Investment in small businesses fell dramatically at the start of the year severely hampering UK entrepreneurs, new figures suggest.
Data from Venture Index, the small unquoted UK companies monitoring company, reveals that investment in UK enterprises has fallen since December 2006.
During the 12 months ending March 2007, just 330 deals were completed raising £54m, with only 73 deals £8.3m completed in the last three months.
Median investment in the last quarter also fell sharply, down by a third to £80,000 when compared with data reported for the end of December.
Modwenna Rees-Mogg, managing director of Venture Index, said: “Risk capital is critical to smaller company growth meaning that the latest figures are certainly a cause for concern.
“Over the last three years we have always seen lower levels of investment in the first quarter of a new year, compared with the last quarter of the previous year, but there is a steady trend downwards in the median investment amount and the number of investments made.
“This suggests that fewer companies are getting less money, but you have to look at the raw data to interpret the real position.
“What the underlying statistics are telling us is that the professional investors such as the early stage funds across the UK are busy doing smaller deals, because they can do them cost effectively and manage their investments through to a time when they either seek more funding or exit via a trade sale or flotation.”
© Crimson Business Ltd. 2007
