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Private equity and venture capital investment into º£½ÇÊÓÆµ firms at all time high

New research from the BVCA shows the vast majority of recipient firms are SMEs

VC and private equity investment deals are mainly targeting SMEs(Image: Getty Images)

The amount of private equity and venture capital invested into º£½ÇÊÓÆµ firms has risen to an all-time high, according to new research.

The British Private Equity and Venture Capital Association (BVCA) - which looked at the economic contributions of more than 200 of its members - found that the total amount invested across all stages of the business life cycle, from venture to buyout, grew by more than 80% in 2021 to £17.3bn. The contribution of growth capital rose by 75% to £3.89bn.

In Wales some 39 firms, employing more than 2,500, secured investment totally £180m - around 1% of the º£½ÇÊÓÆµ total. The vast majority of firms securing equity investment in Wales were SMEs (92%), which was in line with the º£½ÇÊÓÆµ as whole.

Year-on-year, venture fundraising increased by 30%, 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 º£½ÇÊÓÆµ, 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 º£½ÇÊÓÆµ economy and follow an EY report published earlier this year which found that the industry contributed over £200bn to the º£½ÇÊÓÆµ economy, or 5% of º£½ÇÊÓÆµ GDP.

As the new Chancellor prepares to give the annual Mansion House speech, which addresses the direction of the º£½ÇÊÓÆµ’s financial services sector, the BVCA is calling on the Treasury to ensure private capital can continue to invest in, and grow, British businesses.

Michael Moore, director general of the BVCA, said: “The story of private capital investment in 2021 is one of continued growth and success, demonstrating the industry’s readiness to support British businesses, enabling them to innovate, grow, and create jobs right across the º£½ÇÊÓÆµ. It is a valuable and mainstream part of the economy and an industry which, as in previous economic downturns, has maintained active investment in the companies it supports and spent more time with them to address operational and financial considerations