New data from the British Business Bank has revealed that UK smaller companies received a record £8.8 billion of equity investment despite the disruption of both Covid and Brexit. This record growth looks set to continue in 2021 with £4.5 billion invested in the first three months of the year already, while research from IW Capital – a private equity house – reveals that 16% of UK investors are looking to back startups and SMEs in 2021.
This investment support comes at a time of record optimism in the SME sector, with three quarters of CEOs expecting overall economic conditions in the UK and Ireland to improve in the next 12 months. The combination of optimism and investment backing could spell a perfect storm for growth in the sector that is so vital to the UK economy. SMEs make up 99.9% of private sector business and employ around 60% of the workforce.
Luke Davis, CEO of IW Capital discusses what this means for SMEs:
“This record level of investment is great news, and from our experience through the last year and a half, not at all surprising. There has never been more demand to support SMEs and startups in their growth journey, whether that be through the Enterprise Investment Scheme or any other route to provide funding.
“The trend to invest in smaller companies is by no means over either, our research demonstrates that a significant proportion of the UK’s investment community are actively investing in these firms. Opportunities in this sector exist not only for great returns but also to make a real difference in the life and growth of a business. something that is becoming more important for investors as they take a more altruistic approach.
“IW Capital invested in at least six different growth SMEs during 2020 and the majority of them have grown at a rapid pace thanks to our support. The growth of these businesses ranges from sustainable packaging that pivoted to produce plastic-free PPE to apps making hospitality service possible during a pandemic. The thing they all have in common is passion, determination and talent, all qualities that the UK entrepreneurial sector has in spades. ”