Why the Midlands are an undercapitalised region for growth businesses

Despite being home to 11% of high growth businesses, the Midlands only got 5% of UK business investment last year

 The Midlands appear to receive a disproportionate amount of UK business investment

The Midlands appear to receive a disproportionate amount of UK business investment

The Midlands is home to 11 per cent of the UK’s high-growth companies, yet the region only secured five per cent of the £13.5bn invested in UK companies in 2020.

A record £665m was invested in Midlands-based companies via 286 equity deals.

Figures come from a report commissioned by the Midlands Innovation Commercialisation of Research Accelerator (MICRA), and produced by Beauhurst, a platform that provides data on the UK’s high-growth and innovative companies. It’s based on data from 3,453 high-growth Midlands-based companies.

The Midlands is already the fastest-growing economy outside of London and the South East. It has a worldwide reputation in industrial sectors such as automotive and aerospace, is home to the largest number of medical and device technologies in any region of the UK and is foundational for the UK’s research and development in manufacturing and knowledge-based industries.

>See also: R&D tax relief: how to make a successful claim

This could suggest that the region has been undercapitalised. However, the report also highlights the strength of the ‘innovation ecosystem’ and the eight research intensive universities that make up the Midlands Innovation partnership behind MICRA as foundations for the region’s future prosperity.

Midlands Innovation universities (Aston, Birmingham, Cranfield, Keele, Leicester, Loughborough, Nottingham, Warwick) work with large companies on cutting edge research and commercialisation projects. The report cites collaborations with Jaguar Land Rover, Rolls Royce and Tata Motors. On top of  R&D collaborations, these universities also punch above their weight by generating more patents per unit of research income than any other UK university grouping. The region as a whole also has a portfolio of 173 spinout companies.

According to Henry Whorwood, head of research and consultancy at Beauhurst, it’s the research collaborations and spinouts that show what’s in store for the region.

He said: “If investment is a measure of success of a region’s high-growth ecosystem, innovation and spinouts are a measure of its promise. Spinouts in particular represent a promising asset class for investors.”

In the past five years, there have been successful returns produced for investors in Midlands Innovation spinout companies including the Native Antigen Company, Allinea Software and Oncimmune plc.

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