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Andy Burnham, the UK’s new prime minister, is hoping that an outpost up north will become the “nerve centre” of his efforts to redistribute political and economic power. Given the underserved investment opportunities that exist outside London, investors should consider tagging along with him.
Companies based in the capital raised £6.6bn in equity in 2024, according to the British Business Bank, the state development bank, more than the rest of the UK combined. The East of England — which includes a well-developed cluster of life sciences and technology businesses around Cambridge — was a distant second, with £980mn.
It would be easy to assume this is the sort of issue that, while awkward for politicians who want to spread growth more evenly, is not really a problem for investors. Surely London — and a few scattered outposts in university cities such as Cambridge and Oxford — naturally attracts the most ambitious individuals and therefore the highest number of promising businesses?
Not so, as it turns out. Measure fundraising relative to the number of fast-growing companies in each region, and the data is still massively lopsided. On average between 2022 and 2024, London businesses raised £289mn per 100 high-growth enterprises, compared with £104mn per 100 in the East of England, and just £13mn per 100 in the East Midlands. A separate analysis by Oliver Wyman in 2024 also found that the proportion of businesses in each region that are high-growth was “relatively consistent” across the country and had “little correlation with equity investment”.
The businesses that lose out on equity funding are relatively few in number but disproportionately important to economic growth. Most small businesses will be satisfied with debt financing from banks, which, for all their other problems, have relatively robust regional practices. But equity investments are critical for well-positioned midsized businesses to make the leap to become large companies.
Policy changes can make a difference. Recent increases to the British Business Bank’s budget, for example, should allow more companies to access funding and attract additional private investment. The BBB took part in 15 per cent of small business equity deals between 2023 and 2025. Regulators could also make it less capital-intensive for commercial banks such as Lloyds Banking Group — which has a little-known £3bn private equity arm — to make equity investments.
But enterprising investors should be able to profit from the situation without any government help. Midsized companies might be scattered around the country, but venture capital investors aren’t. London has 45 VC offices for every 100 high-growth groups, according to the BBB; the rest of the UK has just five per 100. That matters, because equity investments tend to involve more in-person assessment than traditional bank loans. Cambridge might be benefiting from having a 49-minute train connection to King’s Cross as much as its world-leading university.
Investors who dare to venture farther north should find they have less competition for good companies. That should lead to better returns — and win them brownie points with the new PM at the same time.
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