Private Equity & Venture Capital: Trends in Capital Raising

Several interconnected trends are transforming the funding landscape for businesses of all sizes. Firstly, public markets have become increasingly volatile, with higher regulatory burdens, intense disclosure requirements, and unpredictable investor sentiment. As a result, more companies are choosing to remain private for longer or relying on alternative capital providers to fund their growth.

Secondly, technology has significantly lowered barriers to capital access. Digital investment platforms, crowdfunding portals, and fintech-driven credit solutions allow businesses to raise capital more efficiently and at earlier stages than ever before. Investors, in turn, are actively seeking exposure to higher-growth private markets, especially in emerging economies.

Finally, economic pressures such as rising interest rates, inflation, and slower GDP growth means that companies must adopt more flexible, diversified capital structures. These shifts collectively set the stage for the rising significance of private equity (PE), venture capital (VC), and alternative funding models.

Private equity has become an influential force in the global finance ecosystem, known for its ability to drive operational improvement, restructure businesses, and unlock long-term value. In Southern Africa, its impact continues to deepen.

The SAVCA Private Equity Survey shows that PE firms deployed R23.7 billion in 2024, reflecting investor confidence despite economic uncertainty. Growth capital remains the largest investment category, accounting for 38.4% of all activity which serves as evidence of PE’s role in supporting expansion, modernisation, and market entry.

Businesses are turning to private equity for several strategic reasons:

• Access to expertise: PE firms bring operational experience, strategic direction, and management support.
• Flexible, patient capital: Unlike public investors, PE funds typically operate with longer investment horizons.
• Improved governance: Through stricter oversight and stronger leadership structures, PE-backed companies often achieve sharper performance metrics.
• Capital for transformation: PE allows firms to undertake expansion, digital transformation

Locally, private equity is increasingly aligned with national development priorities. Renewable energy alone represents more than 25% of total PE deal value, driven by the urgent need to address energy security.

PE firms are also significant supporters of SMEs, with more than half of portfolio companies falling within the small and medium-sized enterprise category. This highlights the sector’s contribution to growth, employment, and economic resilience.

For students and emerging finance professionals, understanding PE’s influence is crucial. Corporate finance today extends beyond traditional ratio analysis; it requires an ability to interpret value creation plans, evaluate operational strategies, and assess non-traditional capital structures.

While private equity focuses on established companies, venture capital plays a different but equally important role in financing early-stage, high-growth businesses with disruptive potential. VC funding is essential for technology-driven sectors, especially where traditional financiers may consider the risk too high.

According to the SAVCA Venture Capital Survey, R13.35 billion in VC investment activity was recorded in 2024, with the majority of deals occurring in early-stage technology ventures. Fintech, software, AI and digital platforms dominate the sector, with more than 53% of investments made at the start-up stage.

The significance of VC in the modern economy

• Accelerating technological innovation
• Supporting high-growth and digital-first businesses
• Creating new market opportunities
• Stimulating job creation and competitiveness
• Beyond the capital, VC investors offer mentorship, networks, and strategic direction.

Read More: From a Receptionist to a Career in Investment Management

According to the SAVCA Venture Capital Survey, early-stage investment activity in South Africa remains highly concentrated in two key provinces. The Western Cape continues to dominate the VC landscape, accounting for 52% of all deals, its highest share since 2022. By contrast, Gauteng’s share declined to 26.9%, down from 27.9% in 2023 and far below its peak of 53.8% in 2020.

The survey also highlights a notable increase in non-South African deal activity, which rose to 14.6%, the highest recorded to date. This trend reflects the growing internationalisation of South African startups as they expand into foreign markets, often supported by foreign co-investors alongside local capital.

The future of capital raising is being reshaped by private equity, venture capital and innovative funding models. These mechanisms go far beyond traditional banking and they are strategic pathways that enable corporate transformation, innovation and sustainable growth.

For students and professionals in corporate finance, understanding these shifts is essential. As businesses seek more agile, creative, and resilient financing strategies, finance education must evolve to equip learners with the knowledge and skills needed to navigate an ever-changing financial world.

These days, venture capital, private equity, and alternative funding methods are not just "nice-to-know" subjects; they are influencing how companies raise money, grow, and add value.

With Milpark Education’s Immersive Online approach, you can improve your knowledge with practical, future-focused finance expertise. Get ready for the realities of today's financial markets and apply for a course in corporate finance or investment-focused studies today.