Equity funding reaches record high for SMEs

As investment rises outside of the capital, small businesses in the UK are experiencing record-breaking levels of equity funding.

According to research from the British Business Bank, small-and-medium sized enterprises (SMEs) in the UK were at the receiving end of £6.7 billion in investment – an increase from £5.9 billion in the previous year.

Data also revealed that the rise in funding was a result of interest shown in businesses outside of London – which appeared to be dropping in popularity. Companies outside of the capital generated a 29 per cent increase in the value of investments, whilst London fell by 7 per cent.

Chief of British Business Bank, Keith Morgan, commented that the data revealed “a clear sign of investor confidence in British small businesses and their potential for growth.”

In particular, the north east experienced the greatest increase in investment at 65 per cent. Yorkshire similarly saw a rise of 15 per cent, and Wales of 11 per cent.

The research found that small technology companies gained the most attention from investors, securing 44 per cent of all the equity funding in the last year. This is representative of news that recently emerged that the UK is now home to more than 70 tech unicorns with an estimated worth of £789 million.

Despite the optimism of the data, it was found that the overall number of deals made fell by 6 per cent – perhaps a result of the uncertainty that follows Brexit and the instability it brings to the British economy and small businesses.

Although the chairman of advocacy and policy at the Federation of Small Businesses, Martin McTague, hailed the research as positive for small enterprises, he also said: “We do need to look seriously at how we encourage more equity financing for sectors outside of those traditionally associated with this kind of investment.”

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