Private Equity Isn't Selling Right Now, But Maybe You Should

A dam has been built in the middle market M&A world. This is no ordinary beaver dam, but the equivalent to that of the Hoover Dam.

This dam's construction reflects a convergence of factors within the private equity sector and the broader M&A transaction landscape. Currently, private equity firms are flush with cash reserves, totaling a staggering $1.2 trillion in buyout funds alone. However, despite this abundance of capital, the market is experiencing an absence of investment opportunities. The low supply of acquisition targets is made worse by several factors, including elevated interest rates, debt multiples at a 10-year low, and traditional lenders being tight with credit and underwriting. All of this makes it difficult for private equity to buy new companies. READ MORE

Navigating DEI When Hiring Executive Leaders In Private Equity

In a historically homogenous sector, diversity rises as a leading differentiator among high performing private equity firms and their portfolio companies. From rising interest rates to increasing C-suite turnover, private equity firms and their portfolio companies have recently faced a spectrum of challenges that have limited their potential to achieve growth, according to a new report from Slayton Search Partners’ Dan Dunn. “Leaders within these firms are embarking on a variety of strategic imperatives to jumpstart their value creation,” he said. “For some, that looks like tapping into industry-specific digital transformation, overhauling their tax strategy, or building strategic ESG initiatives.” READ MORE

What To Know As A First-Time Entrepreneur Seeking Investors

Embarking on my entrepreneurial voyage was akin to setting sails on uncharted waters. It was full of lessons about perseverance, agility and the sheer grit needed to transform an idea into a thriving reality. Now with more experience under my belt, I’ve gained a new perspective on the other side as an investor.

As a result, I co-founded a foundation with another impact investor to provide resources and funding to entrepreneurs like me. Here are the lessons I've learned that can help bridge the seemingly vast expanse between nascent entrepreneurs and seasoned investors. READ MORE

The war on ESG doesn’t make sense. Least of all for taxpayers

“I am really frustrated. They [the VC Funds] don’t want to engage when we ask about ESG but they will have to. We are getting somewhere in all other asset classes already.” During our latest conversations with asset owners and limited partners (LPs) in the U.S., some were complaining that the early-stage venture capital (VC) investors they were investing in weren’t keen on ESG. 

The head of ESG at a major American asset owner explained in depth how many big U.S. VC funds have resisted scrutiny of ESG reporting and integration. This is nearly a standard practice in all other asset classes. READ MORE

Senators introduce bill to criminalize private equity ‘looting’ in healthcare

Senators Ed Markey (D-Mass.) and Elizabeth Warren (D-Mass.) have introduced a bill that would impose criminal penalties for private equity firms that extract wealth from healthcare organizations. 

The Corporate Crimes Against Health Care Act of 2024 would allow federal prosecutors to hold private equity executives liable if the business practices of their healthcare entities result in the death of a patient. Penalties include a stint in a federal prison and stiff fines.

Warren and Markey said the legislation is aimed at curbing “looting” by private equity, where investors purchase healthcare practices and hospitals only to run them out of business by prioritizing short-term profits. READ MORE

3 Ways to Get Venture Capital's Attention

If you're like most founders with a big idea, you will need significant funding to bring it to life. That means you're probably contemplating raising venture capital. Raising VC funds might be one of the most challenging hurdles in your company's early life. This is especially true given the state of VC funding in 2024.

There is no silver bullet to ensure you'll receive VC funds. You'll need assets to attract VC attention. From there, simplicity and clarity are critical to helping you catch VC interest, make it through their process, and receive funding. Importantly, you'll need a large market where your company can grow to a sizable value. READ MORE

Microsoft, Nvidia Lead In Investing In AI Startups, But Others Close Behind

Just last week it was reported chip giant Nvidia, Salesforce Ventures  and Cisco all participated in a $450 million investment for Toronto-based AI startup Cohere. That same day, Cisco and its investment arm — Cisco Investments — made news when it launched a $1 billion AI investment fund.

