Investment in small, unquoted UK companies has risen substantially over the last year, according to an index of sub-£1m investment activity.
Latest quarterly figures from Venture Index, which tracks funding below £1m in mainland UK companies, show an 18% increase in activity since a market low in March last year.
Small firms collected £45.7m in 315 investments from privately owned, government-backed venture funds and business angel networks, compared to £42.6m raised in 302 investments in the 12 months to the end of August 2005.
The number of deals made in the year to November 2005 rose 7%, despite a traditional seasonal downturn, according to the index. The total investment of this expanded group represents an 18% increase over last March's £38.67m.
The most popular sector for small investments throughout the growth period has again been the medical sector, Venture Index said. Investors provided financing to 23 unquoted pharmaceutical, medical instrument and healthcare-related companies.
London led all regions in the last quarter with 10 deals, coming just ahead of Manchester, Cambridge and Yorkshire, each with nine.
"Geographically an interesting picture is now emerging as the effect of the new groups joining Venture Index influences where investment is being recorded," said Modwenna Rees Mogg, managing director of Venture Index.
"Regional investment levels are becoming exciting and we continue to see regional pockets come through that are not traditionally associated with venture investment, such as the West Country."
Despite the heightened activity, the average investment value remained static at £125,000 over the last quarter and at £100,000 on the year. The report also shows that early-stage deals accounted for half of all the last quarter's investments.
