After the slowest six months in VC fundraising since 2019, VCs — and startups — are expecting a busier few months ahead.
Almost every company expects to raise capital in the next 18 months, while 63% feel they can pull it off in the next year, according to a survey of investors and founder-led companies by UK-focused investment bank Numis.
Investors are also preparing for an increase in activity, with 90% set to increase their volume of investments over the next six months compared to the last six. What’s more, 80% of investors expect to see valuations increase over the next six months.
95% of executives from founder-led companies interviewed for the survey were “positive” about their companies’ growth outlook in 2023 compared with 2022.
Numis surveyed 205 general partners and 200 senior executives at high-growth companies worldwide. The general partners were predominantly US-based, while the executives were mainly in Europe and Israel.
However, financing challenges remain a concern.
Financing challenges
77% of companies said they were sitting on a runway of between 12 and 24 months. Only 10% had a runway of less than 12 months.
Yet despite this optimism, investors see financing risks in their current portfolio as the number one hurdle going forward.
Unsurprisingly, the biggest challenge for companies has been access to capital, followed by access to talent.
Less than half of the companies surveyed planned to IPO in the next two years. A third have delayed their IPO ambitions, and more than half consider M&A the best exit strategy.
Founders have also had to contend with increased board involvement over the last year, with investors pushing for changes in corporate strategy, aggressive cost-cutting and management changes.
Investors’ investors — limited partners, or LPs — have also been getting more hands on, according to the survey.
“It's clear that scrutiny has increased. Investors are increasingly digging into the numbers, the forecasts, understanding what's driving business performance, what drives the unit economics and what that might mean for valuation four or five years out,” Alex Ham, the co-CEO of Numis, tells Sifted.
