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Large private companies raising more capital and hunting growth over profits in 2022, Numis Research reveals.
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200 senior executives of private companies surveyed, with an average valuation of more than $500m
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80% of respondents said they would prioritise growth over profits in the next 12 months
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To fund growth, overwhelming majority (87%) expect to raise more capital than they did last year, with three quarters (76%) hoping to raise at least $100m
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Executives are targeting technology development and new market expansion as top priorities for capital raised
LONDON - 27 January 2022 - Research* by Numis, the independent investment bank, reveals that 92% of senior executives at large private companies globally, with an average valuation of more than $500m, are positive about their organisation’s growth prospects in 2022 – with a quarter (24%) stating they are “extremely optimistic”.
The survey of more than 200 senior executives also reveals that 80% of respondents are prioritising growth over profitability in the medium-term. Over the next three years, nearly three-quarters (70%) expect revenue growth of at least 50% and nearly a third (31%) expect it to be over 75%.
“Emerging from an incredibly active 2021 - with a record volume of transactions, increasing deal sizes and an unprecedented number of ‘mega-rounds’ – private markets continue to evolve rapidly. While not immune to the volatility and de-rating witnessed in public markets in recent weeks, we expect private market pricing dynamics to adjust less quickly and significantly. Founders are frequently backed by longer-duration capital and less focused on the short term. With more institutions seeking exposure to private market value creation, founders continue to anticipate an active year of issuance, with numerous sizeable rounds and mega-rounds continuing to feature. As ever, outstanding technology companies will continue to defy conventional wisdom, both in terms of operational ambition and fundraising success.”
The level of funding is significant too, according to Numis’ data, with three quarters (76%) of those polled expecting to raise at least $100m in the next two years. This mirrors the appetite amongst the institutional investment community – with three quarters (73%) of institutions signalling they would increase their allocations to high growth private companies in the next three years.
In terms of what the new funding will be used for, 83% said investing in new technology, followed by 68% who said expanding into new markets. This is followed by 28% who said they will use it to hire more staff, and 24% who said it will be used to support new product and service launches.
*Numis commissioned the market research company Pureprofile to survey 200 senior executives of large private companies across the UK, The US, Europe, Asia, South America, The Middle East, and Israel. Interviews were conducted online during September 2021.
Numis’ Growth Capital Solutions team supports a broad range of innovative, high-growth private companies. Through primary and secondary capital raisings, strategic and M&A advice, Numis has helped disruptors change the face of their industries. In the past 12 months, Numis has raised nearly $5 billion for the world’s most ambitious private companies, with an average round on round valuation uplift of three times.
Numis has recently supported category-defining companies, including:
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