Venture capital has £8.4bn ready to invest in fast-growth businesses

British Business Bank interim CEO Catherine Lewis La Torre

Equity investments into growth stage companies increased by 39 per cent to ₤ 5.3 bn. There are indications that equity investment in seed-stage companies was softening even prior to the Covid-19 pandemic hit. The quantity of investment into seed phase business declined by 1 per cent in 2019. This is compared to seed phase investment increasing every year since 2011, as financiers play safe and invest in already-proven organisations.

British equity capital funds have ₤ 8.4 bn all set for investment in fast-growth organisations, according to British Business Bank research.

The equity capital cash might offer crucial financial investment for innovative business as the country emerges from the Covid-19 crisis.
Equity financial investment in unlisted small companies rose by 24 per cent to ₤ 8.5 bn in 2019,– the highest quantity tape-recorded, according to the banks newest Small Business Equity Tracker — and a record number of deals, rising 4 percent to 1,832, with deal measure by 21 percent.
And equity investment in smaller UK tech organisations increased by 27 percent to ₤ 4bn last year. The UK tech sector accounted for 47 percent of total equity financial investment in UK SMEs through 691 offers in 2019.
Within tech, those sectors receiving the largest share of deals were software application (425 offers worth ₤ 2bn) and life sciences (78 deals worth ₤ 540m).
The tech verticals attracting the greatest quantity of equity financial investment in 2019 were software-as-a-service (471 deals worth ₤ 2.5 bn), fintech (193 offers worth ₤ 1.8 bn) and AI (173 deals worth ₤ 880m).
In particular, SaaS companies showed highly appealing to equity financiers, with financial investment worth increasing by 69 percent in 2019 compared to 2018.
>> See likewise: What is the British Business Bank?– a Growth Business guide
Increased growth-stage investment
Growth-stage follow-on deals were the primary chauffeur of increased financial investment.

Equity financial investments into growth stage business increased by 39 percent to ₤ 5.3 bn. The average growth stage deal size, where the UK has dragged the United States, also grew by 27 per cent, driven by a little number of extremely large deals.
>> See also: British Business Bank ₤ 2.5 bn development fund could drift on stock exchange
Seed phase financial investment drops 1%.
There are signs that equity investment in seed-stage business was softening even prior to the Covid-19 pandemic hit. The amount of financial investment into seed phase business decreased by 1 per cent in 2019.
Talking about the record amount of dry powder prepared to deploy in UK organisations, British Business Bank interim CEO Catherine Lewis La Torre said: “Capital yet to be invested is collectively worth ₤ 8.4 bn, equating to 12 to 15 months of financial investment based upon 2018 and 2019 investment levels.
” In addition to the record amounts of venture dry powder, Im delighted to see that for the very first time that follow on funding– financial investment in business that had already gotten equity finance– outstripped newbie deals, which reveals our innovative companies have the ability to raise numerous funding rounds.”.
British Business Bank programmes are estimated to have supported 11 percent of UK equity deals in between 2017 and 2019.
Additional reading.
British Business Bank puts EUR100m into European VC fund of funds
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