The value of equity investments into small firms Wales has hit a record high.
According to the British Business Bank’s latest annual Small Business Equity Tracker the value of announced equity deals in Wales rose by 44% in 2021 on 2020 to £83m. This was despite the volume of deals falling by 22% on the previous year, indicating a rise in deal sizes.
Momentum has continued into 2022, with £26m of disclosed equity investments into smaller businesses in the first quarter of the year.
Across the UK equity investment in smaller firms increasing by 88%, reaching a record level at £18.1bn, nearly double that of 2020. The number of deals also increased by 17% to 2,616. The value of deals in Wales presents less than 0.5% of the UK total.
The definition of a small firm is less than 250 employees and either a turnover of less than €50m or balance sheet total of less than €43m.
The bank, which is the economic development bank of the UK Government, has also reviewed the top 20 UK hubs for equity investment over the past three years, with Cardiff placed 10th.
The Welsh capital has an average of £34m of equity investment per year, with software the largest sector by number of deals. Swansea is ranked 19th, with an average of £7m of equity investment. The largest sector by number of deals was business & professional services.
London’s share of the UK’s equity deals increased to 49% in 2021, up from 46% in 2020 but the report showed clear evidence of strong clusters of deal activity outside of London.
Susan Nightingale, UK network director, Wales at British Business Bank, said: “A record year for equity investment in Wales demonstrates real evidence of the resilience of the Welsh financial landscape.
“Overall investment value has risen significantly, despite deal numbers being down, suggesting that some substantial deal values have been completed, led primarily by a burgeoning technology sector that is growing at pace. Having Cardiff within the top 10 equity clusters for UK deal activity further demonstrates its attractiveness for innovative and high growth companies."
Across the UK, technology companies continue to attract the most funding. The year saw 1,019 deals with £8.2bn invested into UK tech companies, doubling from £4.1bn the previous year. The UK-wide picture was reflected in Wales, where investment value rose by just over £15m in 2021, an increase of 67% on the previous year.
Additional financial support for Welsh smaller businesses is set to be available next year, with the launch of the bank’s next generation of regional funds including a new £130m Welsh fund.
The bank supported around 18% of all announced UK equity deals in 2021, with funds supported by the Bank more likely to invest in technology and IP-based businesses compared to the overall equity market. The most recently announced equity deal supported by the bank in Wales was Swansea- based Smile Plastics via its regional angels programme delivery partner, the Green Angel Syndicate.
