More than £300 million of equity investment raised by West Midlands smaller businesses in 2024

The West Midlands also reported the largest percentage increase in investment value across all UK regions, with an increase of 142% to £301 million. This was driven by a £200 million funding round for housebuilding company Harper Crewe. In line with national trends, deal volume fell in the region to 43 in 2024, from 68 the previous year. This fall was driven largely by heightened market uncertainty in the second half of the year.

Nationally, equity investment fell slightly, by 2.5% to £10.8 billion. While this demonstrates a continuation of subdued levels of market activity since the beginning of 2023, it was still the fifth highest year on record for investment value. Deal numbers fell by 15.1% nationally.

Region feels positive impact of the Midlands Engine Investment Fund II

Across both the East and West Midlands, the British Business Bank’s Midlands Engine Investment Fund II committed over £17m in this time period, leveraging a further £10m from the private sector to help small and medium-sized businesses.

Geographically the Bank has a higher share of deals than the market in seven of the 12 English regions and devolved nations including the West Midlands. This pattern reflects the expansion in recent years of the Bank’s Nations and Regions Investment Funds, in particular the Midlands Engine Investment Fund II which provides equity finance to firms across the region.

Record breaking year for university spinouts

Several West Midlands universities are known for generating university spinouts including the University of Warwick, University of Birmingham, Coventry University, and University of Wolverhampton. These institutions actively support the commercialisation of research and intellectual property through spinout businesses and are developing industry leading technologies in sectors such as healthcare, digital, life sciences and manufacturing.

Nationally, university spinouts raised £1.9bn in equity investment in 2024, equivalent to 17% of total investment across the UK, and accounted for a record share of deals (12%). Spinout companies are a vital bridge between academic innovation and market deployment, and the British Business Bank supports these ventures more than the overall equity market.

Spinout companies raised larger rounds, with the average deal size for spinouts reaching £8.0m in 2024, more than a third larger than the overall UK average, indicating investor appetite for backing innovation. Investment in spinouts increased by 4% in 2024, despite a decline in investment across the wider equity market.

Vicky Mears, UK Network Director, North of England and Midlands at the British Business Bank, said:“The scale of ambition in the West Midlands is clearly seen in the significant rise in investment value here over the last year. While deal numbers may have dipped in line with the national trend, the value of the deals completed is a glimpse of the region’s potential. Buoyed by larger deals, the region’s firms can be confident that their growth plans can be backed in the region by the Bank and its networks including vital angel investors.

“The West Midlands is supported by a strong eco-system that continues to mature and provide opportunities. From our universities and their spin-out pedigree to our funding networks, and the backing of the Midlands Engine Investment Fund II, firms here can be inspired and supported.”

Business angels vital for early-stage equity investment

Business angels continue to be a significant source of equity investment for start up and early stage businesses with 70% of angels investing in early-stage businesses. The Small Business Equity Tracker found that two-thirds (64%) of respondents to the Bank’s survey of UK angel investors have matched or increased their investments from 2023 to 2024.

Where angels reported ‘backing underrepresented groups positively impacted investment decisions’, they were most likely to invest in female entrepreneurs, followed by entrepreneurs from ethnic minority backgrounds. More than a quarter (26%) of businesses backed by angel investors were led by all-female founders, up from 12% in 2019, further indicating increased focus on female founders.

UK investment gap with the US driven by sectors such as life sciences and advanced manufacturing

The UK had a 10% investment gap with the US between 2022-2024 after adjusting for the size of the economy. Looking across sectors, the UK is outperforming the US in financial services and clean energy, and is only marginally behind in digital technology. However, there are more acute gaps in life sciences and advanced manufacturing, two of the growth-driving sectors identified for investment as part of the UK’s modern industrial strategy.