The UK's small companies are set to raise more than ever to fund growth

 
Madeline Ratcliffe
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Small companies have been raking in investment (Source: Getty)

The UK's emerging companies are on track to raise record levels of capital funding this year, with the total for the last nine months at £851m, catching up with the full year total for 2014 of £930m.

Over the three months to the end of September, £330m was raised to grow smaller business, up £110m from the three months before, which was a particularly low quarter.

The data measures investments in SMEs of between £2m and £10m.

Kingston Smith, the accountancy firm which compiled the data in its UK Growth Capital report, predicts the total for 2015 could top £1bn, as investors put behind them the uncertainty that shrouded the General Election in May, and was responsible for the low figures, £220m of investment, over the second quarter.

Jonathan Garbett, corporate finance director at Kingston Smith said: “We’ve seen continued strong growth of capital raising this year in the UK with the third quarter being particularly robust, preceded by a weaker second quarter and a record level of activity in the first three months of the year.

“In addition, institutional activity has made up an even greater proportion of activity than usual. Changes to the venture capital trust rules set out in the Finance Bill 2015, which are due to be approved shortly, are likely to increase the funds available for these transactions in the long term.

“Growth capital is vital as the ability of companies to access funds for growth is a key consideration for the UK government.”

Over the last three months institutional investment activity increased, accounting for 80 per cent of funds raised.

The reports suggests this is due to “increasing appetite on the part of both investors and companies to involve investment professionals rather that deal directly, and added interest on the part of institutions with substantial assets under management providing growth capital to emerging companies.”

The report also points to the growing trend for crowd funding, and suggests that the number of crowd-funded transactions is increasing, accounting for £2m-worth of investment.

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