SME investment declines for first time in five years
EQUITY deals for small- and medium-sized enterprises (SMEs) fell for the first time in five years during 2016.
The British Business Bank’s Equity Tracker, based on publicly-announced deals across venture capital, equity crowdfunding, business angels and private equity, showed transactions slipped 18 per cent, and fell four per cent in value
There were 1,148 equity deals with an investment value of £3.4bn.
Despite the declines in deals, investment in technology firms hit a record level of £1.7bn and the sector now forms 38 per cent of transactions and 49 per cent of the overall value.
The report highlights that clusters of regions for deals have emerged, with London accounting for 46 per cent of transactions.
Of the top 25 areas for deal activity, 12 are London boroughs, led by Hackney with 79 and Camden with 77.
London boroughs also make up eight of the top 10 areas for deals, with Cambridge and Edinburgh the only places outside the capital, representing 44 and 29 deals respectively.
Average equity deal sizes overall have also increased, from £2.2m in 2013 to £3.7m last year.
The mood for deals may be improving though after research from data company Beauhurst, which helped compile the British Business Bank report, showed there was record equity investment in UK businesses in the first half of 2017, up by 74.7 per cent on the previous six months.
“This research provides the most accurate and complete view of the state of the SME equity finance market in the UK for growing businesses,” Keith Morgan, chief executive of the British Business Bank, said.
“While the market here followed the global downward trend in equity investment, there are positive signs of innovative growing businesses receiving significant investment in clusters across the UK.
“Regional disparities continue, however, and that’s something we’re working hard to address.
“We launched our £400m Northern Powerhouse Investment Fund earlier this year, and this is already providing funding to fund managers who are investing in local businesses. We will be introducing similar initiatives for the Midlands and Cornwall and the Isles of Scilly over the coming months.”