How Corporates Receive — And Revive — Investment Strategies

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Businesses today are extra careful about where they place their money — if they invest at all, that is. This week, we take a look at how companies are investing. In some cases, firms are investing in outsourced services to stay ahead of the competition. In other scenarios, it’s a business owner’s friends and family doing the investing. PYMNTS also explores the venture capital and lending spaces as professional investors make some changes and as businesses look to invest in themselves.

 

$2.4 billion was invested in FinTech startups in Q3 2016, calculated KPMG and CB Insights in their most recent Pulse Of Fintech report. It’s impressive, but researchers noted that it’s a drop in VC investment compared to the quarter previously. However, total investment in these startups — venture capital, in addition to angel, hedge fund and mutual fund investment and more — topped $17.8 billion. Researchers agreed that this shows a continually high level of interest in the financial technology and innovation space among investors, despite the overall drop in VC funding. KPMG and CB Insights pointed to Asia as the new hotspot in FinTech investment after the U.S. and Europe dominated in 2015.

83% of U.S. SMEs say friends and family have invested in their business, either financially or by providing operational or emotional support. A new Bank of America survey released last week uncovered the importance of friends and family to the small business owner, as a third said these people provide the most help in running their business. Many business owners say a friend or family member actually holds a key role in the company, either as an employee, advisor or investor. According to Bank of America, friends’ and families’ investment in a small business can offer SMEs a way to thrive in an otherwise challenging market.

A 53% CAGR for the online SME lending industry is sure to be welcome news for small business borrowers. The growth rate, expected to continue through 2020, suggests alternative online lending marketplaces will continue to invest in their industry to fill in ongoing gaps in SME lending left by traditional banks, according to researchers at Technavio. The industry’s impressive growth could also be attributed to the fact that small businesses now have far easier access to credit by going online as they look to invest in their own businesses. Plus, Technavio said in its report, small businesses have shown an improvement in inventory and working capital, enabling balance sheet lenders to more accurately finance a borrower.

More than half of CFOs will boost investment in outsourced financial reporting, found the latest data from EY. The global survey examined the struggle CFOs face in their financial reporting efforts, often hampered by a flood of data and ongoing technological changes. More than half (56 percent) also said that they are prioritizing transforming their financial reporting model as these professionals look to boost accuracy, efficiency and effectiveness in the process. Investing in outsourcing could be an effective way to manage the headache of managing data, and with better financial reporting and insights at hand, CFOs may guide their companies towards boosting investment outwards to grow.

A 5% increase in lending to Canadian mid-size companies is good news, but overall, PayNet’s Canadian Small Business Lending Index fell in September across the small and medium-size business landscape. PayNet President Bill Phelan did admit that the figures are “a little bit of a setback,” but there is evidence that Canada’s economy is rebounding after a brief 2015 recession. And with mid-sized firms boosting their investment in their businesses, shown by their increased borrowing demand, the stats hint at a similar rebound in SME lending in the country ahead.