The UK’s community of city-based tech entrepreneurs continued to attract the greatest share of private equity deals in 2016, as new research reveals the country’s most lucrative startup equity investment hotspots.
Using results from its third annual Small Business Equity Tracker, the government-financed British Business Bank (BBB) produced a league table of city councils and local authorities to demonstrate which sectors and regions were pulling in the most private investment.
Reflecting trends in previous years, technology companies bucked a general decline in investment to generate deals worth a total £1.7bn – the highest on record and almost half of Britain’s total equity market.
Looking at where startup equity investment was focused, London continued to dominate. Small companies in the capital generated funding worth £1.9bn throughout 2016. However, London’s total share of all deals declined by three per cent from the 50 per cent registered in 2015.
Meanwhile, hubs of startup activity in other cities began to emerge as strong equity clusters. City councils in Cambridge, Edinburgh, Manchester and Oxford all saw a greater number of equity deals than some local authorities in London.
Despite growth in other regions, the wider picture for the UK caused some concern. After five years of growth in startup equity investment, deals to smaller firms dropped by 18 per cent in number, and four per cent in value in 2016. The BBB attributed this decline to a wider global dip in equity finance.
Commenting on the final league table, Keith Morgan, BBB CEO, said it offered “the most accurate and complete view” of the state of Britain’s startup equity investment market.
“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,” Morgan added.
Recent figures from professional services organisation EY showed that foreign investment in UK tech companies reached its highest for ten years, with 269 foreign deals, as London maintained its position as the European capital of technology.
However, Morgan conceded that addressing a regional imbalance remained a priority for the BBB.
“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, Cornwall and the Isles of Scilly over the coming months.”
Top 25 startup equity investment hotspots in 2016
|Rank||Local authority district||Sector with highest number of deals|
|1||Hackney London Borough Council||Software|
|2||Camden London Borough Council||Software|
|3||Westminster City Council||Software|
|4||City of London||Software|
|5||Tower Hamlets London Borough Council||Business and professional services|
|6||Cambridge City Council||Software|
|7||Islington London Borough Council||Software|
|8||Lambeth London Borough Council||Software|
|9||Edinburgh City Council||Business and professional services|
|10||Southwark London Borough Council||Business and professional services|
|11||Manchester City Council||Software|
|12||Oxford City Council||Life science|
|13||Hammersmith and Fulham London Borough Council||Software|
|14||Wandsworth Borough Council||Business and professional services|
|15||Kensington and Chelsea Royal Borough Council||Business and professional services|
|16||Bristol City Council||Software|
|17||Glasgow City Council||Software|
|18||Cardiff Council||Business and professional services|
|19||Newcastle upon Tyne City Council||Business and professional services|
|20||Sheffield City Council||Industrials|
|21||Barnet London Borough Council||Software|
|22||Leeds City Council||Software|
|23||Birmingham City Council||Software|
|24||Brighton and Hove City Council||Software|
|25||Liverpool City Council||Software|
Find out which parliamentary constituencies are producing the most new businesses
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