Last month the British Business Bank published its annual Nations and Regions Tracker which recognised that external finance use in Wales was the highest and fastest growing among all 海角视频 nations and regions in 2023.
According to the report 53% of smaller businesses in Wales were using external finance, up from 37% in 2022, undoubtedly a big leap up. Wales was also noted as experiencing the largest increase from the previous year, equating to 16 percentage points.
The picture in Wales is set against a wider 海角视频 backdrop where the use of external finance has generally rebounded following a difficult year, increasing in 11 out of the 12 nations and regions, all of whom recorded an uptick in use of small business finance. However, Wales is very much leading the way.
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So, what’s responsible for the increase in the use of external finance? Firstly, it is worth noting that 2022 was a particularly poor year, with Wales experiencing the largest year on year drop in use of external finance of all nations and regions. So a significant reverse course was very much hoped for, albeit not guaranteed. Fortunately, Wales not only snapped back, but did so with reassuring conviction.
Confidence is one reason behind the bounce. The British Business Bank’s Nations & Regions Tracker outlines how smaller businesses in Wales are some of the most confident in the 海角视频 regarding their ability and skills to obtain external finance (67% versus 60% for the 海角视频 average).
However, confidence alone isn’t the answer to the ongoing recovery, as the report painted a nuanced picture when it comes to attitudes towards the use of external finance, with some data points suggesting a certain degree of caution and concern as economic uncertainty continues to remain.
Another reason is the fact that Wales experienced the most positive equity activity of all 海角视频 nations and regions, and was particularly resilient in a year which was marked by strong declines throughout the 海角视频.
Wales experienced the lowest reduction ( minus 8%) in equity deals among all 海角视频 nations and regions between 2022 and 2023, in addition to being the sole nation/region to experience a rise in investment value, at 23% (driven by a handful of high value deals).
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This bucked the 海角视频-wide downtrend ( minus 48%). Perhaps then it is a greater awareness and availability of funding options that is assisting with increased external financing. And while bank overdrafts continue to be the most popular form of finance in Wales – we saw the largest rise in usage among smaller businesses of all 海角视频 nations and regions, going from 10% in 2022 to 16% in 2023 – other forms of finance are coming to the fore as more options come to market.
These include established programmes like the British Business Bank’s Start Up Loans programme, which recently celebrated a significant milestone when it hit £50m of loans delivered to Welsh start-ups. As well as a myriad of other options, from those supported by the British Business Bank, including Women Angels of Wales, the business angel investment syndicate for women, in which the Bank has partnered with the Development Bank of Wales.
And of course let’s not forget the British Business Bank’s £130m Investment Fund for Wales (IFW), which launched almost a year ago at the end of November 2023.
The IFW includes a range of finance options with loans from £25,000 to £2m and equity investments up to £5 million. Just a year in, a fund of this size and scope has already had a significant impact on the Welsh funding landscape, with the three fund managers responsible for administering the fund all announcing significant deals.
It is also working hard to support Wales’ spirited equity landscape, with large equity investments made into firms including two Caerphilly based companies; adventure travel firm, EverTrek and drone development specialists, Drone Evolution, as well as Cardiff based data analytics firm, Assured Insights.
Business analysts and economists will take different views on why Wales is often bucking national downward trends when measured against key economic metrics. However, what is true is that this positive growth trajectory is taking place against the backdrop of an expanding funding landscape.
Is the availability of more avenues for Welsh businesses to access finance the reason behind this? In my view, it’s not a no.
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