British Business Bank has recorded recent trends in SME equity finance, showing deal and investment activity in both 2021 and Q1 of 2022 as well as the UK VC market in comparison to several other countries and overseas investor contribution into the UK VC ecosystem.
Equity investment in smaller UK businesses rose to record levels in 2021 following an 88% increase to £18.1 billion, in comparison to the year before, representing the highest numbers seen in a year since Beauhurst’s data series began in 2011.
This powerful momentum persisted into Q1 of 2022, as £7.6 billion of equity investment pushed smaller businesses forward, marking the highest number invested in a quarter and double the £4.3 billion reached in Q1 of 2021.
Continuous growth of investment in UK tech companies has persisted over the past 5 years, reaching £8.2 billion in 2021, a huge increase from £4.1 billion of the previous year.
This doesn’t come as a surprise, given the fact that the UK’s tech centered companies are representing an essential part of building the future’s economy and pivoting the UK as a major tech hub in Europe.
Within technology subsectors, investment into smaller and earlier-stage businesses focused in the life-sciences sector increased from £800 million in 2020 to £1.7 billion in 2021, and software deals more than doubled from £2.3 billion in 2020 to £4.8 billion in 2021, a trend consistent with the wider boost of the equity market.
The UK has maintained its place in 2021, as a prominent and indeed, as the largest venture capital market in Europe, taking precedence over France and Germany combined.
In 2021, 753 deals largely involved an overseas investor, a 58% increase from the previous year and adding up to 29% of all deals recorded for the year.
The British Business Bank has supported around 18% of all announced UK equity deals in 2021, as funds supported by the Bank are more likely to invest in tech and IP-focused businesses, in comparison to the overall equity market.
This is made evident by the fact that between 2019-2021, 47% of the British Business Bank’s supported deals were in these tech sectors, compared to 39% of the wider market.