Scotland got 3% of UK equity finance, London 66%

Mark Sterritt of the British Business Bank

New analysis from the British Business Bank reveals that smaller businesses in Scotland raised equity finance more than any other part of the UK outside of London last year.

Figures from the bank’s annual Small Business Finance Markets report show that there were 242 equity deals in Scotland in 2020, 12% of the UK total.

Only London, with 965 deals – 47% of the total – had more, with the South East of England third at 188.

However, despite the number of equity deals, Scottish businesses accessed a low share of the total investment value at just 3% – £283 million.

London attracted two-thirds (66% – £5.8 billion) of equity finance, while equity investment in the South East of England represented 9% (£792 million) and the East of England 7% (£595 million).

The British Business Bank is the UK government’s economic development bank.

The figures come after increased initial public offering (IPO) and crowdfunding activity in Scotland.

Linlithgow’s Calnex was the first Scottish IPO in two years when it made its market debut in October, followed by AMTE Power and Parsley Box.

TC BioPharm, Pawprint and Celtic Renewables have all also in recent months completed crowdfunding campaigns.

Mark Sterritt, UK Network Director – Devolved Nations at the British Business Bank, said: “Equity finance can be a great source of funding for businesses with significant growth potential.

“It is encouraging to see so many smaller businesses in Scotland use it as a tool to grow their businesses, highlighting the rich ecosystem that is emerging.

“Combined with recent IPO and crowdfunding activity, the increasing number of smaller businesses raising equity finance for the first time, or opting to do so again, suggests strong opportunities and a possible changing of attitudes towards this form of funding.

“The lower value of deals in Scotland, nevertheless, suggests businesses may not be raising all the finance they need to continue on their growth journey and so we continue to work to raise awareness amongst smaller businesses of the finance options available to them.

“Through our fund managers and finance delivery partners, the British Business Bank provides a range of programmes for smaller businesses looking at equity finance, including our Regional Angels programme and Enterprise Capital Funds.

“The Future Fund programme, which closed in March, has also invested £8.6 million in innovative Scottish companies.

“Future Fund: Breakthrough, which will invest alongside venture capital funds into R&D intensive companies, launches this summer.”