Investment in smaller businesses in the East Midlands is on the rise

Sophie Dale-Black

By Dr Sophie Dale-Black (director, Midlands – UK network at the British Business Bank)

2021 was an exceptional year for UK equity finance, with investment in smaller businesses reaching nearly double its 2020 level at £18.1bn.

This is good news for businesses, as the country continues to recover from the impacts of the COVID-19 pandemic and tackles new economic headwinds.

Encouraging signs for the East Midlands

The British Business Bank recently launched its Small Business Equity Tracker for 2022, revealing an encouraging rise of investment in the region.

Smaller businesses in the East Midlands secured £154m of investment across 50 deals in 2021. This represented a 92 per cent increase on 2020, while the number of deals increased by 32 per cent.

Tech is leading the way

The technology sector attracted the largest amount of investment in the East Midlands at £35.2m, up by 188% from £12.2m in 2019. From a low base, the number of deals are rising gradually across most tech sectors and it’s encouraging to see the value of deals increasing within life sciences, trebling compared to 2019 to £12.8m and clean tech increasing to £7.9m, from less than £100,000 invested in 2019. Across the UK, investment in environmentally friendly clean technology was worth £436m, up 38 per cent from the previous year.

Although this data signals investor confidence in the region, businesses outside of London, including in the East Midlands, are still underrepresented in terms of their share of equity finance.

Last year, 1,286 deals worth £11.9bn took place in London, representing 49 per cent of the UK’s total number of equity deals and 66 per cent of total investment – both a slight increase on 2020’s figures (three and one per cent respectively).

This was however due to stronger growth in London than the rest of the UK, rather than a decline in the activity in the other regions in 2021. The British Business Bank is working to identify and reduce regional imbalances in access to finance through a series of programmes to support supply of and demand for finance across the UK regions.

In the Midlands, our Midlands Engine Investment Fund (MEIF) has provided key financial support for SMEs throughout the East and West Midlands, with more than £150m of investment since 2017, with an additional £251m of private sector co-investment leveraged as a result of the MEIF’s work.
Our Regional Angels Programme commits funds for investment alongside business angels and other early-stage equity investors, acting as a catalyst to bring longer-term capital to smaller businesses with growth ambitions.

Commitment to smaller businesses

The East Midlands is a region of innovative business, covering a whole host of sectors that are striving for growth. The rising level of investment is a big indication of confidence in the area after the uncertainty and adversity they have faced over the past few years.

Smaller businesses will continue to be mindful of economic challenges in the coming months, the British Business Bank will be working to help companies looking to grow access the finance they need to succeed whatever the stage of their development

Information can be found, along with independent and impartial advice, on the British Business Bank Finance Hub – which outlines all the financing options available to small businesses.