EY reports US entrepreneurs show optimism for 2025, with strong focus on AI adoption, strategic fundraising and M&A activities, despite economic challenges
The global business landscape has been marked by significant challenges in recent years, from the aftermath of the COVID-19 pandemic to geopolitical tensions and economic uncertainties.
Despite these hurdles, entrepreneurs have consistently demonstrated resilience and adaptability.
In the US, a country known for its entrepreneurial spirit, business leaders have been navigating these turbulent waters with a mix of caution and optimism.
As 2025 approaches, understanding the mindset and strategies of these entrepreneurs provides insights into the future of business and innovation on a global scale.
The first edition of the EY (the multinational professional services firm) Entrepreneur Ecosystem Barometer, which surveyed 500 established entrepreneurs with companies making more than US$1m in annual revenue, offers a comprehensive look at the current state of entrepreneurship in the US and the outlook for the coming year.
Entrepreneurs bullish on growth and AI adoption
Despite the higher interest rates and stubborn inflation of recent years, 76% of the entrepreneurs surveyed saw revenue growth in 2024, with 20% experiencing more than 20% growth.
Key facts from the survey:
76% of entrepreneurs saw revenue growth in 2024, with 20% experiencing more than 20% growth
82% of entrepreneurs believe the market will be stronger in 2025
73% of entrepreneurs are optimistic about AI and its benefits to their business
94% of entrepreneurs are past the consideration phase for implementing AI
91% of entrepreneurs plan to fundraise over the next 18 to 24 months
72% of entrepreneurs are considering a strategic transaction within the next 18 months
Women entrepreneurs lead in AI adoption, with 45% having established AI systems
This performance was relatively consistent across industries.
The survey also reveals that 82% of entrepreneurs believe the market will be stronger in 2025.
This confidence exceeds that of CEOs of large corporate companies, with 68% of respondents to EY's September 2024 CEO Outlook Pulse Survey expressing optimism about the outlook for the US over the next 12 months.
AI emerges as a key focus area for entrepreneurs.
"Entrepreneurs are the backbone of the US economy and their optimism serves as a barometer for growth and innovation".
EY Americas Entrepreneur Of The Year Director, Andrew Jordan
Nearly three-quarters (73%) of the entrepreneurs surveyed are optimistic about AI and believe it will bring benefits to their business.
Additionally, a significant 94% of entrepreneurs report that they are past the consideration phase when it comes to implementing AI, indicating that their technology investments are designed to further their lead rather than to catch up.
Women entrepreneurs are leading in AI adoption, with nearly half (45%) saying they have established AI systems and that their teams are fluent in their use, notably higher than the total average of 36%.
Fundraising and strategic transactions on the horizon
EY indicates a renewed focus on fundraising among entrepreneurs.
An overwhelming 91% of entrepreneurs are planning to fundraise over the next 18 to 24 months, with 30% aiming to raise over US$10m.
However, self-funding remains the most popular option, with 53% of entrepreneurs planning to invest their own money into their businesses.
Loans from financial institutions are also a significant source of capital, with 45% of entrepreneurs considering this route.
Private equity and venture capital are other key sources, with 44% and 37% of entrepreneurs, respectively, planning to tap into these funds.
Furthermore, the amount of capital sought varies among different groups of entrepreneurs.
A majority (57%) of entrepreneurs whose company revenue exceeds US$5m are hoping to fundraise over USD 10 million next year, compared to 10% of those whose revenue is less than US$5m.
“Contrary to conventional belief, entrepreneurs don’t need to burn the midnight oil to be successful”, says Andrew Jordan, EY Americas Entrepreneur Of The Year Director.
“They are approaching their business with a productive and intentional mindset, allowing them to be fully present when at work and honed in on innovation.”
Strategic moves and market outlook
In addition to fundraising, many entrepreneurs are considering strategic transactions to accelerate growth.
A majority (72%) of all respondents confirmed they are considering a strategic transaction within the next 18 months.
This figure jumps to 91% for entrepreneurs with US$5m or more in revenue.
Mergers and acquisitions are also the leading target (75%), followed by private sales (58%) and initial public offerings (IPOs) (39%).
This robust pipeline of deals suggests that entrepreneurs are keen to leverage strategic transactions to drive growth and scale their businesses.
The broader market outlook is also encouraging.
IPO proceeds over the first three quarters of 2024 have outpaced the full-year levels of 2023, and deal volume has more than doubled compared to 2023, according to the EY Q3 US IPO Trends Report.
A healthy public market is likely to have a cascading effect on the broader appetite for strategic transactions, further fueling entrepreneurial optimism for 2025 and beyond.
Andrew says: "Entrepreneurs are the backbone of the US economy and their optimism serves as a barometer for growth and innovation".
Anna Horndahl, EY Americas Entrepreneur Of The Year Deputy Director concludes: “Entrepreneurs are continuous risk-takers who swim upstream, powered by optimism and a heavy dose of grit.
“They move quickly and react in real time to changing market forces. Their agility and ability to pivot are key to moving innovation forward and driving growth.”
Sourced from Technology Magazine