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Conventional wisdom entering 2024 was that private equity dealmaking would surge on a series of interest rate cuts by the U.S. Federal Reserve.
Fast forward: The prediction was right, but for the wrong reasons.
By the numbers: U.S. private equity activity is up 54% year-over-year, with nearly $132 billion of deal value, according to LSEG. READ MORE
The private equity industry is showing resilience and optimism for 2024 despite shifting market dynamics, according to the S&P Global Market Intelligence 2024 Private Equity and Venture Capital Outlook. According to the outlook, private equity executives are notably more optimistic about deal activity in 2024 with 60% expecting an improvement, compared to 34% last year. Survey respondents also showed increased interest in private credit and shared that artificial intelligence (AI) will play a larger role in deal sourcing and target selection.
"This year's survey revealed more optimism among both general partners (GPs) and investors as they are racing for a return to increased deal activity with increasing valuations allowing them to exit their backlog of investments and return cashflows to limited partners (LPs)," said Thomas Mercieca, associate director and lead author for the report, at S&P Global Market Intelligence. "There is also increased investor interest in private credit allocation, with 61% of LPs reporting that they will increase their asset allocation to the asset class in 2024. We are pleased to see that despite macroeconomic challenges still lingering, the industry remains adaptable and poised for growth throughout 2024." READ MORE
While some analysts might call the current state of the venture capital industry a winter, there is still a warm investment climate for startups and established businesses. Even if your business isn't on the same scale as OpenAI—setting the tone for the AI industry and securing a reported $10 billion funding round from Microsoft—the funding opportunities are still abundant.
At all times, investment firms and VCs have resources to support innovators and cutting-edge technological novelties. Based on what I'm seeing in the industry, they're now looking for businesses that show promise for predictable growth and liquidity and align with current VC trends. READ MORE
Thanks to online retailers and the magnetic draw of unlimited two-day shipping, convenience stores have never felt less convenient.
It felt like an overnight shift from our usual way of swinging by the drugstore to an easy press of the button (or set to auto-ship) to get us what we need as quickly as we need it. Before these online retailers rose to prominence, convenience was a term we held quite loosely. But suddenly we have discovered a new need and an entirely new meaning of convenience. READ MORE
When an investor passes on you, they will not tell you the real reason,” said Tom Blomfield, group partner at Y Combinator. “At seed stage, frankly, no one knows what’s going to fucking happen. The future is so uncertain. All they’re judging is the perceived quality of the founder. When they pass, what they’re thinking in their head is that this person is not impressive enough. Not formidable. Not smart enough. Not hardworking enough. Whatever it is, ‘I am not convinced this person is a winner.’ And they will never say that to you, because you would get upset. And then you would never want to pitch them again.” READ MORE
Typically, when a venture-backed startup raises a follow-on round, the size of the investment and the company’s valuation go up as well.
One expects a Series D round, for instance, to be larger than a Series C. Another bump usually occurs should the company secure a Series E. READ MORE
With Microsoft-backed data security firm Rubrik set to enter the public market this week, talk about the rejuvenated IPO market has returned as many wonder who may be next, and when.
Rubrik is set to join the likes of chip startup Astera Labs, Walmart-backed Ibotta and online forum host Reddit as one of the bigger IPOs so far this year. Those IPOs came after last year’s second-half offerings by Arm Holdings, Instacart and Klaviyo helped thaw an IPO pipeline that had been frozen for nearly two years. READ MORE
While a growing appetite for mergers and acquisitions appears to be afoot, there are signs some buyers are nonetheless more guarded when it comes to tapping their retention bonus budgets for payouts designed to keep target companies’ top executives and employees in their seats. READ MORE
Startup investors kept a tight hold on their wallets in the first quarter of 2024, Crunchbase data shows. There were big exceptions — some AI, healthcare, energy and robotics startups, among others, received massive investments — but overall the tone was cautious as the year got started.
To break it down further, let’s look at 11 charts based on recent Crunchbase data that show the state of the startup world in early 2024. READ MORE
Private capital activity has increased in recent years. For startups, raising private capital offers financial support for development and innovation.
Our firm's capital raises have included obtaining capital through funds and direct investment. Drawing from that experience, here is a look at the current private capital landscape and strategies for successfully raising capital. READ MORE
Startups in sectors that saw steep funding declines may be getting fresh attention from investors, courtesy of new industry-focused funds that closed this year.
In areas from consumer products to apps to gaming, U.S. venture firms have raised fresh capital to invest in industries where funding levels remain drastically below peak. This, along with a modest uptick in first-quarter venture investment, indicates some sectors may have hit a cyclical low last year and should be heading higher. READ MORE
With VC firms in the U.S. spending only half of the $435 billion funds raised between 2020 and 2022, dry powder reserves have reached a record high. According to Pitchbook and the Financial Times, $311 billion still awaits deployment.
Meanwhile, terms like "unicorpse" are being thrown around as high-growth companies are running out of money. READ MORE
In the world of venture capital and business start-ups, the greatest measure of success is a company that is valued at more than $1 billion and earns over $100 million annually. These businesses are called “unicorns,” and according to the analytics firm CB Insights there are more than 1,200 such companies operating in the U.S. today, over 500 of which were created in the past decade. So why is it that despite significant financial backing over the same decade – via venture capital and government funding – very few educational technology companies have reached unicorn status? Let me count the ways. READ MORE
Dear venture capitalists,
I've been covering your industry for over two decades, through booms and busts and back again. If there is to be another two decades, you'd better change your behavior. And quick.
The basic VC model is cyclical. Raise money, invest that money, exit via IPOs or strategic sales, and then use those exits to raise more money. READ MORE
A brisk new trade in the financial futures of millions of retirees is unnerving some US workers, regulators, and politicians who worry that private equity firms will invest corporate pensions recklessly.
Recent lawsuits challenging AT&T, Lockheed, and Alcoa’s plans to turn their pensions over to Athene, which is owned by Apollo, casts a broader spotlight on private equity’s push into new corners of finance. Sen. Sherrod Brown has held hearings, cheered on by the Teamsters, and the Labor Department is weighing whether to require companies to at least consider whether an insurance business is owned by private equity before turning over their pensions. READ MORE
Warren Buffett famously said that when he owns outstanding businesses with outstanding management teams, his favourite holding period is “forever”. Fix-and-flip private equity bosses have come round to his way of thinking. READ MORE
The fundamental bargain of M&A seems pretty simple. At the closing of a deal, the buyer pays the seller, and gets a business in return.
It hasn’t been so straightforward for the family who agreed in 2022 to sell its California supermarket Save Mart to the private equity firm Kingswood Capital Management, which valued the grocery chain at $245mn. READ MORE
Last quarter, our analysis of Crunchbase data shows 178 AgTech startups raised a total of $1.3B. This represents a 1% increase in funding and a 5% increase in deals from Q4 2023. There were three AgTech exits last quarter, all through M&A transactions. READ MORE
Today’s social divisions are as palpable as ever, and on the receiving end are often people from marginalized communities, immigrants and refugees.
As investors, we know many founders who have recently arrived to the U.S. from countries suffering humanitarian crises, or whose teams are stuck in war zones. The challenges they face in everyday life — let alone finding success as an entrepreneur — are unimaginable to many. READ MORE
US venture fund returns remain negative but are trending up once again, a hopeful sign for a struggling fundraising market after a sustained period of portfolio markdowns.
One-year rolling IRR bottomed out in Q4 2022 at -17.9% before rising to -9.1% in Q2 2023, according to the latest PitchBook-NVCA Venture Monitor. READ MORE