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£6.7bn Invested in Small Businesses in 2018

Posted 5 months ago

£6.7bn Invested in Small Businesses in 2018
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Small businesses received a record £6.7bn in equity funding in 2018/19, a 5% increase year on year. The average deal size was £4.5m, an 11% increase compared with 2013.

Small business equity funding outside London increased by 29% as the capital’s influence as an SME hub waned. The East of England, North East and West Midlands were the three regions driving this regional uptick, where equity finance investment deal sizes grew by 118%, 115% and 81% respectively.

Several UK regions also saw a significant increase in the overall number of deals – up by 65% in the North East, 15% in Yorkshire and Humber and 11% in Wales.

The UK’s hot tech sector received 44% of small business equity funding. Backing for tech businesses increased by 24% in 2018 with £3bn invested, the highest amount so far. 

Keith Morgan, CEO of British Business Bank, said: “We are particularly pleased to see a 29% increase in investment outside of London. The British Business Bank continues to work to address regional imbalances in access to investment to ensure smaller businesses across the UK can access the equity finance they need to fulfil their growth potential.”

The UK's venture capital sector grew faster than the US for the first time ever. The UK had 570 VC deals close per £1trn of GDP, 18% higher than the US, which had 482.

One criticism of the UK VC funding scene is that Britain has fewer funding rounds than America, so scale-ups cannot keep growing; this is no longer the case, according to the British Business Bank‘s annual Small Business Equity Tracker report.

Although the total number of equity finance deals fell last year, it could be argued this is good news: investors are putting money into bigger, more established businesses with greater chance of becoming fabled “unicorns” – ultimately valued at $1bn or more.

The overall value of funding increased at every stage of funding: up for 4% for seed-stage businesses, 10% for ventures and 2% for growth-stage businesses.

CEO of NextFin Sacha Bright said: “All of the above is fantastic news for 2018/19. It’s great to see equity investment expanding in the UK. 

“Given the current 2020 coronavirus pandemic, it is important for the government to support these early stage businesses with increases in S/EIS allowances and match funding to continue this growth

“NextFin is currently running the Free Our Startups campaign. You can read the open letter and sign our petition here.”

Authors: Sacha Bright & Oliver Murphy

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed. Nextfin is not liable for any damages arising from the use of or inability to use this site or any material contained in it, or from any action taken as a result of using the site. 

Tagged: sme equity crowdfunding alternative finance news raising funds



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