UK small business equity investment declined 11% in 2022 driven by a downturn in market conditions in second half of the year, as ongoing market challenges continue into 2023.
The total value of equity investment in the UK’s small businesses declined by 11% to £16.7bn in 2022, driven by a downturn in market conditions, reveals the British Business Bank’s annual Small Business Equity Tracker, published this week. The total number of deals also saw a modest decline of 7%, falling from 2,912 in 2021 to 2,702, the first annual drop in equity deal volumes since the Beauhurst data series began in 2011.
Key Findings in the South West
South West bucks the national trend with an increase in number of equity deals in 2022 but actual investment is down.
- The South West is one of just two English regions to see an increase in equity deals in 2022
- The number of announced equity deals in the South West increased by 4% to 155
- Total equity investment value in the South West was £540m, down 32% against a record 2021, with fewer larger deals in 2022
- The South West saw 12 university spinout deals worth £33.8m
- Clean-tech companies in the South West received £7.1 million over eight deals in 2022
Louis Taylor, CEO, British Business Bank, said: “2022 proved to be a year of two halves for small business equity investment, with record levels of finance raised over the first two quarters of the year, followed by a 47% decline in total investment during the second half. This decline reflected concern about the overvaluation of deals, and the effects of higher inflation and rising interest rates.
“However, there are still some bright spots that can be drawn from this year’s report, in particular levels of investment in university spinouts and breakthrough technology sectors. While it is still too early to tell the full scale of the downturn in investment, the UK’s broad and advanced equity finance markets are well placed to support recovery”.
See more tracker insights and download the full Small Business Equity Tracker 2023 Report here.
