The proportion of total UK equity finance going to smaller businesses in the North East is in line with the region’s share of UK high growth businesses, at three per cent in 2020, according to the British Business Bank’s Small Business Equity Tracker, published today.
The North East saw a total of £123m invested in 2020, a 75 per cent increase from £70m invested in 2019. The number of announced equity deals in the region also increased by 38% to 69 in 2020.
The UK’s thriving tech sector remains the most attractive to investors, accounting for 46% of total equity investment in UK smaller businesses. In the North East, 41% of equity investment went to the tech sector in 2020.
The Small Business Equity Tracker, which is compiled annually and is in its seventh year, also revealed that regional imbalances were moving in the right direction.
In the overall equity market, the proportion of investments going to companies in London has reduced from 50 per cent in 2015 to 47 per cent in 2020. The volume of equity deals from British Business Bank going to companies in London reduced further from 63 per cent in 2015 to 42 cent in 2020. This shift signals a positive change for regional businesses and has been driven by the activity of the Northern Powerhouse Investment Fund and the Bank’s range of equity programmes.
Despite this, the North more widely remains under-invested by the overall equity market, with just 12 per cent of all deals done with small businesses across the North West, North East and Yorkshire and Humber in 2020. This is lower than the area’s 21 per cent share of UK high-growth businesses.
Dr. Sophie Dale-Black, UK Network Director, North of England, at British Business Bank, said: “We remain committed to supporting ambitious businesses here in the North East and there have been huge success stories in the region with many real opportunities for equity investors looking to strengthen their portfolios.
“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 the North East and unlock growth for smaller businesses.”
British Business Bank is a UK Government-owned development bank that supports smaller businesses to access the finance they need to grow and prosper.