Welsh Equity Investment Deals Plummet by 53% in 2025, New Research Reveals
New research from the British Business Bank has uncovered a dramatic decline in both the number and value of equity investment deals in Wales during the first three-quarters of 2025. The findings, detailed in the latest Small Business Finance Markets report, paint a concerning picture for the Welsh economy, with the region experiencing the steepest percentage drop of any UK nation or territory.
Sharp Decline in Deal Volume and Value
According to the report, Wales recorded only 26 reported equity deals between January and September 2025. This represents a staggering 53% decrease from the 55 deals confirmed during the same period in 2024. The financial value of these investments also suffered a severe contraction, falling 63% from £62 million in 2024 to just £23 million in 2025.
This decline positioned Wales as the worst-performing region in the UK for equity investment activity. In contrast, several other areas experienced growth: Northern Ireland saw a 35% increase, the West Midlands rose by 6%, and Yorkshire and the Humber grew by 4%. For the United Kingdom as a whole, the number of equity deals fell by 23% to 1,238 transactions.
Wales's Diminishing Share of UK Investment
The research, conducted by data firm Beauhurst, indicates that Welsh deals constituted merely 2% of total UK equity transactions in 2025, down from 3% the previous year. In terms of monetary value, the contribution was even more marginal. The £23 million invested in Wales accounted for just 0.3% of the UK's total £7 billion equity investment pool, a significant drop from 0.7% of an £8 billion total in 2024.
London continued to dominate the national landscape, accounting for 46% of all UK deals and 60% (£4.1 billion) of the total value. Scotland followed with 11% of deals and 11% (£757 million) of the value, while the South East of England secured 9% of transactions.
Shrinking Business Population and Creation Rates
The report also reveals a troubling contraction in Wales's business base. At the start of 2025, there were 194,200 businesses operating in Wales, a sharp 12% decline from the 220,200 recorded at the beginning of 2024. This reduction stands in stark contrast to the modest growth observed across much of the United Kingdom.
The decline was primarily driven by a reduction in unregistered businesses without employees, a trend that diverges from the UK-wide pattern where growth in the business population was supported by increases in this very segment.
Business creation in Wales remained among the lowest in the UK. In 2025, there were 10,245 business births in Wales, representing only 3% of the UK total of 314,000. The Welsh enterprise rate—742 businesses per 10,000 adults—was approximately half the level seen in London (1,436) and below most other UK nations and regions.
Survival Rates and the Role of Smaller Firms
The five-year survival rate for Welsh businesses founded in 2019 stood at 38%, matching the UK average but ranking joint third lowest among UK nations and regions. Survival outcomes varied significantly across the country, with the highest rates recorded in the South West (44%) and Northern Ireland (43%).
Despite these challenges, smaller businesses continue to be the backbone of the Welsh economy. They account for 74% of total private sector employment in Wales, the second-highest proportion among UK nations and regions, trailing only Northern Ireland (77%). Employment is widely distributed across firm sizes, with the largest share concentrated in businesses employing fewer than 50 people, underscoring the critical importance of smaller firms to job creation and economic vitality.
Broader UK Context and Bank Commentary
Overall UK lending markets showed tentative signs of improvement, with gross SME bank lending increasing by 9% to £68 billion in 2025. Challenger and specialist banks expanded their role, accounting for 60% of gross SME bank lending across the UK.
Susan Nightingale, Director of UK Network for Devolved Nations at the British Business Bank, commented on the findings. "Smaller businesses remain fundamental to Wales’s economy, particularly as employers across communities and sectors," she said. "The findings in this year’s report highlight the pressures many businesses continue to face in a challenging economic environment, including reduced investment activity and slower business creation."
Nightingale emphasized the bank's commitment to supporting Welsh businesses: "The British Business Bank is dedicated to improving access to finance and supporting innovation-led growth across Wales. Through initiatives such as the Investment Fund for Wales, we are helping ambitious businesses access the funding they need to scale and build resilience for the future." She highlighted a recent milestone—a £3.5 million equity investment into industrial services firm Advantiv—as evidence of this support, facilitating the company's expansion and operational innovation.
