The British Business Bank says there are signs of recovery when it comes to accessing funding in comparing data from 2023 to 2022.
As part of the Bank’s annual Nations and Regions Tracker, the document reported that in Q4 2022, 34% of small businesses were utilizing external finance – a decline of seven percentage points from Q4 2021. This was also a decline of 10 percentage points from the same period in 2020 – with the largest declines in 2022 being seen in grants (6 percentage points) and bank loans (5 percentage points).
The report also found that in 2022, the combined Nations and regions outside of London recorded their first year-on-year decline in the number of equity deals since Beauhurst’s data collection began in 2011 (-10%), with the total investment value in these areas also falling (-11%). Only the South West, Yorkshire and the Humber, and Wales saw an increase in deal numbers compared to 2021. Although the data is gloomy, the Bank said there are early signs in 2023 indicating the decline in equity finance deals is beginning to ease.
Catherine Lewis La Torre, Chief Executive Officer of British Patient Capital, said there is potential for more regions in the UK to become innovation hubs.
“Academic spinouts in 33 clusters across the UK represented 23% of technology and IP-related deals since 2011, with a significant share of funding going into highly innovative sectors such as advanced materials, nanotechnology and life sciences. Regions outside of the golden triangle of London, Oxford and Cambridge are also seeing stronger academic spinout activity, and investors are starting to capitalise on these new opportunities. Investment is essential if these companies are to convert promising research into commercially viable products,” said La Torre. “While early-stage funding is critical for proof of concept, patient capital is vital for the scale-up of spinout businesses over the long-term. Academic spinouts received 12% of total equity investment in 2022, representing a value of £2 billion.”
La Torre added that British Patient Capital is vital for developing the innovation ecosystem, citing specific examples of funding.
The Nations and Regions Tracker highlighted 33 clusters covering 196 local authority districts across the UK. These clusters are said to represent 93% of technology/IP-related equity deals and 96% of total equity investment value from 2011 to Q2 2023.
The UK’s top innovation clusters (ordered by number of deals) outside the golden triangle of London, Oxford and Cambridge are:
- Edinburgh-Fife-Mid and West Lothian (475 deals, investment value: £0.7bn)
- Greater Manchester (342 deals, investment value: £1.1bn)
- Greater Glasgow (257 deals, investment value: £0.4bn)
- Bristol and Bath (219 deals, investment value: £0.9bn)
- Newcastle upon-Gateshead-Sunderland-Tyneside (179 deals, investment value: £0.3bn)
The British Business Bank is launching six new Nations and Regions Investment Funds which aims to provide £1.6 billion of finance in the South West, Scotland, Northern Ireland, Wales, North of England, and Midlands.