Equity investment in UK technology firms increased by 27% to £4bn in 2019, according to figures published today by British Business Bank.
It is the largest amount invested in private UK tech shares since the government-owned development bank began tracking equity investment in 2011.
The Small Business Equity Tracker showed that the tech sector scooped up 47% of all equity investment in UK small and medium-sized enterprises (SMEs) last year. This was made through a total of 691 deals.
Total equity investment in UK SMEs across all sectors came to £8.5bn, reflecting the large presence of technology SMEs in the country.
Software companies attracted the most equity investment, at £2bn, while the life sciences netted investment worth £540m.
Software as a service (SaaS) companies were particularly attractive among investors, with deals in that vertical generating £2.5bn in investment.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
The UK’s successful fintech sector also proved a popular choice, with £1.8bn invested across 193 deals.
Most deals were made in London (52%), but the number of deals in areas outside of the capital increased compared to the previous year.
“This was a clear sign of investor confidence in UK smaller businesses located across the country and their potential for growth as well as the strong fundamentals of the UK economy as a place to start and grow a business,” said Keith Morgan, CEO, British Business Bank.
Equity investment in UK tech show strong growth prior to Covid-19
The figures reflect a period of strong growth in UK tech before the coronavirus pandemic. Although market growth had been softening pre-pandemic, the fate of the UK’s private equity market is less certain in 2020 as a recession looms.
“As the economic impact of Covid-19 continues to affect businesses across the country, the work of the Bank has never been more important,” added Morgan.
“Ensuring a wide range of innovative and ambitious smaller businesses continue to have access to equity investment to support their growth plans will be essential to the UK retaining its world-leading position in science, innovation and technology.”
Alice Hu Wagner, managing director of strategy economics and business development at British Business Bank said: “The British Business Bank’s Small Business Equity Tracker report illustrates a strong interest in growth stage investment in the equity market in 2019, with a particular focus on tech businesses.
“Ensuring our high-potential later stage companies have the capital they need to compete on the global stage will be crucial to powering the economic recovery.”