British businesses are increasingly turning to private capital to grow, with the total amount invested in UK companies by private equity and venture capital hitting an all-time high, according to a report by the British Private Equity and Venture Capital Association (BVCA). 

The PE trade body, which looked at the economic contributions of more than 200 of its members and found that the total amount invested across all stages of the business life cycle, from venture to buyout, grew by more than 80 per cent in 2021 to £17.3bn. The amount of growth capital invested in UK companies had risen by 75 per cent to £3.89bn.

Of the 1,320 businesses that received funding, nine in ten were small or medium-sized, signally the importance of private capital to the UK’s entrepreneurs and start-ups. 

Year-on-year, venture fundraising increased by 30 per cent, showing the increasing investor interest in backing firms which invest in the earlier stages of a business lifecycle.

The report also found that almost two-thirds of businesses receiving investment were outside London. 

The BVCA is calling on HM Treasury to ensure private capital can continue to invest in, and grow, British businesses. 

Michael Moore, director general of the BVCA, said: “The story of private capital investment in 2021 is one of continued growth and success, demonstrating the industry’s readiness to support British businesses, enabling them to innovate, grow, and create jobs right across the UK. It is a valuable and mainstream part of the economy and an industry which, as in previous economic downturns, has maintained active investment in the companies it supports and spent more time with them to address operational and financial considerations. 

“As we face the increasing instability and uncertainty in 2022, we look forward to the government continuing to support the industry to invest through providing access to new sources of UK capital, a strong innovation agenda and  access to the talent it needs.”