High-growth startups and scale-ups are attracting record levels of investment in Wales, according to a new report released by Beauhurst, the research platform and sponsored by the Development Bank of Wales.
Investments in Welsh businesses have steadily increased in recent years. Welsh startups and scale-ups got £ 129million in 2020, which was a record for the country. Beyond high growth companies, a record number of companies were incorporated in Wales that year – 19,453.
The resilience of Welsh businesses during the pandemic has been bolstered by the Covid-19 Wales Business Loan Scheme, which saw the Development Bank of Wales grant £ 92million in additional loans to Welsh businesses.
Research suggests that Wales is emerging as a springboard for a new generation of high growth businesses. While data suggests the UK is seeing a steady decline in start-up funding for startups, the average deal size for Welsh companies in 2020 was £ 939,000. Since 2011, a third (466) of deals have been concluded by Welsh companies mobilizing investments for the first time.
The in-depth study of Welsh investment activity between 2011 and 2020 identified 1,215 high growth companies in Wales, which have raised £ 882million in 1,201 deals over the past ten years .
Technology is the dominant sector for high growth Welsh companies, accounting for 28 percent. The country has emerged as a major hub for software-as-a-service companies, with startups and SaaS scale-ups raising £ 145million since 2011. The technology is closely followed by real estate and land development. and food and beverage processors as the most popular sectors in Wales. .
Three of the ten high growth Welsh companies are based in Cardiff (363). The next most common location is Swansea (106).
A total of 210 funds have participated in Welsh deals since 2011, with crowdfunding platforms Seedrs and Crowdcube being the most active.
However, research shows the impact the Development Bank of Wales has had on the emerging Welsh startup and scale-up ecosystem. The Development Bank of Wales is by far the most active investor in Wales, having participated in 391 transactions since 2011.
Giles Thorley, Managing Director of the Development Bank of Wales, said: “This research shows that Wales has a vibrant startup and tech ecosystem and, in Cardiff, one of the most exciting tech cities from the United Kingdom. There is now a critical mass of young, fast growing companies with diverse founders whose efforts are making Wales the engine room for the next generation of UK startup success stories. “
Henry Whorwood, Head of Research and Consulting at Beauhurst, added: “The Welsh entrepreneurial ecosystem is exceeding its weight in certain metrics. Ambitious and crucially invested companies are growing. However, there is still untapped potential in Wales: I would like to see higher levels of activity in West Wales and North Wales. “