Equity investment activity has risen in Wales, bucking national trends, although overall equity deal values have fallen.
The British Business Bank’s fifth annual Nations and Regions Tracker finds that equity investment activity in Wales increased in 2024, contrasting with sharp declines seen across much of the UK. Wales was one of only five UK regions to record growth in deal numbers, which rose by 7.2%, compared with a UK-wide fall of 15.1%.
However, despite the rise in deal numbers, the total value of equity investments in Wales fell by 12.1% – a steeper decline than the UK average (-2.5%) – reflecting smaller deal sizes in the region. The per capita equity investment value in Wales – £26 million – remains on average among the lowest in the UK, ahead only of the East Midlands.
The Tracker also finds that usage of external finance amongst smaller businesses in Wales fell in 2024 following a sharp rise in 2023. Wales-wide, a cautious approach still dominates, with a third of smaller businesses thinking it would be difficult to secure it.
The Cardiff City Region was the main hub for equity activity, accounting for 71% of deals and 80% of investment value in Wales between 2022 and 2024. In 2024, deal volumes in Cardiff rose 23%, while total investment value fell 14%, mirroring wider trends across Wales. Based on equity deals per 100 High Growth Enterprises, Wales (18) was broadly in line with the UK average outside London (14) between 2022 and 2024.
The increase in equity deals coincides with the first full year of activity for the British Business Bank’s £130 million Investment Fund for Wales, which was launched in late 2023. The fund offers loans from £25,000 and equity investments up to £5 million across the region. Since its launch, more than £18 million has been invested into more than 67 Welsh businesses, leveraging more than £3 million in private sector co-investment.
Notable Investment Fund for Wales deals include Cardiff-based AI startup Nisien.AI, which secured investment to accelerate research and development, expand its workforce, and scale innovation, and Caerphilly-based Drone Evolution, which utilised an £850,000 equity investment to develop its products and marketing.
In 2024, 46% of smaller businesses in Wales used external finance, down from 53% the year before. This represented the largest fall among the Devolved Nations, with Northern Ireland recording a 1 percentage point increase and Scotland a 3 percentage point decrease, and the third steepest drop across the UK after the East Midlands and the North East.
The decline follows a period where Wales consistently reported higher-than-average finance use, including the highest rate of any UK Nation or region in 2023. However, despite witnessing a decrease in 2024, finance usage rates in Wales remain above the UK average (45%).
The biggest decline came from bank loans, which fell from 13% to 8%, marking the third consecutive annual drop. Other types of external finance remained broadly stable, in line with UK-wide trends.
Credit cards continued to be the most used finance type in Wales (14%), followed by overdrafts (13%), and leasing, hire purchase or vehicle finance (10%).
Borrowing intentions in Wales remained broadly unchanged in 2024, holding steady despite the fall in finance use. Three-quarters (75%) of smaller businesses described themselves as not interested in seeking finance in the future, the second highest share in the UK, while only 7% said they were planning to borrow or renew, up slightly from 5% in 2023.
Smaller businesses in Wales were the most cautious in the UK when it comes to the economy. Two-thirds (66%) felt the trading environment posed more threats than opportunities, unchanged from 2023, and representing the highest share across the UK.
These concerns are reflected in relatively low confidence in securing finance: 36% of Welsh smaller businesses felt they might find it difficult to obtain it, up from 30% in 2023. Half (50%) of businesses indicated they were very likely or likely to seek external advice if they needed finance in the future, broadly in line with the UK average.
British Business Bank said it would launch new initiatives and investment in the Cardiff City Region in 2026.
In 2024/25, the bank supported 900 Welsh businesses that had not previously received its backing, which is expected to help sustain 10,800 existing jobs and to create 900 new jobs over the lifetime of the finance. This activity is anticipated to generate an additional £500 million in business turnover, equivalent to around £200 million in additional gross value added for Wales.
The bank is also developing the Welsh angel investment ecosystem, partnering with the Development Bank of Wales and Women Angels of Wales – Wales’ first female focused angel investing community and network – to increase the number of women actively investing in and championing female-led Welsh businesses.
Looking ahead, the bank is expanding geographically-focused interventions to support the UK’s Modern Industrial Strategy and unlock regional potential, strengthening efforts in Wales from 2026/27. This includes additional investment in the Cardiff City Region innovation cluster and the appointment of a dedicated Cluster Champion to build a more connected finance ecosystem.
Susan Nightingale, UK Network Director, Wales at the British Business Bank, said:
“Despite a decline in external finance use, Welsh businesses’ borrowing intentions held steady in 2024, demonstrating resilience amid ongoing economic uncertainty. This strength was also reflected in the equity landscape, where deal numbers in Wales grew – bucking the UK-wide trend – even as overall investment values pointed to continued investor caution.
“The British Business Bank remains committed to supporting smaller businesses across Wales to start up and grow. With our £130 million Investment Fund for Wales now well established, and new investments and initiatives underway to strengthen the Welsh finance ecosystem, we are working to unlock greater opportunities for entrepreneurs and high-growth firms across the country.”
