Equity investment in the UK’s smaller tech businesses soared to £4bn last year, the highest figure on record – and despite a coronavirus-induced slowdown, deals are still being done.
The highest investment total ever meant that Britain’s tech companies enjoyed 27 per cent more funding than the previous year, according to the British Business Bank’s annual Small Business Equity Tracker report.
It came as part of a wider total equity investment of £8.5bn in the UK’s smaller businesses, a 24 per cent year-on-year rise.
The data also reflected a record number of deals, rising four per cent to 1,832 with deal sizes up by 21 per cent.
The coronavirus lockdown has slowed the market down considerably in recent months; the bank’s analysis of Beauhurst data showed that 43 per cent of all UK equity backed companies are at least moderately affected by changes in delivery and demand for their products and services.
Nevertheless, Matt Adey, director of economics at the British Business Bank told City A.M. that there had been “a fair bit of activity in April and there were still deals being done even in May,” despite the lockdown.
“That’s not to say that there wont be an impact, but for many equity finance is a bit of a longer term game.”
He said it would be impossible to predict when the market would return to 2019 levels, but said “the market hasn’t stopped, it’s still going. There are still many opportunities. It is a positive sign.”
On the wider market, Alice Hu Wagner, managing director of strategy economics and business development, added that the figures for 2019 showed “a strong interest in growth stage investment in the equity market, with a particular focus on tech businesses”.
“Ensuring our high-potential later stage companies have the capital they need to compete on the global stage will be crucial to powering the economic recovery.”