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The mountain of dry powder — money that investors have committed to private equity and venture capital funds — has set a new record high, as firms anticipate that deal markets will continue improving.
Since December 2023, private equity and venture capital funds have added $49.44 billion to their cash reserves, nearly twice as much as they did during the previous 12-month period, bringing the total to more than $2.62 trillion, according to S&P Global Market Intelligence. READ MORE
– Still fearless. The floodgates have opened, and the corner of Silicon Valley that supports former President Donald Trump in the 2024 election is becoming more vocal. Marc Andreessen and Ben Horowitz, the founders of elite venture capital firm Andreessen Horowitz are the latest, announcing yesterday that they personally plan to donate millions to organizations supporting the Trump campaign.
They object to the Biden administration’s policies around regulation of tech, especially a proposed tax on unrealized capital gains. Others have cited the antitrust efforts of the Biden administration’s Federal Trade Commission chair, Lina Khan, as a reason for their support of Trump. READ MORE
Billionaire venture capital investors Marc Andreessen and Ben Horowitz are reportedly set to announce their plans to make donations in support of former President Trump's presidential campaign.
Axios reported Tuesday that the two founders of VC firm Andreessen Horowitz are expected to outline the reasoning behind their plan to financially back Trump's White House bid in a podcast later on Tuesday afternoon. The Information had previously reported on the duo's donation plans. READ MORE
Until relatively recently, private equity buyers were viewed as largely benign. Where antitrust regulators expressed concerns with private equity buyers, it was generally in the context of them being viewed as sub-optimal divestiture buyers. This changed during the Trump administration where the Democratic minority began to voice concerns about the incentives of private equity players. READ MORE
If there’s one topic that has dominated the minds of private equity investors in recent months, it’s liquidity. It is so present that you can now even buy T-shirts on Amazon emblazoned with the phrase “DPI is the new IRR”. DPI, or Distributions to Paid-in Capital, measures how much capital a fund has returned to its investors relative to what has been called. Putting DPI ahead of the industry’s widely promoted performance metric IRR (Internal Rate of Return) sends a clear message to managers: stop focusing on returns and start selling stakes to generate liquidity. READ MORE
As private equity (PE) firms and financial sponsors of all varieties look for ways to generate liquidity in today’s economic climate, partial exits are becoming a tool that some firms leverage to provide returns to investors. PitchBook reports on several recent examples of partial exits by firms across various sectors, noting that these are not necessarily a bad thing, just a sign of the current climate. With firms beginning to utilize this option more frequently, below we look at the issues to consider when weighing a partial exit. READ MORE
The economist Hyman Minsky’s name can once more be heard in ominous whispers around Wall Street. Private equity firms have recently been undertaking such funny financial manoeuvres that those who invest in the funds have had to put a stop to it. With private equity markets depressed, fund managers have been taking on so-called net asset value (NAV) loans to pay their investors’ dividends. Far from being happy to get their money, investors realised that the funds they had invested in were borrowing from Peter to pay Paul, and told them to cut it out. READ MORE
The rise and rise of private markets has a feeling of inexorability about it. Despite increased financing costs and an uncertain growth outlook, private market assets under management totalled $13.1tn on June 30 last year, having grown at nearly 20 per cent a year since 2018, according to consultants McKinsey. While fundraising has declined from its 2021 peak, a recent survey by State Street found that a majority of institutional investors intended to increase their exposure to almost all private markets, including infrastructure, private debt, private equity and real estate. READ MORE
Funding to women-founded companies overall (including mixed-gender teams) has declined in the first half of 2024 compared to the first half of 2023, picking up $15.5 billion out of $93 billion — 17% — compared to the $24.8 billion out of $87.7 billion — 28% — in the first half of 2023, according to PitchBook data. READ MORE
It was barely half an hour after shots rang out at a Donald Trump rally in Pennsylvania, with the candidate apparently among the wounded, that Elon Musk took to X, formerly Twitter, and formally backed him for president. “I fully endorse President Trump and hope for his rapid recovery,” Musk wrote, sharing video of the chaotic scene. He meanwhile set about blaming the Secret Service for the attempted assassination, which killed one attendee and injured two others, and amplifying posts that implied their “diversity hires” were a factor in the failure to prevent it. READ MORE
Venture capital has significantly changed since its peak in early 2021. Low interest rates helped investors deploy significant capital into unicorn startups, helping them reach new heights and make their public debuts. However, as the pandemic's effects started to take a toll and inflation began to strain available capital, more companies took longer to list and hit the market. So, how should investors and businesses navigate this current market? And what options exist outside of venture capital for businesses looking to raise funds? READ MORE
Venture capital has its vice presidential candidate, with Donald Trump yesterday picking J.D. Vance to be his running mate.
