Small Business Equity Tracker 2026

Our Small Business Equity Tracker 2026 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 twelfth edition of the report, consists of five chapters covering:

• Chapter 1: Headline trends in SME equity finance
• Chapter 2: Trends by stage and sector
• Chapter 3: Trends by Nation and region and founder diversity
• Chapter 4: British Business Bank activity
• Chapter 5: Equity pathways for UK spinouts

Key Findings

Equity investment into smaller businesses fell slightly in 2025, though investors remained willing to write large cheques for the most promising companies.

• UK smaller businesses raised £12.3 billion of equity investment across 2,002 deals in 2025, representing a slight decline of 4% from 2024. Despite this, total investment in 2025 remained materially above pre-pandemic levels. Deal numbers contracted by 17%.
• Across the overall market (including larger businesses), deal numbers fell by 16% to 2,075 in 2025, while total investment declined by 3% to £17.0 billion.
• The market became increasingly concentrated in 2025, with the ten largest fundraisings capturing 23% of total investment in smaller businesses — the highest share since 2020.
• Market concentration intensified into 2026, as equity investment into smaller businesses fell by 43% in Q1 while overall UK equity investment (including larger businesses) rose by 28%, driven by three unicorn megadeals accounting for around £3 billion of the £4.6 billion total.

AI companies captured a record share of equity investment in 2025, while Advanced Manufacturing and Digital and Technologies led the IS-8 sectors on investment value growth

• Investment into AI companies reached a record high of £5.4 billion in 2025, accounting for 44% of total investment into smaller businesses and 26% of deals.
• Advanced Manufacturing and Digital and Technologies saw the largest increases in investment value across the IS-8 sectors in 2025, rising by 49% and 21% respectively.

Investment in growth stage companies was the most resilient 

• Investment into growth stage smaller businesses rose by 10% to £5.7 billion despite a 4% decline in deal numbers in 2025.
• Seed stage deal numbers declined by 27% in 2025 and seed stage companies also took longer to secure funding on average.
• The UK had a 32% VC investment gap with the US when adjusting for the size of the economy in 2023-2025, amplified by outsized AI deals in the US in 2025.

The North West, South West and Scotland experienced the largest increases in investment value in 2025

• The North West (+82%), South West (+104%) and Scotland (+74%) saw the largest increases in equity investment in 2025.
• London’s share of overall UK equity activity declined in 2025. London-based companies made up 48% of deals (down from 49% in 2024) and 57% of investment value (down from 60%).
• UK spinouts’ access to equity finance expanded strongly over the past decade, but momentum weakened in 2025 and outcomes remain geographically uneven.
• UK spinout VC activity in 2021–2025 ranked second only to the US, with deal counts up 95% from 2016–2020 and investment increasing from £2.7 billion to £7.5 billion.
• The UK generates five VC-backed spinouts per $1 billion of higher education and government R&D, outperforming international peers.
• Broader equity activity involving spinouts expanded in the post-pandemic period, but momentum reversed in 2025, with deals falling by 33% and investment by 51% from 2024.
• Fundraising outcomes for spinouts vary significantly by location; nearly half (49%) of spinouts in the Golden Triangle raise equity, compared with 38% in the Northern Growth Corridor.

The Bank was more likely to invest in Digital and Technologies, Life Sciences and Professional and Business Services between 2023 and 2025

• 15% of UK equity deals were supported by the Bank’s equity programmes during 2023–2025, alongside 16% of total investment value. 
• 74% of the Bank’s supported deals were in Digital and Technologies, a higher share than the wider market (61%); similar concentrations were seen in Life Sciences and Professional and Business Services. 
• The Bank accounted for a higher share of deals than the wider market in 5 of 12 UK Nations and regions. 
• 1 in every 5 spinout deals received Bank support during this period.30% of Bank-supported deals involved at least one female founder, exceeding the share observed in the wider market.