Equity finance remains stubbornly low in Northern Ireland

The level of equity finance deals across Northern Ireland has remained stubbornly low for another year according to the British Business Bank’s annual Small Business Equity Tracker.

In 2024, there were 24 equity deals in Northern Ireland at a total value of £78million, which was down 1.8% on the previous year.

The stand-out sector was technology/IP-based businesses which made up 36% of the total deals in Northern Ireland while business and professional services made up 19%.

Meanwhile, across the UK the continued focus on artificial intelligence (AI) was laid bare in the tracker with the average size of AI deals significantly higher than other deals across the wider equity market in 2024.

The average AI equity deal in the UK was £8.3m in 2024, more than 40% larger than the £5.7m across the wider market. At the growth stage, AI deals were on average £36.3m, 2.5 times larger than the wider market, indicating that appetite for AI drives value.

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 firms 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.

Where angels reported ‘backing underrepresented groups positively impacted investment decisions’, they were most likely to invest in female entrepreneurs followed by entrepreneurs from ethnic minority backgrounds.

More than a quarter (26%) of businesses backed by angel investors were led by all-female founders, up from 12% in 2019, further indicating increased focus on female founders.

The British Business Bank has been working in partnership with Awaken Angels syndicate in Northern Ireland 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. With over 89 angel investors now onboarded and deals completed worth a total of more than £2.3million.

Susan Nightingale, UK Network Director, Northern Ireland, at the British Business Bank, said: “2024 was a challenging year for the equity finance market in Northern Ireland as investment values and deals stagnated. However, it is encouraging to see that university spinouts, including local companies Cirdan and Dia Beta Labs, have contributed to a record-breaking year.”

Investment Fund for Northern Ireland

With a commitment to supporting local smaller businesses with both debt and equity finance, the Investment Fund for Northern Ireland recently marked a major milestone.

Since launching in November 2023, the fund has supported 35 smaller businesses in Northern Ireland through the deployment of £30million. Of this total, the fund invested £18million which leveraged a further £12million from the private sector.

In further evidence of the fund’s effectiveness in supporting potential high growth businesses it announced its first exit last month. Pilates equipment specialists, Reform RX had, just last year, completed a £1million equity deal with the Investment Fund for Northern Ireland but have exited from the fund after being acquired by US giant, iFIT.

Record breaking year for university spinouts

The UK is home to world-leading research and development, with four of the top 10 universities globally. University spinouts raised £1.9bn in equity investment in 2024, equivalent to 17% of total investment across the UK, and accounted for a record share of deals (12%).

Spinout companies are a vital bridge between academic innovation and market deployment, and the British Business Bank supports these ventures more than the overall equity market.

Spinout companies raised larger rounds with the average deal size for spinouts reaching £8.0m in 2024, more than a third larger than the overall UK average, indicating investor appetite for backing innovation.

In Northern Ireland there were two spinouts in 2024 - medical technology company Cirdan, from Queen’s University raised £7.5million while another medical technology/life sciences company, Dia Beta Labs, a spinout from Ulster University, raised £602k.

Throughout the UK investment in spinouts increased by 4% in 2024, despite a decline in investment across the wider equity market. Between 2022-2024 almost a quarter (24%) of university spinout deals were supported by the British Business Bank, demonstrating the Bank’s significant role in supporting the commercialisation of cutting-edge scientific research.

Equity investment declined slightly, still above pre-pandemic levels

Across the UK, equity investment has declined slightly in 2024, but investment value remains above the levels seen before the pandemic.

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.