A total of 71 small business equity deals worth over £120 million were completed in the West Midlands in 2023, according to the British Business Bank's annual small business equity tracker.
The figure was 21% less than in 2022 but this was reflected across the overall UK market, where equity investment for small businesses has returning to 2019 (pre-pandemic) levels, following record levels in 2021 and 2022.
Notably, the West Midlands accounts for a higher share of Bank-supported deals than deals across the overall equity market.
"Despite an overall downturn in the equity finance market and continued challenges involving the higher interest rates, the Bank is encouraged to still see such a strong desire for business growth and entrepreneurship across a variety of sectors in the past year," said Tracy Sherratt, senior manager, UK Network West Midlands at the British Business Bank.
"Efficient and supportive routes to external finance opportunities, such as the recently launched Midlands Engine Investment Fund II, are vital for small businesses and play a huge role in the future growth of the West Midlands economy."
Between 2021 and 2023 the British Business Bank supported 15% of UK announced equity deals and 18% of total investment through its equity programmes.
This was a slight increase from the 2020-2022 period, when 13% of deals and 15% of investments were backed by the Bank.
The bank has focused on financing innovative high-growth companies. During 2021-2023, 48% of Bank-supported deals were in the technology/IP-based sector, compared to 42% of deals across the overall market.
In February 2024, it launched the Midlands Engine Investment Fund II, a £400 million fund aimed at unlocking additional funding to help smaller businesses in the Midlands.
Across the UK for 2023, the data showed that overall investment declined by 48% to £8.8 billion last year, in line with other equity markets, while the number of deals fell by 25% to 2,152.
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