More than £90 million of equity investment was raised by smaller businesses across the East Midlands in 2024, according to the British Business Bank’s annual Small Business Equity Tracker. The region accounted for 2.9% of all equity investment activity by the Bank between 2022 and 2024.
The East Midlands was one of three regions to experience growth in both deal numbers and investment value across the UK along with Scotland and the North West in 2024. This increase in investment came through 55 deals with the value of equity investment increasing by 26.1% and the number of equity deals increasing by 7.8%.
Region feels positive impact of the Midlands Engine Investment Fund II
Across both the East and West Midlands, the Midlands Engine Investment Fund II committed over £17m in the Midlands in this time period, leveraging a further £10m from the private sector to help the region’s small and medium-sized businesses.
Record breaking year for university spinouts
A number of East Midlands universities are known for generating university spinouts, including the University of Nottingham, University of Leicester, Loughborough University, and University of Lincoln. These institutions actively support the commercialisation of research and intellectual property through spinout businesses and are developing cutting-edge technologies in sectors such as healthcare, agriculture and the environment, digital, 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 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 potential of the East Midlands is clearly seen in the significant rise in both investment value and deal numbers here over the last year. Investment values climbed by more than a quarter while deal numbers showed marked growth.
“These results demonstrate the strength and resilience of the East Midlands market. The region’s firms can be buoyed by these results and be confident that their growth plans can be backed in the region by the Bank and its networks including vital angel investors.
“The East 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.