Those noteworthy machinations by some of the biggest names in tech are just the latest examples of these corporate giants’ desires to at best be leaders in the generative AI sector — and at worst not fall behind. READ MORE

There are risks lurking in the world of private capital

New Orleans is (in)famous for being a party town that seems to inhabit a parallel universe — what happens on Bourbon Street usually stays there, however wild. Not so, however, in America’s fast-expanding private capital world. On Wednesday, the New Orleans-based Fifth Circuit US Court of Appeals ruled in favour of six private equity and hedge fund groups to toss out a transparency rule introduced last year by Securities and Exchange Commission. This had required private equity, hedge fund and real estate groups to start issuing quarterly performance and fee reports, perform annual audits, and to stop giving some investors preferential treatment over redemptions and special access to portfolio holdings. READ MORE

Private equity bosses warn of lower returns

Private equity executives have warned that their industry faces the prospect of years of lower returns as they seek to sell assets following a frenzy of investments during the coronavirus pandemic. After booming in recent years and raising record hauls of cash, buyout groups face a challenge in exiting from trillions of dollars worth of unsold companies. Many of those deals were agreed during the 2021 to 2022 window of low interest rates and buoyant markets. READ MORE

How Startup Investments Help Corporations Accelerate Their Growth

In my experience, corporations often struggle to be more innovative and get ahead in the marketplace. They often develop their own research and development organizations, which are intended to develop new product and technology ideas.

However, such traditional approaches are typically not fast enough to stay ahead of industry trends. Corporations also collaborate with top universities to develop new technologies, but such research partnerships usually move slowly. READ MORE

The Portion Of US VC Funding That Went To Female Founders Hit A New Peak In 2023, Thanks To Massive AI Deals

In 2023, the proportion of U.S. venture funding that went to startups with at least one female co-founder reached a new peak. In fact, a quarter of all funding — $34.7 billion — was invested in companies with at least one female founder, Crunchbase data shows.

The uptick in the portion of startup investment going to female-founded companies — up from 15% in 2022 — was in large part due to a number of billion-dollar-plus rounds raised by AI companies with a female co-founder. READ MORE

In 2024, many Y Combinator startups only want tiny seed rounds — but there’s a catch

When Bowery Capital general partner Loren Straub started talking to a startup from the latest Y Combinator accelerator batch a few months ago, she thought it was strange that the company didn’t have a lead investor for the round it was raising. Even stranger, the founders didn’t seem to be looking for one.

She thought it was an anomaly until she talked to about nine other startups, Straub told TechCrunch. They were all looking to raise nearly identical rounds: $1.5 million to $2 million with around a $15 million post-money valuation, while giving up only 10% of their companies — aside from YC’s standard deal, where it takes a 7% stake. Most had raised the majority of that already from multiple angels with only a few hundred thousand dollars’ worth of shares left to sell. READ MORE

Eleventh Circuit Invalidates Contest Providing Venture-Capital Funding for Black Women

The U.S. Court of Appeals for the Eleventh Circuit held that a contest providing venture-capital funding only to Black female applicants is substantially likely to violate section 1981 of the Civil Rights Act of 1866, which prohibits race discrimination in the making of contracts. The 2-1 split decision in American Alliance for Equal Rights v. Fearless Fund Management, LLC (No. 23-13138, June 3, 2024) held that an organization devoted to “ending racial classifications and racial preferences in America” was substantially likely to prevail on its § 1981 claim to enjoin the restricted contest, and it remanded the case for entry of a preliminary injunction. READ MORE

13% of VC firms aren’t planning to raise another fund

Thirteen percent of venture GPs don’t plan to raise another fund as the LP pullback spoils fundraising efforts, according to PitchBook’s semiannual VC Tech Survey. That’s double the rate in H1 2023, when 6% said they had no plans to raise another fund.

Nearly half of venture firms—44% of those surveyed in mid-2023—had previously pushed back their plans to re-enter the fundraising process, as institutional investors became increasingly concerned with overexposure to the asset class. READ MORE

How to get a job in private equity

Private equity is a vast industry covering a range of investment firms from global companies like Blackstone, KKR, and The Carlyle Group to hundreds of smaller players that specialize by geography or sector such as Vitruvian Partners, Sovereign Capital Partners, or Bridgepoint Group. The biggest firms tend to operate beyond just private equity and invest in asset classes like real estate and private credit as well.  READ MORE

Will Europe Ever Match The U.S. For Startup Investment And Growth?

“Europe is less hard-working, less ambitious, more regulated, and more risk-averse than the US, with the gap between the two continents only getting wider.” Those were the words of Nicolai Tangen, the boss of Norway’s $1.6tn Norges Bank Investment Management (The Petroleum fund), in an interview with the Financial Times in April. As one of the largest single investors in the world, with increasing holdings in the US compared to Europe, Tangen’s views matter. But is he right, and what does it mean for Europe’s startups? READ MORE

VC funds take a shine to new gen’s D2C brands

Several direct-to-consumer (D2C) brands in sectors such as food and beverages, apparel, health and wellness — founded by scions of families running traditional businesses in similar categories — are drawing

These entrepreneurs with their inherent understanding of the business and deep-rooted connections in the supply chain ecosystems are best placed to launch modern avatars of legacy businesses, according to investors backing them. READ MORE