According to the latest Barclays Entrepreneurs Index
London continues to be the entrepreneurial hub of the UK, with a 9 per cent increase year-on-year in the number of high-growth companies based there (to 1,529), and 37 per cent of all the UK’s high-growth companies. The region also leads the way for private equity-backed companies, with the highest ratio of private equity-backed companies to all companies (0.38), as well as the highest overall number of private equity-backed companies (204).
However, there was a 53 per cent decline in venture capital funding year-on-year (from £219 million in 2015 to just £102 million in 2016). Nationally, the number of companies receiving venture capital investment at its lowest levels since 2011.
London did see a significant increase in expansion funding, drastically increasing from £332 million in 2015 to £742 million in 2016. While expansion funding has increased 70 per cent year-on-year, the number of companies receiving this funding has decreased.
Nationally there is a mixed picture with merger and acquisitions at an all-time high, as well as the number of new enterprises being created 8 per cent higher than the previous year. Together, they’ve helped the Barclays Entrepreneurs Index see the strongest levels of entrepreneurial outputs since the annual research began in 2011.
However, growth levels among young enterprises are down. The number of high-growth companies is at an all-time low, 33 per cent lower than its peak in 2013, and venture capital investment is the lowest it’s been in the report’s history.
Mark Smith, Regional Director in London, Barclays Wealth & Investments, said: “In spite of a mixed national picture, it’s encouraging that London continues to lead the way for entrepreneurial activity in the UK. In an uncertain political and economic environment, the growth in expansion funding in London is positive for businesses moving from start-up to scale-up.”