Edinburgh and Glasgow represent Scotland as city-based clusters lead equity investment market

Edinburgh and Glasgow are two of the UK’s leading cities for equity investment, according to the third annual Equity Tracker, published today by the British Business Bank.

The Small Business Equity Tracker provides an in-depth assessment of equity markets for growing businesses, delivered in partnership with data specialist Beauhurst.

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% 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 (released last week) shows record equity investment in UK businesses in the first half of 2017, up by 74.7 per cent on the previous 6 months.

In Edinburgh, last year saw 29 equity investment deals signed with the city, with 15 in Glasgow. The cities lead the way as hotspots for investment in the business and professional services sector and the software sector respectively.

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 £1.7 billion – the highest level on record meaning technology represented almost half (49 per cent) by value of the total equity market.

London continued to experience greater levels of equity investment compared to other UK regions, with £1.9 billion in funding in 2016. However, the capital experienced a decrease in its share of UK deals (47 per cent, down from 50 per cent in 2015); 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 Bristol, Manchester 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.”