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Three years ago, U.S. entrepreneurs were enjoying one of the best funding environments in decades. Venture capital and private equity hit all-time highs as banks loaned at historically low interest rates. All you needed to get a term sheet, it seemed, was a smile and a pitch deck.

- By Graham Winfrey and Kevin J. Ryan

Three years ago, U.S. entrepreneurs were enjoying one of the best funding environments in decades. Venture capital and private equity hit all-time highs as banks loaned at historically low interest rates. All you needed to get a term sheet, it seemed, was a smile and a pitch deck.

Then, the music stopped. In 2022, VC and PE activity declined, while business owners in need of debt financing faced a higher cost of capital thanks to a series of steep interest rate hikes. Things got worse in 2023, as Silicon Valley Bank collapsed, interest rates kept rising, and investment activity fell for the second straight year.

Though 2024 has seen only slight increases in VC and PE investment, there are reasons to expect a rebound in 2025. Investors are sitting on large stockpiles of capital, and in September, the U.S. Federal Reserve cut interest rates for the first time since 2020, with more cuts on the way. That alone could help trigger more deals in private equity, given that investors often adopt a herd mentality, says James Andersen, co-founder of Stamford, Connecticut-based PE firm Clearview Capital.

"This business has always been cyclical, he says. You go through times when deals just aren't getting done, and then you have an explosion of deals."

Like every firm on Inc.'s FounderFriendly Investors list, Clearview has a history of backing founders, and comes recommended by entrepreneurs. It also doesn't force the PE playbook on founders the way some large buyout firms do.

If you're going to go with a firm like that, you have to be OK with the idea of somebody dictating what you do every day, Andersen says. "We'll work with you and make suggestions, but we don't want to micromanage you."