2021 was a record year for equity investment in Wales’s smaller businesses according to the British Business Bank’s annual Small Business Equity Tracker 2022 published this week (June 22).
The report outlines how the investment value of announced equity deals in Wales rose by 44% on 2020 values to £83m, despite the volume of deals falling by 22% on the previous year, indicating deal sizes increased in Wales in 2021.
Momentum has continued into Q1 2022, with £26m equity investment in smaller businesses in Wales.
Across the UK the strong equity picture was mirrored, with equity investment in smaller UK businesses increasing by 88%, reaching a record level at £18.1bn, nearly double that of 2020. The number of deals also increased by 17% to 2,616.
Cluster activity
Analysis from the Bank also included a review of the top 20 UK hubs for equity investment over the past three years, with Cardiff placed at number 10.
The Welsh capital has an average of £34m of equity investment per year, with software the largest sector by number of deals.
Swansea also features at number 19, with an average of £7m of equity investment. The largest sector by number of deals was business & professional services.
London’s share of the UK’s equity deals increased to 49% in 2021, up from 46% in 2020 but the report showed clear evidence of strong clusters of deal activity outside of London.
Susan Nightingale, UK Network Director, Wales at British Business Bank, said: “A record year for equity investment in Wales demonstrates real evidence of the resilience of the Welsh financial landscape.
“Overall investment value has risen significantly, despite deal numbers being down, suggesting that some substantial deal values have been completed, led primarily by a burgeoning technology sector that is growing at pace. Having Cardiff within the top 10 equity clusters for UK deal activity further demonstrates its attractiveness for innovative and high growth companies.”
Technology continues to dominate the equity landscape
Across the UK, technology companies continue to attract the most funding. The year saw 1,019 deals with £8.2bn invested into UK tech companies, doubling from £4.1bn the previous year.
This national picture is reflected in Wales, where investment value rose by just over £15m in 2021, an increase of 67% on the previous year.
Additional financial support for Welsh smaller businesses is set to be available next year, with the launch of the Next Generation of Regional Funds including a new £130m Welsh fund administered by the British Business Bank to further tackle geographical funding gaps.
The Bank supported around 18% of all announced UK equity deals in 2021, with funds supported by the Bank more likely to invest in technology and IP-based businesses compared to the overall equity market. The most recently announced equity deal supported by the Bank in Wales was Swansea based Smile Plastics via its Regional Angels Programme delivery partner, the Green Angel Syndicate.
