- 1,215 high growth companies identified in Wales, raising £ 882million since 2011
- Record year of investment in 2020 with 129 million pounds raised by startups and scale-ups and nearly 20,000 new companies formed
- 69% of high growth Welsh businesses are now based outside Cardiff or Swansea
NOV 4, CARDIFF: High-growth startups and scale-ups attract record levels of investment in Wales, says new landmark report released today by Beauhurst, the research platform and sponsored by the Development Bank of Wales, the fifth most active investor in the UK.
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 has enabled the Development Bank of Wales to provide £ 92million in additional loans to Welsh businesses.
Research suggests 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 businesses in 2020 was £ 939,000. Since 2011, a third (466) of deals have been concluded by Welsh companies raising investment 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). Both cities are developing a critical mass of entrepreneurs and investors and benefiting from successful university spin-offs from Cardiff University and Swansea University. However, 69% of high growth Welsh businesses are based outside Cardiff or Swansea, suggesting entrepreneurial activity is spreading across the country.
The study also found that 19.2% of high-growth Welsh businesses have female founders and the average age of Welsh entrepreneurs is between 30 and 39.
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, CEO of the Development Bank of Wales, comments: “Welsh entrepreneurs were able to start, grow and grow their businesses during the pandemic to create a record year for Welsh investment. This research shows that Wales has a vibrant startup and tech ecosystem and, in Cardiff, one of the UK’s most exciting tech cities. There is now a critical mass of early stage and fast growing companies with diverse founders whose efforts are making Wales the engine room for the next generation of UK startup success stories.
“The Development Bank of Wales generally co-invests with other investors in all equity transactions, so we welcome the growing diversity of investors active in Wales. As the Welsh startup and tech sector matures, we hope that the high number of deals comes with a steady increase in deal value. Once the size of transactions increases, high growth Welsh businesses will be able to reach their full potential. “
Henry Whorwood, Head of Research and Consulting at Beauhurst, comments: “The Welsh entrepreneurial ecosystem is exceeding its weight in some ways. Rising levels of equity investment are an important catalyst for growth across the country and the supply of high growth, innovative, ambitious and fundamentally invested companies is increasing. However, there is still untapped potential in Wales: I would like to see higher levels of activity in West Wales and North Wales.
The Development Bank of Wales was established by the Welsh government to make it easier for Welsh businesses to obtain equity investments to start new businesses and grow. Founded in 2017, the Development Bank of Wales and Finance Wales have invested £ 1 billion in Wales and created over 26,000 jobs.