British businesses are increasingly turning to private capital to grow, with the total amount invested in UK companies by private equity and venture capital rising to an all-time high, according to a new report published by the British Private Equity and Venture Capital Association (BVCA).
British businesses are increasingly turning to private capital to grow, with the total amount invested in UK companies by private equity and venture capital rising to an all-time high, according to a new report published by the British Private Equity and Venture Capital Association (BVCA).
The research, which looked at the economic contributions of more than 200 BVCA members, found that the total amount invested across all stages of the business life cycle, from venture to buyout, grew by more than 80 per cent in 2021 to £17.3 billion. The amount of growth capital invested in UK companies had risen by 75 per cent to £3.89 billion.
Of the 1,320 businesses which received funding, nine in ten were small or medium-sized, showing the importance of private capital to the UK’s entrepreneurs and start-ups. Year-on-year, venture fundraising increased by 30 per cent, showing the increasing investor interest in backing firms which invest in the earlier stages of a business lifecycle.
With new hubs of innovation developing across the country, the report found that almost two-thirds of businesses receiving investment were outside London – and nearly two-thirds in every pound invested in 2021 was also outside the capital.
The new figures offer further evidence of the value of private equity and venture capital to the UK economy and follow an EY report published earlier this year which found that the industry contributed over £200 billion to the UK economy, or five per cent of UK GDP.
As the Chancellor prepares to give the annual Mansion House speech, which addresses the direction of the UK’s financial services sector, the BVCA is calling on HM Treasury to ensure private capital can continue to invest in, and grow, British businesses. In a letter to the Chancellor, the BVCA outlined three core issues for the Treasury to prioritise.
The BVCA believes that support for new sources of UK capital, additional efforts to promote innovation and ensuring access to international talent these will encourage increased commitment to businesses right across the UK, which in turn are creating jobs, generating economic and social value for the communities they operate within, and innovating to address pressing societal issues such as climate change.
