Small firms are set to benefit from a surge in confidence among private equity investors over recent months, new research has revealed.
The latest British Venture Capital Association (BVCA) quarterly survey revealed that 72 per cent of investors feel the UK’s business climate is ‘favourable’ or ‘very favourable’ for investment – up from 60 per cent in January.
This mushrooming optimism contrasts starkly with March last year, when just 19 per cent of investors felt the conditions were right to part with their money.
Over a third of those questioned in the latest poll expected business conditions to improve further this quarter, with just one per cent of investors predicting a decline.
Encouragingly for startups seeking funding, over half of private equity investors planned to increase their investments over the next three months.
Investee businesses are also expected to perform well over the next quarter, with 65 per cent of investors forecasting improvements among the firms they have funded.
Favourable interest rates and the improving economy are believed to be the main factors behind the rise in confidence.
This increase in optimism will be warmly welcomed by small businesses who are looking for funding from other sources than banks.
Startups have been urged to look far and wide in order to secure finance, with banks often not providing the best deals for entrepreneurs.
John Mackie, chief executive of the BVCA, said that the improvement in business conditions have contributed to strong growth in investment activity.
“Private equity will continue to be a driving force behind the UK economy, with firms increasing investment activity and portfolio companies widely expected to further improve over the coming months.
“This is great news not just for the private equity industry, but for British business as a whole,” he said.
