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London leads the way for equity investment but UK tech clusters are on the rise

New figures from the British Business Bank have demonstrated, rather predictably, the capital’s dominance when it came to equity investment last year as high growth tech businesses gobbled up nearly half (49%) of the UK’s total equity investment.

In total, eight London boroughs feature in the British Business Bank’s top 10 list of local authority areas for equity investment deals in 2016 with Hackney coming out on top followed by Camden and Westminster.

The figures, released as part of the investment bank’s third annual Equity Tracker, highlight the £1.9bn in equity investment businesses in London received last year, this despite a 22% decline in the number of deals that went through.

However, the surge of up and coming tech clusters right across the UK has helped take a small bite out of the capital’s overall deal share, with the likes of Cambridge, Edinburgh, Manchester and Oxford all helping to reduce London’s share of UK deals to 47% from 50% in 2015.

Keith Morgan, Chief Executive Officer at the British Business Bank, said: “This research provides the most accurate and complete view of the state of the SME equity finance market in the UK for growing businesses.

“While the market here followed the global downward trend in equity investment, there are positive signs of innovative growing businesses receiving significant investment in clusters across the UK.

Oxford’s life science expertise and Cambridge’s thriving ecosystem of artificial intelligence (AI) and general tech expertise have helped catapult both cities to respectable finishes in the top 15, while Manchester’s burgeoning reputation as the tech centre of the Northern Powerhouse saw it level with Southwark in tenth place.

Despite the strong regional performance, Morgan still believes there is work to be done addressing the stark regional funding and investment disparities that still prevail, and pointed towards its Northern Powerhouse fund as an example of moves by the bank to redress the balance.

Morgan explained: “Regional disparities continue, however, and that’s something we’re working hard to address. We launched our £400m Northern Powerhouse Investment Fund earlier this year, and this is already providing funding to fund managers who are investing in local businesses.

“We will be introducing similar initiatives for the Midlands and Cornwall and the Isles of Scilly over the coming months.”

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