Equity Finance for Start-up and Growing Businesses: Recent Trends

Abstract

Our recent report describes trends in equity finance deals in the UK in the period from 2011 to Q3 2023. The health of the equity finance ecosystem is of vital importance for development of the innovative enterprises that drive economic growth, employment, and the international competitiveness of the UK economy.

The significant drop of the overall investments in 2023 is a worrying phenomenon. After sizeable increases during the pandemic, the last two quarters of 2022, witness a sharp decline in investment in terms of both deal value and the number of deals, and the trend of gradual decrease continued till the end of the sample period in the third quarter of 2023. The average deal value dropped in the third quarter of 2022. It fluctuates around £3m since then, a significantly higher level when compared with the pre-pandemic period. The marked overall increase in the average deal value is driven, predominantly, by investors focusing on later stage, higher rounds and announced investments.

Keywords: Equity finance

JEL Classification: G23