Equity investment in the UK’s tech businesses increased by 27 per cent to £4bn last year, the highest amount since records began in 2011, the British Business Bank has found.
The state development bank’s annual small business equity tracker report showed the UK’s thriving tech sector remains highly attractive to equity investors, accounting for 47 per cent of total equity investment in UK small- and medium-sized enterprises (SMEs) through 691 deals in 2019.
Within tech, the sectors receiving the largest share of deals were software (425 deals worth £2bn), life sciences (78 deals worth £540m) and fintech (193 deals worth £1.8bn).
“The UK’s small business equity finance market saw a record year in 2019 with investment amounts soaring to £8.5bn,” said Keith Morgan, chief executive of the British Business Bank.
“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.
“Ensuring a wide range of innovative and ambitious smaller businesses continue to have access to equity investment to support their growth plans will be essential to the UK retaining its world-leading position in science, innovation and technology.”
52 per cent of deals took place outside of London, with the South West, Scotland and Northern Ireland showing a strong rise in 2019, increasing by 34 per cent, 26 per cent and 24 per cent respectively.
Several regions also saw investment levels by value increase strongly in 2019, including Northern Ireland (191 per cent), Scotland (51 per cent), North West (50 per cent), London (37 per cent), West Midlands (36 per cent), and the South East (27 per cent).
Meanwhile, equity investments into growth stage companies rose by 39 per cent to £5.3bn.
Despite a record year for fundraising overall, investment into private, seed stage companies declining by one per cent in 2019.