Scotland recorded a 74% increase in equity investment value in 2025, defying a broader UK downturn that saw overall funding into smaller businesses fall by 4%, according to new figures from the British Business Bank.
Published today, the Bank’s annual Small Business Equity Tracker reveals that while deal volumes declined across Scotland, a smaller number of higher-value transactions significantly boosted total investment. The findings position Scotland among the UK’s strongest-performing regions, alongside the South West and North West of England, at a time when London’s long-standing dominance continued to ease, with its share of equity investment slipping from 60% to 57%.
The reduction in deal numbers reflects tighter funding conditions across the UK, yet Scotland’s ability to attract larger investments signals sustained investor confidence in key sectors and innovation clusters. In particular, university spinouts demonstrated notable resilience. Scotland overtook London in spinout deal activity, completing 45 deals compared to the capital’s 28, with the University of Edinburgh leading the charge. The institution recorded 16 deals in 2025, placing it among the UK’s top three universities for spinout activity.
The British Business Bank’s ongoing commitment to addressing regional funding gaps has also played a role. In the 2024/25 financial year, 84% of the Bank’s newly supported businesses were based outside London. Scotland continues to benefit from the Bank’s dedicated £150 million Investment Fund for Scotland, which provides a range of financing options, from loans of £25,000 to equity investments of up to £5 million.
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Mark Sterritt, Managing Director of the British Business Bank’s Local Growth Team, said: “Scotland’s performance in 2025 is a real positive in what has been a challenging year for the UK equity market. The increase in investment value reflects the strength of Scotland’s businesses and its innovation base, particularly in sectors such as energy, where the country has clear competitive advantages.
“The continued resilience of Scotland’s spinout ecosystem is especially encouraging, highlighting the strength of its universities and their ability to translate cutting-edge research into high-growth companies. We know that access to finance remains critical, particularly for early-stage businesses navigating tougher market conditions, which is why the Investment Fund for Scotland plays such an important role in helping ambitious ventures across the country access the finance they need to start and scale. We remain committed to supporting entrepreneurs in all parts of Scotland to realise their full potential.”
The Bank has also stepped up its wider investment activity following the launch of its Five-Year Strategic Plan in November 2025. By increasing its annual deployment by two-thirds, it aims to unlock around £26 billion of private capital alongside £13 billion of its own funding over the next five years, including £4 billion targeted at high-growth firms within the government’s eight Industrial Strategy sectors.
