Equity investment in UK businesses rose 58% in 2015
£3.5bn was invested into small firms last year yet most of this funding was concentrated in London and the South East
2015 saw a surge in equity investments in the UK’s smaller businesses – up 58% on 2014 – according to the British Business Bank’s second annual Equity Tracker Report.
Created in partnership with data provider Beauhurst, the report shows that an impressive £3.5bn was invested in UK small firms last year with 1,270 equity deals – a 71% increase in deal numbers above £10m when compared to 2014.
Technology companies, especially those in life sciences and software, are leading this wave of equity investments with £1.6bn invested into tech/IP-based businesses in 2015, growing 49% on 2014.
However, while the British Business Bank suggests that investments levels are “thriving”, the report indicated a disparity in the levels being invested in different regions of the UK.
Most of the £3.5bn invested last year was concentrated to businesses in London and the South East with businesses in regions outside of London (where 79% of small companies are based) only attracting a 53% share of equity investment.
The research also highlighted that, outside of London, no region has seen year-on-year growth in the total amount of annual investment between 2011 and 2015. Businesses in the North and the Midlands were found to be the most “underrepresented” for equity deals.
Keith Morgan, CEO of the British Business Bank, has said that there is “more work to do to ensure that the UK’s smaller businesses get the equity finance they need to grow”:
“Our research paints a comprehensive picture of the state of the equity finance market for smaller businesses. It identifies a step-up in equity finance provision since 2011 but, notably, wide-ranging regional disparities persist.
“Our Northern Powerhouse Investment Fund and Midlands Engine Investment Fund are specifically responding to the regional challenge. In creating these regional funds, we expect to work with Growth Hubs and the private sector to help stimulate both supply and demand for growth finance and to encourage a more dynamic equity culture.”