The technology sector remains “highly attractive” to investors, accounting for 47 per cent of total equity investment in small and medium-sized enterprises (SMEs) through 691 deals in 2019, according to the British Business Bank’s annual Small Business Equity Tracker report.
The study found that 52 per cent of deals by number took place outside of London, with the south west of England, Scotland and Northern Ireland showing a strong increase by deal number in 2019, rising by 34 per cent, 26 per cent and 24 per cent, respectively.
Several regions also saw investment levels by value increase strongly, including Northern Ireland (191 per cent), Scotland (51 per cent), the north west of England (50 per cent), London (37 per cent), West Midlands (36 per cent), and the south east (27 per cent).
Within tech, the areas receiving the largest share of deals were software (425 deals worth £2bn) and life sciences (78 deals worth £540 million).
Meanwhile, equity investments into UK “growth stage” companies rose by 39 per cent to £5.3bn. The average growth stage deal size, where the UK has lagged behind the US, grew by 27 per cent driven by a small number of very large deals.
The report noted that such financing was important as it is often used to aid international expansion and to enter new markets.
Keith Morgan, chief executive of the British Business Bank, said: “The UK’s small business equity finance market saw a record year in 2019 with investment amounts soaring to £8.5bn.
“This was a clear sign of investor confidence in UK smaller businesses located across the country and their potential for growth as well as the strong fundamentals of the UK economy as a place to start and grow a business.
“The British Business Bank’s equity programmes are estimated to have supported around 11 per cent of all equity deals in UK SMEs in 2019.
“As the economic impact of Covid-19 continues to affect businesses across the country, the work of the Bank has never been more important.”
Alice Hu Wagner, managing director, strategy economics and business development at the British Business Bank, added: “The report illustrates a strong interest in growth stage investment in the equity market in 2019, with a particular focus on tech businesses.
“Ensuring our high-potential later stage companies have the capital they need to compete on the global stage will be crucial to powering the economic recovery.”
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