New research from the British Business Bank has uncovered that smaller firms in Scotland saw increased levels of equity investment in 2024, while the wider UK saw a collective decline and London became less dominant.

The Bank’s annual Small Business Equity Tracker, published today, shows that equity deals involving small firms in Scotland totalled £507 million last year, up 28.3% on 2023’s £395 million.

Further, the number of deals picked up by 13.6% to 201 in 2024, an increase over 2023’s number of 177.

Compared to 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 backdrop.

Meanwhile, the UK’s capital of London saw its share of investment activity drop to 61%, compared to the 2020 peak of 73%.

Government funds supported more than half (56%) of equity deals announced last year, including the first tranche of equity funding deals through the British Business Bank’s Investment Fund for Scotland.

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 £150 million Investment Fund for Scotland launched in late 2023.

The Fund is designed to increase the availability and supply of finance to all parts of the country through loans ranging from £25,000 to 2 million, and equity investments up to £5 million.

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

The British Business Bank 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.

Over 28 angel investors have now been onboarded, with deals completed with a total of more than £5.05 million.

A Record Year for UK Spinouts

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.

Meanwhile, the University of Glasgow 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).

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Expert Commentary and Insight

Susan Nightingale, director, UK Network, Scotland at the British Business Bank, said on the findings: “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.”

Nightingale further commented: “Smaller businesses play a crucial role in Scotland’s economy, and it is great to see that firms, particularly spinouts, are continuing to attract external finance to help them achieve their goals.

“There is a strong track record of early-stage companies emerging from some of the nation’s major research hubs, and that also shows no signs of slowing down. However, continued access to funding is essential for ensuring that Scotland remains an attractive place for entrepreneurs and startups to establish roots in the future.”