The South West saw the UK’s biggest increase in equity investment among SMEs last year, new research finds.
The number of West Country businesses taking on investment was up 49% in 2021 - to 130 deals - more than any other area of the country.
The amount of cash investors parted with also increased by more than 350%, reaching £821m throughout the period, the British Business Bank’s annual Small Business Equity Tracker found.
Technology and IP-based businesses received the greatest share of investment, according to the bank.
Earlier this month, Bristol was named one of the most successful cities in Europe for attracting tech investment in 2022. The city was named among the top 20 European tech hubs for venture capital funding after its technology firms raised a huge £220m in the first five months of the year.
Nationally, equity investment in the UK’s smaller businesses increased by 88% in 2021 to £18.1bn compared to the previous year - the highest yearly amount since the bank's data series began in 2011.
The strong momentum continued into the first quarter of 2022, with £7.6bn of equity investment reaching smaller businesses, the highest amount invested in a single quarter at nearly double that of the £4.3bn in the first quarter of last year.
Catherine Lewis La Torre, chief executive of British Business Bank, said: “The UK’s small business equity finance market has continued to grow, achieving a new record last year. The momentum continued in Q1 of this year – a clear sign of investor confidence in UK smaller businesses following the pandemic.”
Investment in UK tech companies has continued to grow rapidly in the past five years, rising to £8.2bn in 2021, up from £4.1bn the previous year.
Within technology subsectors, investment into smaller businesses in the life sciences sector rose from £800m in 2020 to £1.7bn in 2021 and software deals more than doubled from £2.3bn in 2020 to £4.8bn last year, in line with wider equity market trends.
As investors adapt to more sustainability driven equity investment, the bank’s analysis showed a 30% increase in the number of clean tech deals with £436m invested into this sector across 72 deals.
According to the British Business Bank, the UK retained its position in 2021 as the largest venture capital (VC) market in Europe, bigger than France and Germany combined.
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