The value of equity finance in Northern Ireland grew by 39% to £58 million in the first three-quarters of 2023.
But new analysis by the British Business Bank revealed that the number of deals fell by 27% to 16.
The bank’s Small Business Finance Markets 2023/24 report said smaller businesses in the north are more likely to opt for traditional forms of finance like bank loans.
One-in-five (20%) of businesses in the north used bank loans in the second quarter (Q2) of 2023, compared to 12% for smaller businesses in the UK overall.
The same report revealed credit card use in Northern Ireland increased by 13 percentage points from Q1 2023 to Q2 2023, much higher than the overall UK increase of 4 percentage points.
The British Business Bank said the use of external finance by smaller businesses saw a consistent rise over the year across the UK, growing from 41% in Q1 to 50% in Q3.
Working capital was the main reason for seeking finance for 58% of smaller businesses in 2023, up from 53% the year before.
Asset finance grew for the third year in a row, increasing 7% in 2023 to £23.5bn, the highest level on record.
Susan Nightingale, director for devolved nations at the bank, said: “The British Business Bank has been on a journey in Northern Ireland for the past decade and during that time we have witnessed a lot of positive changes. Supporting businesses in accessing finance has been key.
“In Northern Ireland, there is greater choice than ever before to help your business start-up and scale up.
“A great example of this is the £70m Investment Fund for Northern Ireland which will provide both debt and equity finance and help support smaller businesses at different stages of their growth.”