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Raising capital: a go-to funding source

November 27, 2023

A new survey of private companies reveals that raising capital is the big bet of the moment for financing growth initiatives. The vast majority of the 100 survey respondents represented the C-level, presidents, board members, and partners/owners said they intend to raise capital to finance talent (93%), technology (88%) and productivity (87%) initiatives. According to the report, they mainly look to equity financing (88%) and existing investors (80%) as sources, compared to debt financing (48%) and bank loans (48%).

However, the majority of private companies surveyed face problems accessing capital. Respondents indicated investor valuations (52%), interest rates (51%) and liquidity challenges (48%) as the main obstacles, with only 12% indicating that they have no obstacles.

Bigger challenges for smaller companies

The survey also shows that leaders from businesses with $100 to under US$200 million in annual revenue are two times or more likely than those earning US$200 million and above to expect difficulty raising capital for the remainder of 2023. The smaller organizations also report being more likely to rely on bank loans as a source of funding.

“Private companies are an extraordinarily important cross-section of (the U.S.) economy. As their leadership teams navigate the impact of financial headwinds, the hybrid work environment, and the pace of digitization, capital needs appear to remain high. The survey results indicate private companies are looking for capital solutions that allow them to manage near-term needs while remaining focused on long-term stability and growth,” said Wolfe Tone, Global Deloitte Private leader.

Source: Deloitte