Institutional investors rank second only to banks as the primary source of funding for micro, small and medium-sized enterprises (MSMEs), according to a new survey by Tradeteq.

About a quarter (24.7 per cent) of small businesses said they source funding from institutional investors for new projects, while almost a half (49.3 per cent) said they source it from traditional banks.

The survey also found that more than half (54.4 per cent) of institutional investors were ‘very likely’ to decrease their portfolio allocation of commercial property in favour of private credit last quarter.

Increasing private credit investment will help drive funding of MSMEs and stimulate growth, Tradeteq said.

Tradeteq head of international markets, Mattia Tomba, said: “Previously, institutional investors took a more cautious approach to investing in MSMEs and startups, but we’re now seeing them display a greater appetite for risk.

"At the same time, the businesses are meeting stricter compliance criteria of the lenders and are therefore able to benefit from lower borrowing costs.”

This article originally appeared on our sister title, Insurance Asset Management.

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