Equity investment levels in Scotland’s smaller businesses surged in the first three quarters of 2025, significantly outpacing the UK average, according to new research from the British Business Bank.

The Bank’s Small Business Finance Markets 2025/26 report found that during the first three quarters of 2025, the investment value of announced equity deals involving smaller businesses in Scotland rose by 70% compared with the same period in 2024, reaching £757 million.

This is a fairly substantial increase when viewed through the context of the rest of the UK, which suffered a decline of 20% – it also meant that in 2025 Scotland was on track to exceed the annual equity investment value record set in 2022.

Scotland’s investment growth was driven by a small number of high-value fundraisings. Notably, Edinburgh-based Fidra Energy, a battery energy storage system platform, secured a £445 million funding round in Q3 of 2025, which contributed significantly to the overall increase.

Across the UK, the ten largest deals accounted for 25% of total equity investment in the first three quarters of 2025, the highest share since 2020.

While the number of transactions fell slightly by 10% to 133, this was still ahead of the UK’s overall decline of 23%.

The report also noted changes across the business population. In 2025, the number of private sector businesses increased by 2% in Scotland, compared with 4% growth in England and Northern Ireland, and a 12% decline in Wales. This marked a slowdown in growth for the devolved nations compared with 2024, when Scotland, Northern Ireland, and Wales saw growth of 19%, 9%, and 1% respectively.

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Susan Nightingale, Director, UK Network, Devolved Nations at the British Business Bank, said: “Scotland’s smaller business sector showed remarkable resilience in 2025. Even as overall UK equity investment fell, Scotland experienced a strong rebound, supported by some of the largest fundraisings in recent years.

“The year-on-year rise underscores the strength of Scotland’s investment ecosystem and the ambitions of its entrepreneurs. As interest rates have begun to stabilise and confidence gradually returns to the market, we’re seeing encouraging signs that businesses are continuing to secure the capital they need to scale.

“Maintaining that momentum will be key. Ensuring smaller businesses across Scotland can access the right type of finance at the right time remains critical to supporting innovation, driving the economy, lifting wages, and improving living standards.”