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South West equity finance markets grow at the fastest rate in the UK

24 November 2022
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The British Business Bank’s second annual Nations and Regions Tracker, published today, showed strong signs for growth of equity finance in the South West.

While every region and nation outside London apart from the West Midlands saw an increase in equity investment in 2021, the South West showed the greatest growth. During the period, investment value in the region was up 357 per cent to £820 million over 130 deals. This strength carried on into the first half of this year, with nearly £388 million invested over 77 identified deals, however current economic conditions are likely to see equity markets slowing over the remainder of the year.

Four in 10 businesses were using external finance in the South West in the four quarters to Q2 2022, down four percent from the previous quarter, having been at 45 per cent a year earlier. Core debt products remain the most used and widely available across UK nations and regions.

Steve Conibear, UK Network Director, South and West of England at the British Business, said: “Smaller businesses in the South West showed a positive appetite for equity finance during 2021, with the highest increase in value of equity investment in the UK. It is also encouraging to see evidence of a number of future net zero clusters emerging in the region, which is already known as a hotbed of innovation and technology.

“External finance can be an important tool for smaller businesses to promote growth and stability as they navigate the current economic conditions. We will continue support smaller businesses in the South West through the launch of our new £200m South West Investment Fund next year.”

The Nations and Regions Tracker found that equity investment in net zero sectors has grown at an even faster rate than overall UK equity markets. Since 2011, £6.9bn of equity investment has gone into net zero-aligned UK smaller businesses across 1,307 deals.   The share of deals which are in net zero sectors has grown every year since 2018 rising from 5% in 2018 to 12% in first half of 2022.

Net zero sectors are those that are likely to see growth related to the net zero transition and include: clean technology, hybrid and electric vehicles, biomass and biofuels, artificial meat and meat substitutes, and smart energy

The growth in net zero-related equity investment has occurred across the UK’s nations and regions, with 69% of deals and 67% of investment taking place outside of London between 2011 and H1 2022. These equity finance flows have the potential to spark clusters of net zero innovation, including in the South West. There were 20 net zero deals worth a total of £173m in Bristol since 2011, representing 22% of net zero deals in the UK and 66% of investment in the South West.

New South West Investment Fund launching next year

A £200 million investment fund to support the growth of small and medium-sized businesses across the South West of England is on course to be launched in the first half of next year.

It aims to tackle an identified funding gap across the South West and increase the supply and diversity of early-stage finance for smaller businesses.

The South West Investment Fund is the first in a series of new Nations and Regions Investment Funds being launched by the British Business Bank which will deliver a £1.6bn commitment of new funding to drive sustainable economic growth across the UK.

The South West Investment Fund will offer a range of commercial finance options with small loans from £25,000 and equity investment up to £5m. The new fund will cover the entire South West region including Bristol, Cornwall and the Isles of Scilly, Devon, Dorset, Gloucestershire, Somerset and Wiltshire.

The South West Investment Fund will have a demonstrable presence across the region linking up with the existing small business finance ecosystem to increase reach and create an impact beyond the funds, helping to boost productivity, innovation and jobs


Nicky Godding is editor of The Business Magazine. Before her journalism career, she worked mainly in public relations moving into writing when she was invited to launch Retail Watch, a publication covering retail and real estate across Europe.

After some years of constant travelling, she tucked away her passport and concentrated on business writing, co-founding a successful regional business magazine. She has interviewed some of the UK’s most successful entrepreneurs who have built multi-million-pound businesses and reported on many science and technology firsts.

She reports on the region’s thriving business economy from start-ups, family businesses and multi-million-pound corporations, to the professionals that support their growth and the institutions that educate the next generation of business leaders.

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