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October was most notable for the government’s comprehensive spending review and some encouraging economic data showing stronger than expected growth for the UK economy. It also saw a return to more normal levels of deal activity after the usual, although somewhat more marked, summer hiatus.

A wide range of deals, in terms of both size and sector, funded from a broad range of sources is encouraging and reflects the increasingly diverse nature of the West Midlands economy and the flexibility of the local deal making community.

Uncertainty abounds, however, for the region’s deal doers. Inflation remaining stubbornly high, and significantly above the Bank of England’s target, suggests that interest rates may rise sooner rather than later. This, combined with the impact of the spending review still to feed into the economy, suggests some choppy waters may still have to be navigated before we see any kind of return to historic deal activity levels.

Certainly with the availability of bank funding, particularly for the SME space within which Midven operates, still somewhat patchy an increase in interest rates could have a significant impact on the ability of deals to be funded - MBOs in particular. Further, with the emphasis on the private sector to drive future economic growth and take up the slack created by a reduction in public sector expenditure, growth funding, whether through debt or equity, will have an important role to play.

In this regard, the announcement of a further £2bn being available over four years under the Enterprise Finance Guarantee Scheme will be welcomed by SMEs who will no doubt be keen to test the availability of this funding. The news of two small businesses in the region securing such loans during the month to invest in growth is encouraging and hopefully won’t be isolated incidents.

In addition, the new £1.5bn Regional Growth Fund that will operate for three years between 2011 and 2014 will have an important role to play. To benefit the West Midlands economy in particular we will need to see early signs of joined up thinking between public and private sector bodies putting forward credible bids for chunks of this money to be used to create long-term growth in our regional economy. Potentially, many dealmakers from across the region have an important role to play in this area.

It would be a brave man indeed who could make any predictions as to how these initiatives might ultimately benefit the West Midlands. Times of uncertainty, however, are also times of opportunity. The West Midlands economy ever evolves and is increasingly a centre for many technological innovations. Midven is seeing a strong level of deal flow with a significant number of good quality businesses and innovations seeking equity funding.

The entrepreneurs behind these sort of businesses, that are not scared to seek outside help and finance, are not the sort to give up easily and that is why, despite the difficulties that lie ahead, the long-term future for the West Midlands economy and dealmaking remains positive.

Roger Wood is director of Birmingham-based venture capitalist firm Midven which won the Fund Manager of the Year Award in our Dealmakers Awards 2010.