Smaller businesses in the West Midlands secured over £120m in equity investment in 2023

This was 21 per cent less compared to the previous year, but this was reflected across the overall market, which has seen equity investment for smaller businesses returning to pre-pandemic levels, following record levels of activity in 2021 and 2022.

The West Midlands accounted for 3.2 per cent of all smaller business equity deals between 2021 and 2023. This proportion was higher when looking at British Business Bank supported equity deals, with the West Midlands accounting for 4.7 per cent of deals during the period.

Full year data from across the UK shows that overall investment declined by 48 per cent to £8.8 billion in 2023, in line with other equity markets, while the number of deals fell by 25 per cent to 2,152.

Tracy Sherratt, senior manager, UK Network West Midlands at the British Business Bank, said: “The West Midlands is a thriving area that the British Business Bank is keen to support through equity investments and this is reflected in the 71 deals in 2023 showcased in today’s Small Business Equity Tracker.

“Despite an overall downturn in the equity finance market and continued challenges involving the higher interest rates, the Bank is encouraged to still see such a strong desire for business growth and entrepreneurship across a variety of sectors in the past year.

“Efficient and supportive routes to external finance opportunities, such as the recently launched Midlands Engine Investment Fund II, are vital for small businesses and play a huge role in the future growth of the West Midlands economy.”

In February 2024, the British Business Bank launched the Midlands Engine Investment Fund II, a £400m fund aimed at unlocking additional funding to help smaller businesses in the Midlands prosper and thrive.

Since 2014, more than 21,000 equity deals have been completed, collectively providing over £90bn of equity finance to support the growth of innovative smaller businesses. While the equity market has seen two consecutive years of contraction, investment values have increased by 182 per cent over the last 10 years, with deal numbers 42 per cent higher.

Between 2021 and 2023 the British Business Bank supported 15 per cent of UK announced equity deals and 18 per cent of total investment through its equity programmes. This represented a slight increase from the 2020-2022 period, when 13 per cent of deals and 15 per cent of investments were backed by the Bank.

The Bank’s programmes have focused on financing innovative high-growth companies. During 2021-2023, 48 per cent of Bank-supported deals were in the technology/IP-based sector, compared to 42 per cent of deals across the overall market.

The Bank is also more likely to fund university spinouts; these accounted for 13 per cent of Bank-supported deals, compared to 9% across the wider equity market, with the leading contributors being British Business Investment’s Regional Angels Programme, the Managed Funds Programme, and British Patient Capital.