Small Business Equity Tracker 2025

Our Small Business Equity Tracker 2025 report provides a comprehensive overview of equity market conditions for small businesses in the UK. The report is intended to inform the development of the Bank’s strategy in improving finance markets for small businesses, as well as informing wider developments in both markets and government policy.

This year, the eleventh edition of the report, consists of three sections covering:

• Chapter 1: Recent trends in SME equity finance
• Chapter 2: British Business Bank activity
• Chapter 3: The UK Business angel market

Key findings:

Equity investment for smaller businesses fell slightly in 2024, while deal numbers declined more sharply

• Equity investment in smaller businesses declined by 2.5% to £10.8 billion in 2024. The number of deals also fell by 15.1% to 2,048.
• The first quarter of 2025 saw a rise in investment value but the number of deals remains historically low.
• The trend towards larger deals has in part been driven by the AI sector where deals were 40% larger on average.
• The UK has a 10% VC investment gap with the US when adjusting for the size of the economy, although more acute gaps remain in sectors prioritised as part of the Government’s Industrial Strategy.
• London accounted for 61% of investment and 47% of deals in 2024, although the capital has seen a greater contraction in dealmaking compared to the rest of the UK.
• University spinouts raised £1.9 billion in 2024 equivalent to 17% of total investment across the market and a record share of deals at 12%.

Business angel investment appears to have fallen for the second year in a row, but remains a key funding source for early stage innovative businesses

• Investment through EIS fell by 20% to £1.6 billion in 2023/24, down 31% from its £2.3 billion peak in 2021/22.
• While the proportion of angels making 6-10 investments has risen, an increasing share reported making no investments, citing economic uncertainty as their biggest barrier.
• An increasing share of angels are focusing on supporting underrepresented groups.
• Angel investors are undertaking more investments in life sciences and energy related sectors.
• Angels are active in looking to reinvest with two fifths expecting an exit opportunity in 2024/25, with the majority looking to reinvest their gains into further early stage investments.

The Bank has supported 14% of UK smaller business equity deals and a quarter of university spinout deals between 2022 and 2024

• The Bank’s equity programmes supported around 14% of UK smaller business equity deals and 17% of total investment between 2022 and 2024.
• Half (48%) of Bank supported deals were at the seed stage between 2022 and 2024 (compared to 42% for the overall equity market).
• Bank supported deals were larger in size across all stages compared to the overall market, helping to address the funding gap in deal sizes UK companies have with their US counterparts.
• The Bank’s programmes have focused on innovative high growth companies. Between 2022 and 2024, half (49%) of Bank supported deals were in the technology/IP based sector.
• The Bank supported a quarter (24%) of all academic spinout deals between 2022 and 2024.