Smaller businesses in the West Midlands secure £338 million in equity investment in 2021

Dr Sophie Dale-Black

Equity investment in UK smaller businesses reached record levels of £18.1 billion in 2021, as revealed by The British Business Bank’s Small Business Equity Tracker 2022, published this morning (Wednesday).

UK equity investment more than doubled in 2021 compared to the previous year – the highest annual investment amount since the data series began.

Businesses in the West Midlands secured 68 deals worth £338 million of investment in 2021. The number of equity deals increased by 13 per cent compared to 2020, but investment is down 12 per cent compared to 2020.

However, the West Midlands is still at historically high equity investment levels being 93 per cent higher than 2019 levels (£115 million).

The technology and IP-based business sector has attracted the most funding, with technology and IP-based businesses securing £244 million. This is up from £28 million in 2020, a 771 per cent increase despite only an additional three deals (25) seen in the sector in 2021, indicating a notably higher deal sizes.

Medical technology also appears prominently, seeing nearly £188 million worth of investment across eight deals, up from just over £0.9 million in 2020 seen over five deals. However this can be partly explained by one single very large deal. Quanta, a medical device company received a £176m funding round in Q2 2021.

The report shows encouraging signs for regional businesses, including an 11 per cent increase in equity investment deals in the English regions outside of London and devolved nations to 1,330 deals worth a total of £6.2 billion.

Another positive sign is the 21 per cent increase in the number of deals involving an angel outside of London compared to 2020 figures – the number of deals reached 373, whilst the value of those deals increased by 87 per cent to £1 billion.

The British Business Bank’s equity programmes supported around 14 per cent of all equity deals between 2019 to 2021. The Midlands Investment Fund (MEIF), delivered by the British Business Bank, is one of the Bank’s programmes providing commercially focused support through debt and equity finance. The Fund has now invested over £170m into small businesses across the Midlands since its launch in 2017.

A total of 769 investments were made in 546 businesses throughout both the West and East Midlands. An additional £270m of private sector co-investment has also been leveraged as a result of the MEIF’s support.

Dr Sophie Dale-Black, UK network director, Midlands at the British Business Bank, said: “The West Midlands is home to many innovative businesses that are hungry for growth, shown by a healthy level of investment and deals secured. This is a clear sign of investor confidence in the region’s smaller businesses following the pandemic.

“The emergence of tech in the region is welcome and reflects the many initiatives underway locally to support this cluster.

“Whilst there are signs of this momentum continuing in early 2022, smaller businesses will be mindful of potential economic headwinds in the coming months and year. We will continue to provide businesses with the access to finance they need to start up and thrive in the West Midlands.”