26 June 2020

British Business Bank has launched their 2020 Small Business Equity Tracker report which provides an in-depth assessment of equity finance markets for growing businesses. It is intended not only to inform the development of the Bank’s own strategy, but also to inform wider developments in both the market and government policy.

The headlines from the report are …

Equity investment in smaller UK tech businesses increased 27% to £4.0bn last year.

  • Value of total equity investment in UK’s smaller businesses rose 24% to £8.5bn.
  • Growth stage deals are the primary driver of increased investment.
  • Early signs of market softening before emergence of Covid-19.
  • British Business Bank programmes supported 11% of all UK equity deals.

The equity investment in the UK’s tech business of 27% in 2019, to £4.0bn, is the highest amount since the series began in 2011. The UK’s thriving tech sector remains highly attractive to equity investors, accounting for 47% of total equity investment in UK SMEs through 691 deals in 2019. Within tech, the sectors receiving the largest share of deals were software (425 deals worth £2bn) and life sciences (78 deals worth £540m). The verticals attracting the greatest amount of equity investment in 2019 were Software as a Service (471 deals worth £2.5bn), FinTech (193 deals worth £1.8bn) and AI (173 deals worth £880m) – to note companies can appear in one or more verticals. Software as a Service companies in particular were highly attractive to equity investors, with investment value increasing by 69% in 2019 compared to 2018, a much larger increase than that seen in the overall market.

The Small Business Equity Tracker report, which analyses Beauhurst data on equity investments throughout the UK in 2019, provides an important benchmark of the market immediately prior to the Covid-19 pandemic. It shows the value of total equity investment in the UK’s smaller businesses rising 24% to £8.5bn in 2019 – the highest amount recorded – and a record number of deals, rising 4% to 1,832 with deal sizes up by 21%.  The breakdown of deals shows 52% of deals by number took place outside of London, with South West, Scotland and Northern Ireland showing a strong increase by deal number in 2019, rising by 34%, 26% and 24% respectively. Several regions also saw investment levels by value increase strongly in 2019, including Northern Ireland (191%), Scotland (51%), North West (50%), London (37%), West Midlands (36%), and the South East (27%).

You can download the full Small Business Equity Tracker Report here.

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