Hot on the heels of our attendance at the Bath BVCA regional dinner, we thought we’d recap why the south west region has high potential for private equity investors.

In terms of private equity deals, the latest BVCA report for 2013 on investment activity talks of a trend of decentralisation of investment away from London and the South East in favour of increased regional activity. It reports that investment in the South West increased to £326 million in 2013, although Wales didn’t fare so well.

So why is this region thriving?  Why is it now home to the largest cluster of tech companies outside London, and why are many start-ups choosing to locate themselves in the new ‘Silicon Gorge’ of Bristol and Bath?

Well connected

Companies need talent, a good infrastructure and an inspiring environment in which to thrive, as well as a local government willing to give their support.

For talent, the region is home to four top universities, and according to Invest Bristol and Bath, the area has the highest percentage of university educated workers in the country.  Rather than all flocking to London, the influx of a raft of new high tech, engineering, digital and business services companies are offering good prospects for graduates in the locality.

The region has good transport links with easy access to London and overseas if needed. Several new up and coming enterprise zones are selling their shiny new offices as the place to be – Bristol’s Temple Quarter and Bath’s river city amongst them.

There are several bodies dedicated to helping companies get off to the best start, and Invest South West is doing a good job of reminding people of the benefits of a move to the region.

Technology incubator

Business in the region has been gathering pace, with several big firms in aerospace, engineering, high tech, creative & digital, low carbon and business services establishing bases.

As the success of this week’s Venturefest event proves, the region has earned a reputation as the fastest growing digital cluster outside of London, as well as a good base for start-up companies.  Let’s face it, London property prices, commute times and high cost of living are not something all start-ups find conducive to early growth.

BVCA South West Dinner

Talking to the private equity funds, portfolio companies and private equity service providers at the BVCA dinner last week, it’s clear that there is a positivity and energy in the region.

Wales has a bit of catching up to do, but with a new £2bn investment coming into the Swansea Bay area, and devolution set to pick up pace, optimism prevails.

There is a feeling that private equity deals in the region will continue to grow over the next few years as start-up businesses mature and grow. Certainly, the sectors that are prolific in the area – digital, high tech, low carbon – are all predicted to outperform against some of the more traditional investments. 

With such a positive outlook – and the Silicon Gorge moniker – expect to see investment in the area increase again as private equity firms capitalise on the momentum sweeping the South West.  Who knows, perhaps we will also see a number of mid-market firms taking advantage of Bristol’s current accolade as the Sunday Times’ best city to live in, and join LDC and BGF setting up their own regional offices.

Arden Tomison, Director