Stability returning to UK small business investment with South East still a focus

Investment in the UK's smaller companies is stabilising and the South East offers a thriving opportunity, according to new data from the British Business Bank.
The region saw £866 million of equity investment in 2023, second only to London, but that was still down 56% on the previous year, amid the tighter macroeconomic environment and higher interest rates. The city of Oxford continues to be a global player in the life sciences sector.
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Overall, across the UK, investment in small businesses has returned to 2019, or pre-pandemic, levels.
"This year’s Small Business Equity Tracker report shows that within the UK’s investment landscape, the South East region continues to offer thriving investment opportunity and potential for small business growth with the second highest level of investment value in 2023, outside of London," said Steve Conibear, UK network director, at the British Business Bank.
The report showed that over the last decade Oxford was home to 5% of European VC investment in life sciences, outperforming all UK cities except London and Cambridge.
And the so-called 'Golden Triangle' of London, Oxford and Cambridge, received £14.1bn of European life sciences VC investment in the last 10 years - a quarter (24.1%) of the total.
Investment across the UK declined by 48% in full year 2023 to £8.8bn in 2023 in the UK, in line with other equity markets, while the number of deals fell by 25% to 2,152.
But equity investment for smaller businesses has remained at over £2bn in each of the last five quarters, and while the equity market has seen two consecutive years of contraction, investment values have increased by 182% over the last 10 years, with deal numbers 42% higher, the report showed.
Between 2021 and 2023, the British Business Bank supported 15% of UK equity deals and 18% of total investment through its equity programmes.
In that period, 48% of the bank-supported deals were in the technology/IP-based sector, compared to 42% of deals across the overall market.
The Bank is also more likely to fund university spinouts, with these accounting for 13% of Bank-supported deals, compared to 9% across the wider market, with leading contributors being British Business Investment’s Regional Angels Programme, the Managed Funds Programme, and British Patient Capital.
The British Business Bank is the UK government's economic development bank. Established in late 2014, its mission is to drive sustainable growth across the UK and to enable the transition to a net zero economy, by improving access to finance for smaller businesses.