New research reveals volume of equity investment in region’s small businesses

Smaller businesses attracted £98m of equity investment across the East Midlands in 2022, according to the British Business Bank’s annual Small Business Equity Tracker.

Published today, the Bank’s report has revealed that 58 equity deals were announced in the region – but because of the downturn in the market, the East Midlands attracted 37% less in investment compared to the previous year.

However, despite this, the number of deals in the East Midlands in 2022 remained relatively stable, and was the second highest annual total on record.

The British Business Bank allocated 2.1% of its equity deals to the region, compared to 2% across the wider equity market.

In areas outside of London, the number of deals fell by 10% in 2022 to 1,337. The total investment value in these areas also fell by 11% to £5.8bn. The decline in the number of deals is twice as fast as the decline experienced in the London region. The biggest concentration of investment is once again focused in London.

Dr Sophie Dale-Black, UK network director, Midlands at the British Business Bank, said: “2021 was an incredibly strong year for equity investment in the East Midlands and it is positive to see such a huge amount of equity investment coming into the region to help smaller businesses to grow and this shows there is still a desire for that to continue.

“But, as we start to feel the economic downturn, the decline in investment in 2022 reflected concern about the overvaluation of deals, and the effects of higher inflation and rising interest rates.

“The Bank continues to back smaller businesses in the region and will monitor these changing equity finance conditions carefully, and stands ready with programmes such as the Midlands Engine Investment Fund to support finance markets in the region.”