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Analysis

Private financial markets: The Road to Next

Market trends affecting investor-backed private companies

The Road to Next series explores investment trends defining the private financial markets and covers strategies, liquidity concerns, market dynamics, and more. This latest issue focuses on robust environmental, social, and governance (ESG) investing that shows no signs of abating.

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Supported by a broad swath of participants, ESG dealmaking is undaunted

ESG investment at the governmental level has been staggering, while multiple groups of institutional investors and asset managers have pledged to ESG mandates across their holdings. Dealmaking in the sectors most related to ESG—cleantech, climate tech, and impact investing—remains healthy. As we examine ESG market, investment, and regional trends in 2022, here are some key findings that have emerged:

  • 2021 saw record-breaking tallies, and dealmaking in 2022 has been quite strong. At $15.7 billion in 2022 to date, investment spanning the three primary ESG-related sectors remains robust.
  • While ESG frameworks and policies are proliferating, translation into impact, especially quantifiable changes, remains a hurdle.
  • Cleantech innovations are multiplying quickly, beyond better-known tech spanning mobility and well-known energy generation tech such as solar and wind.

Road to Next: ESG adoption and dealmaking remain robust and resilient

   

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Amid current market turmoil, proper governance and social standards help companies better navigate risk, leading to improved outcomes. As for environmental concerns, the ripple effects of many processes can spread far and lead to unanticipated costs, especially as regulations tighten; addressing these costs upfront helps build toward longer-term sustainability.

— Heather Gates, Audit & Assurance Private Growth Leader, Deloitte & Touche LLP

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Explore previous editions of our Road to Next Report series

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A public forum for private financial markets

Deloitte and PitchBook have collaborated to produce a distinct methodology and array of data sets in order to answer some of the most pressing questions for venture capital and private equity-backed companies. The Road to Next series focuses on critical issues companies and their backers face, covering liquidity concerns, investor strategies, macroeconomic pressures, important regulations, market dynamics, and more.

In each edition, Deloitte subject-matter specialists discuss the issues dominating industry discussions in the current environment, especially the hurdles that growing companies face as they scale. As new market trends develop, additional themes and data sets will be featured to address potential concerns that private companies may have, whether they are planning to stay private or preparing for a new phase of their journey.

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