City-based clusters lead equity investment market

equity investment market

City-based clusters and tech hotspots were the focus of equity investment in the UK last year, according to the third annual Equity Tracker.

The Small Business Equity Tracker provides an in-depth assessment of equity markets for growing businesses.

The findings show that, following five years of growth, equity deals to smaller businesses in the UK fell last year across all sectors, by 18 per cent in terms of the number of deals and 4 per cent in value. This was in line with a wider global slowdown in equity finance in 2016.  However, the latest research from Beauhurst shows record equity investment in UK businesses in the first half of 2017, up by 74.7 per cent on the previous 6 months.

Today’s Equity Tracker outlines emerging clusters of strong deal activity around the country. Technology sectors bucked the market trend as the amount invested rose to £1.7bn – the highest level on record meaning technology represented almost half by value of the total equity market.

London continued to experience greater levels of equity investment compared to other UK regions, with £1.9bn in funding in 2016. However, the capital experienced a decrease in its share of UK deals; a 22 per cent decline in the total number of deals; and a drop in total investment value of 1 per cent.

Elsewhere, trends in equity deals varied geographically, with successful equity clusters in many UK cities, including Edinburgh, Manchester, Bristol and Birmingham, and the already-established equity eco-systems of Oxford and Cambridge. These clusters often have a combination of innovative companies, skilled staff and equity investors, creating dynamic hubs of growth and propelling equity investment.

Keith Morgan, CEO, British Business Bank, said: “This research provides the most accurate and complete view of the state of the SME equity finance market in the UK for growing businesses. 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.” 

Top 25 Local Authority areas for equity investment deals in 2016:

Rank Local Authority District Sector with highest number of deals
1 Hackney London Borough Council Software
2 Camden London Borough Council Software
3 Westminster City Council Software
4 City of London Software
5 Tower Hamlets London Borough Council Business and professional services
6 Cambridge City Council Software
7 Islington London Borough Council Software
8 Lambeth London Borough Council Software
9 Edinburgh City Council Business and professional services
10= Southwark London Borough Council Business and professional services
10= Manchester City Council Software
12 Oxford City Council Life science
13 Hammersmith and Fulham London Borough Council Software
14 Wandsworth Borough Council Business and professional services
15= Kensington and Chelsea Royal Borough Council Business and professional services
15= Bristol City Council Software
17 Glasgow City Council Software
18= Cardiff Council Business and professional services
18= Newcastle upon Tyne City Council Business and professional services
20 Sheffield City Council Industrials
21= Barnet London Borough Council Software
21= Leeds City Council Software
21= Birmingham City Council Software
21= Brighton and Hove City Council Software
25 Liverpool City Council Software