, secure and trusted digital economy in the UK — across all our digital and physical infrastructure."
"This means investing in and promoting innovation in the UK’s cybersecurity ecosystem. The work of Osney Capital’s fund is a matter of national security, digital sovereignty, and economic leadership."
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