North East equity deals rebound after multi-year dip, but investment values fall

The volume of equity transactions in the North East of England increased in 2024, rising by 8.6% to 63 deals, reflective of market confidence slowly being restored in the region. However, total equity investment into smaller businesses declined by 8.1% to £141m, in line with a nationwide slowdown in activity. This is according to the British Business Bank’s annual Small Business Equity Tracker, published today.

During 2022-24, 2.6% of equity deals in the UK went to the North East, compared with 1.4% of British Business Bank supported equity deals. In 2024, government funds supported 38% of all announced equity deals in the North East.

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.

In the North, the British Business Bank is working closely with Lifted Ventures as part of its Female-led Angel Syndication Pilot. So far, Lifted Ventures and the British Business Bank have raised a total of £7.2m worth of investment into 17 deals in the region. This runs alongside the Bank’s commitment to investing in the North through its Northern Powerhouse Investment Fund II (NPIF II), which provides equity finance to businesses across the region.

The national picture

These findings differ from those across the UK. Full year data shows that investment declined by 2.5% to £10.8bn in 2024 in the UK, while the number of deals fell by 15.1% to 2,048, reflecting a more cautious investment environment and a trend towards fewer, larger deals. Despite the fall in equity investment, 2024 was still the fifth highest year on record in value terms for small business equity investment.

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. Between 2022-2024, UK venture capital investment represented 0.68% of GDP, 1.1x less than in the US, though this gap has narrowed from 1.3x in 2019-2021.

Vicky Mears, UK Network Director, North of England and the Midlands, at the British Business Bank, said: "It’s encouraging to see an increase in the number of equity deals in the North East after multiple years of decline, highlighting investor confidence in the region’s innovative and ambitious businesses. While overall investment value has dipped, the rise in deal activity is a positive sign that momentum is returning to the market.

“The North East remains a vibrant hub for entrepreneurship, supported by world-class universities and a growing innovation economy. Through our work with regional partners and the launch of Northern Powerhouse Investment Fund II, the British Business Bank is committed to helping more businesses in the North East access the finance they need to scale and succeed."