The big picture: Vance wasn't a successful or failed VC. Namely because he didn't have enough time, spending just six years at three different firms.
Catch up quick: Vance was a corporate lawyer who went to Silicon Valley and got connected with Peter Thiel, via a two-year stint at venture capital firm Mithril Capital. READ MORE
Global startup funding picked up in the second quarter, reaching $79 billion — rising 16% quarter over quarter and 12% from the $71 billion invested in Q2 2023. Mega-rounds — fundings $100 million and above — accounted for much of the increase this past quarter.
Funding to companies in AI more than doubled quarter over quarter to $24 billion — representing 30% of all dollars invested, the largest quarter for AI funding in recent years. And there are signs that larger M&A deals increased in Q2, providing much-needed liquidity to venture capital markets. READ MORE
The worldwide IPO market in coming quarters faces possible turbulence from intensifying regional conflicts, the uneven pace of monetary easing and “an election super-cycle,” EY said, noting that more than 50% of the world’s population generating nearly 60% of global gross domestic product goes to the polls this year.
Election outcomes “may prompt changes in government spending, debt levels, interest rate policies, currency strength and global supply chains,” EY said. READ MORE
So far, 2024 is shaping up as a not-so-shabby year for robotics startup funding.
Developers of workplace robots, robotic surgery technologies, and even humanoid models have all raised large rounds in the past six months. The artificial intelligence funding boom has also helped boost the space, with investors backing big deals at the intersection of AI and robotics. READ MORE
I recently had the pleasure of speaking at the VC Platform Summit in Miami, a 3-day event that brought together 500-plus VC professionals focused on platform roles across 340 firms.
The platform role has come to wear a lot of hats in the world of private capital—from business development to community-building to recruiting and marketing—and matured substantially over the past decade. Perhaps the most central and important theme today is portfolio value creation. READ MORE
Over the past decade, private equity investors have shown a particular interest in acquiring or investing in various healthcare providers and services. This includes physician practices across multiple sub-specialties, home healthcare providers, behavioral healthcare clinics, skilled nursing facilities, urgent care clinics, and other specialty clinics. This trend is driven by the attractive returns that healthcare investments have generated, fueled by factors such as a fragmented market, industry growth due to an aging population, technological advancements, and evolving healthcare needs. READ MORE
Private equity's exit drought has led to a record number of dividend recaps, which is when PE funds pay themselves to kick the debt grenade down the road and into a storm drain.
A more academic description would be that PE-backed companies issue new debt and use some/most/all of the proceeds to pay shareholders a dividend. READ MORE
In the first quarter of 2024, global venture capital funding grew by approximately 16% quarter over quarter, reaching $89 billion distributed over 4,600 deals (see Figure 1). The US experienced the most substantial spike, with a 72% quarter-over-quarter increase in funding, aided by large investments in technology, AI, energy, and healthcare. China saw a 13% increase in quarter-over-quarter funding, bolstered by investments in the automotive and AI sectors. In contrast, Europe reported a 28% decline in funding, primarily because of ongoing macroeconomic uncertainty and the UK’s technical recession.
Average deal sizes grew across all funding stages, with early-stage deals recording 43% quarter-over-quarter growth, followed by seed- and late-stage deals with sequential growth of 17% and 21%, respectively (see Figure 2). In particular, Series B deals surged, propelled by sectors such as generative AI, clean energy, and healthcare. READ MORE
A wannabe venture capitalist who made a “bogus offer” to buy Richard Branson’s satellite company is being sued by the Securities and Exchange Commission (SEC).
Matthew Brown, from Dallas-Fort Worth, owner of investment managing firm Matthew Brown Companies LLC, submitted a fake picture of a bank account in March 2023 that said he had $182 million while trying to purchase Virgin Orbit, a now-defunct company that launched small satellites into orbit, according to the SEC lawsuit. READ MORE