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Tech ‘continues to dominate’ UK equity investment

report british business bank
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The number of equity investments in UK tech have increased every year since 2011, according to a report by the British Business Bank.

Published today, the bank’s second annual Equity Tracker Report also notes that UK tech had recorded the highest ever level of investment (£1.6bn) last year, showing a 49% increase when compared to 2014.

Life sciences and software, the report continues, are the largest sub-sectors in the technology industry. “The number of deals in the software sector reached a record high in 2015, as did the amount invested (296 deals, £659m in 2015),” says the report.

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The number of deals increased by only 5% compared to 2014, but the report adds that the amount invested soared by 45%.

Overall, the report highlights the continued growth of equity investment for small businesses in the UK but notes that despite trends in equity investment looking positive in the long-term, there is evidence of softening in the market and more work is needed to ensure that small businesses have access to equity finance.

Regional disparities

The report notes that regional disparities persist with regards to equity investments across all sectors in the UK, with London and the South East concentrating most of the activity.

“London has seen the largest year-on-year growth in both deal numbers and the total amount invested. The number of equity deals grew by 17% in 2015, with the total amount invested increasing by 100%.

“Putting this in context, London has the highest share of high-growth enterprises (21%) in the UK, but its share of the total number of equity deals in 2015 is much higher at 47%,” adds the report.

Although the value of deals outside of London rose by 23%, the number of deals decreased by 4%. Additionally, the report says, no region outside of London has seen continuous year-on-year increases in the total amount of annual investment recorded between 2011 and 2015.

It adds:

“Looking at specific regions in more detail shows the issues more clearly. 10% of deals by value (18% by volume) went to companies in Northern Regions and 5% of deals by value (6% by volume) went to companies located in the Midlands between 2011 and 2015.”

“This suggests equity deals are underrepresented in the North, and even more so in the Midlands, when compared to the number of private sector enterprises located in these areas. For instance, 19% of all businesses in the United Kingdom are located in the North and 14% are located in the Midlands at the start of 2015,” concludes the report.

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