Fundraising in Private Markets
Capital markets form an important part of a dynamic market-driven economy. They ensure capital is efficiently allocated between investors and the opportunities they believe will deliver the most attractive risk adjusted returns. The most visible part of capital markets is the stock market, where retail, institutional and other types of investors buy and sell shares in about 3600 public companies, and $46bn per year in new capital is raised via initial public offerings[1].
Yet, the public markets are just the tip of the iceberg when it comes to the whole capital markets ecosystem in the US. Every year about 20,000[2] companies raise capital in private markets to fund business expansion and strategic initiatives. We estimate that operating companies raise up to $200bn per year in the private market – significantly more than is raised via IPOs[3]. On the other hand, the secondary market for private securities is a tiny fraction of the size of public secondary markets, potentially hampering capital allocation.
With a mission to enhance the structure of private markets, Texture Capital conducted a survey of companies who had recently tapped the private markets, seeking to better understand the process, pain points and opportunities for improvement.
The key findings we discovered are:
Key Takeaways: Fundraising in Private Markets
To download the full report please visit: https://www.texture.capital/fundraising-paper-download
[1] Source: https://www.renaissancecapital.com/IPO-Center/Stats/Proceeds 2019 data
[2] Texture Capital analysis of SEC EDGAR filings.
[3] See: https://blog.texture.capital/introducing-texture-capital/