The number of investment deals in Wales increased by 19% in 2022 compared to the previous year. However, the total value of equity deals fell by 10%.
The data is reported in the British Business Bank’s annual Small Business Equity Tracker, published today, which also reveals that the number of UK-wide announced equity deals fell by 7% in 2022 and the total value of equity investment in small businesses declined by 11% to £16.7bn, driven by a downturn in market conditions.
The data demonstrates the first annual drop in equity deal volumes since the Beauhurst data series began in 2011.
Susan Nightingale, Director UK Network, British Business Bank, said: “In Wales we’re seeing a mixed picture for small business equity investment, more so than in other nations and regions which tell a more linear story, be that positive or negative.
”Deal volumes are up – significantly so – with Wales seeing the largest increase in deal volume of any nation or region across the UK, with most other areas witnessing volume decreases. However, this is tempered by a decrease in investment value of 10%. Although it’s worth pointing out that this is the smallest decrease of the nations and regions who also experienced a fall in investment values.”
Strong investment in clean tech, life sciences and nanotech in Wales
The Small Business Equity Tracker also outlines that while tech companies continue to receive the majority of UK equity finance, overall investment value in the sector fell by 11% in 2022. Certain sub-sectors still experienced investment growth during the year, despite the decline in overall small business equity finance. The cleantech sub-sector in particular bucked the trend of the wider market, with equity investment in this area increasing by over 50% to £0.9bn.
QLM, a Cardiff based tech firm that has developed a new technology to fix methane leaks using quantum imaging, received significant British Business Bank investment as part of a £12m funding round in 2022.
The company, which uses quantum-enabled gas imaging LiDAR (laser imaging, detection, and ranging) cameras to visualise and quantify environmental greenhouse gas emissions and methane leaks, is using the investment to advance its cameras and deploy them across the oil and gas and other markets.
Looking ahead, given rapid progress globally in the research, development and commercialisation of breakthrough technologies, there are also a number of future opportunities for the UK VC ecosystem. For example, British Business Bank analysis shows that the UK may be able to benefit from its leading position in some sectors, such as nanotechnology, and could benefit from greater investment in others, like space technology.
The British Business Bank has previously invested in aerospace manufacturing company Space Forge through its Regional Angels Programme. The Cardiff-based start-up is developing returnable satellites and aims to launch up to two missions next year.
Nearly a third of Wales’s equity deals supported by government funding
In 2022 government funds supported at least 29% of all announced equity deals in Wales. This showcases the UK and Welsh Governments’ significant contributions in making equity finance available to small businesses across devolved nations.
Overall, local, and national government funds supported 12% of all announced equity deals across the UK in 2022.
