Changes in funding provided by the British Business Bank, including support for the UK’s nations and regions, are a ‘major win’ for the economy.

A £6.6 billion boost for start-ups and scale-ups from the BBB was announced in the Chancellor’s Spending Review and the BBB has now unveiled a programme of investment.

The British Business Bank Industrial Strategy Growth Capital is a £4bn fund to be invested through the its existing capabilities across the eight growth-driving sectors – advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services – crowding in another circa £12bn of private capital.

It is committing £2.6bn of capital to help drive the growth of smaller businesses across the UK, partly through the City regions.

Michael Moore, chief executive of the British Private Equity & Venture Capital Association (BVCA), said:  “A major capital boost and more freedom for the BBB was the major win from the Spending Review for UK growth.

“It’s great to see the BBB is cracking on with rolling out exciting programmes that can unlock the potential of ambitious businesses in every corner of the UK.

“The changes to the BBB’s remit, enabling a number of strategic large investments in priority sectors represents an important step towards more high growth companies attracting the capital they require, and tackling the scale up gap – something that the BBB’s previous remit wouldn’t have allowed it to do.” 

On the announcement of new Nations and Regions investment funds, Mr Moore added: “Specific funding to support high potential businesses across the UK’s nations and regions is particularly welcome as it will help to narrow imbalances in regional investment. “

He also welcomed the Investor Pathway Capital Programme, targeted at diverse and emerging fund managers.

He said: “New programmes that support diverse and emerging fund managers will enable a wider pool of talent to break into the private capital industry.

“Greater diversity of talent and experience will be a huge benefit to the industry and wider economy.” 

Louis Taylor, CEO, British Business Bank, said: “To deliver the government’s growth mission it is also critical that our most promising entrepreneurs can access the finance they need to grow their businesses, no matter what their background or where they are located across the Nations and regions of the UK.”

Equity deals rise in Scotland

Smaller firms in Scotland saw increased levels of equity investment in 2024 as London became less dominant and investment across the UK declined, according to new research from the British Business Bank.

The Bank’s annual Small Business Equity Tracker showed that equity deals involving small businesses in Scotland totalled £507 million last year, up 28.3% on 2023’s £395m. The number of deals also picked up by 13.6% to 201 in 2024, increasing from 177 in 2023.

Compared with the rest of the UK, which saw an average 15.1% decline in the number of deals and a 2.5% fall in investment values in 2024, Scotland has shown signs of resilience against a difficult economic backdrop. London’s share of investment activity dropped to 61%, compared to a 2020 peak of 73%.

More than £12 million in investment was delivered to smaller businesses in sectors ranging from life sciences and biotechnology to manufacturing, as a result of the £150m Investment Fund for Scotland launched in late 2023. The fund offers loans ranging from £25,000 to £2m and equity investments up to £5m.

Across the UK, business angels continue to be a significant source of equity investment for start up and early-stage businesses, with 64% of respondents to the Bank’s survey of UK angel investors matching or increasing investments in 2024. 

The BBB has been working in partnership with Mint Ventures in Scotland since 2023 to support and accelerate the development of female-led angel syndicates, increase the number of investors and boost the flow of capital to female-founded companies. With over 28 angel investors now onboarded and deals completed worth a total of more than £5.05million.

Susan Nightingale, director, UK Network, Scotland at the British Business Bank, said: “It is highly encouraging to see Scotland bouncing back and going against the trends seen elsewhere, given that 2024 was a challenging year for the UK equity finance market as overall investment values and the number of deals declined.

“Investment activity has picked up significantly compared to the previous year, with several new deals agreed through the Investment Fund for Scotland and Maven Equity Finance and angel investment also on the rise.”

The report also shows that 2024 was a record year for university spinouts in the UK, accounting for £1.86 billion in equity investment across 243 deals and 17% of total equity funding. Academic institutions in Scotland made a significant contribution to the increased level of activity.

The University of Edinburgh raised the second highest number of deals (18) – behind the University of Cambridge’s 34 and joint second place with the University of Oxford.

The University of Glasgow also recorded ten deals in 2024, cementing Scotland’s position as a leading area for breakthrough companies outside of the Golden Triangle (institutions in Oxford, Cambridge, and London).