The British Business Bank has published its Small Business Equity Tracker 2020, examining the impact of equity finance on smaller business.
The report found that 2019 saw record levels, with equity investment in small businesses reaching £8.4 billion. This represents a 24 per cent increase on 2018 and a more than 100 per cent increase on 2016.
Much of this increase was driven by investment in the tech sector – 47 per cent of total equity investment in small businesses in 2019 was in tech businesses, which saw investments of £4 billion.
However, the report notes that the Coronavirus outbreak is set to have a substantial impact on the availability of equity finance to small businesses. Deal numbers in the first quarter of 2020 were down by 15 per cent on the final quarter of 2019. However, the report says that this is “likely to underreport the full scale”.
Keith Morgan, CEO at the British Business Bank, said: “The UK’s small business equity finance market saw a record year in 2019 with investment amounts soaring to £8.5 billion. 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.”