Last year, small and medium-sized enterprises (SMEs) attracted a record £6.7 billion in equity investments, representing a five per cent year-on-year increase.
According to the British Business Bank’s annual Small Business Equity Tracker report, the UK equity investment market has grown by 72 per cent in just two years.
While the tech sector secured the most investment, with equity investment in tech businesses increasing by 24 per cent last year (£3 billion), the highest amount to date.
Keith Morgan, Chief Executive of the British Business Bank, said: “These statistics are a clear sign of investor confidence in British smaller businesses and their potential for growth.
“We are particularly pleased to see a 29 per cent increase in investment outside of London. The British Business Bank continues to work to address regional imbalances in access to investment to ensure smaller businesses across the UK can access the equity finance they need to fulfil their growth potential.”
Furthermore, the report revealed that while the value of equity investment had risen, the number of deals declined by six per cent last year. The largest decline was seen at the seed stage.
Alice Hu Wagner, Managing Director of strategy economics and business development at the British Business Bank, said: “The British Business Bank’s Equity Tracker report points to a maturing market for equity finance in the UK, with a small dip in the volume of investments and larger deals further down the pipeline increasing the overall value of lending.
“Standing at £4.5 million, the average equity deal size in the UK is up 11 per cent in 2013. When combined with high regional growth, this demonstrates that conditions are improving and the UK equity finance market is strong.”