Small businesses in the West Midlands received more than £382 million in equity investment in 2020 – but the region still remains under-represented.
The British Business Bank’s Small Business Equity Tracker 2021 – which was published today – revealed that equity deals in the region jumped by 266 per cent in 2020, from £104 million in 2019.
But despite the large annual increase, the West Midlands remains under-represented in its share of UK equity investment, compared to the region’s share of UK high-growth businesses.
The Equity Tracker report also found that seven per cent of British Business Bank fund supported equity deals went to companies in the West Midlands in 2020, ahead of the overall equity market at just three per cent.
The bank says the shift signals a positive change for regional businesses and has been driven by increased activity from the Midlands Engine Investment Fund (MEIF) and the bank’s range of equity programmes.
Across the region, the share of equity deals involving MEIF has increased from 20 per cent of all announced deals in 2019 to 25 per cent in 2020. The Fund has provided finance to more than 350 smaller businesses across the Midlands.
Dr Sophie Dale-Black, UK network director for the British Business Bank in the Midlands, said: “The West Midlands is home to many innovative and ambitious businesses which we can see through the notable increase in value of equity investment being secured to unlock growth, develop new technologies and bring products to market.
“While it is positive that there appears to be a continued shift away from regional imbalances in terms of access to finance, it is clear that there is a long way to go to fully realise the potential in the West Midlands and unlock further growth for smaller businesses.”
Nationally, equity investment increased by nine per cent to a record £8.8 billion in 2020.
According to the report, the key contributing factor to the growth of UK equity finance deployed has been increasing investment in deep tech companies, which has grown rapidly in the past five years – rising 291 per cent to £2.3 billion in 2020.
And the strong momentum in the UK is continuing into 2021, with the total equity investment in smaller businesses in the first quarter of the year reaching £4.5 billion – the highest amount ever recorded in a single quarter.