Writing Venture Capital’s New Fintech Playbook

OpenAI’s $6.6 billion fundraising event affirms the historic firepower of venture capital. But, even as the private markets soar, OpenAI’s round dynamics are irrelevant to most founders. After a dramatic influx of cash into the asset class over the last several years, venture capital is now at a crossroads defined by a critical conflict: founders who raise too much money will make very little. Even as mega-rounds and mega-funds grow, a subset of investors is quietly instructing founders to prioritize capital efficiency and ownership over valuation. READ MORE

I Was a Founder Before I Became an Investor — Here's How It Shaped My Investment Strategy

Before becoming an investor at Bread, I was a startup founder. I know what it's like to stand before a room full of people, palms sweating, asking them to believe in me. I also know the relentless effort it takes to prove, time and again, that their faith — and their money — will pay off. My journey from founder to funder was shaped by these experiences, and it's why I approach investing differently.

As a founder, I benefited most from investors who went beyond providing capital. They mentored me, guided me through difficult decisions and became true partners in my entrepreneurial journey. Now, as an investor, I aspire to offer the same kind of support to the founders I back because it's something that the startup world has long been missing. READ MORE

Why It’s Harder for Women Founders to Get Venture Capital Funding

Let’s say that two entrepreneurs, a man and a woman, co-found a startup and raise venture capital. But the business struggles, and they shut it down and go their separate ways. Eventually, each of them independently forms a new business. Do these entrepreneurs have the same chance of getting venture capital funding for a second time?

The answer is no, according to Yale SOM’s Heather Tookes, whose new research uses this scenario as a natural experiment of sorts to understand how potential gender bias shapes the world of entrepreneurial financing. It’s long been recognized that women are underrepresented in the group of startup founders who receive funding from venture capital investors. But how underrepresented, and why, are more difficult questions to answer. READ MORE

Venture Capital Write-Downs Hit College Endowments

Venture capital write-downs continued to weigh on U.S. college and university endowments in the latest fiscal year, tempering their ability to reap rewards from one of the strongest U.S. stock market showings of the last decade.

Harvard University’s endowment said Thursday it had gained 9.6% for the fiscal year ended June 30, citing an absence of gains in private markets. Stanford University's and Dartmouth College’s endowments both gained 8.4%, while Columbia University’s and the University of Pennsylvania’s returned 11.5% and 7.1%, respectively. READ MORE

Did that startup founder really work through his wedding?

Thoughtly co-founder Casey Mackrell had a big week. First, he got married. Then, he went viral.

At his wedding reception, Mackrell needed to quickly give a colleague access to code that could only be unblocked from his laptop. His fellow co-founder Torrey Leonard seized the moment by taking a photo to capture Mackrell wrapping up a pull request, staring at his computer in a ballroom as his friends and family danced in the background, floral arrangements and fairy lights abounding. READ MORE

Private equity’s latest source of leveraged buyout funding is US farmers

Duckhorn Portfolio would not consider $11 a heady price for a bottle of its luxury wine. But for a price per share of its company, it represents the height of decadence. The Napa Valley headquartered vintner this week sold itself for $11.10 a share, more than double its previous trading price and an implied enterprise value of $2bn.

Duckhorn had gone public at $15 per share in 2021. But a recent big acquisition, youth apathy towards wine, and a small cap float collectively meant that Wall Street turned sour. Its buyer, the private equity firm Butterfly Equity, is taking a big swig with some unusual backers. READ MORE

Why a private equity executive wants more businesses to adopt employee stock ownership plans

A coalition of organizations spearheaded by Pete Stavros, a co-head of global private equity at KKR, is advocating for legislative reforms that would make it easier for larger companies to give employees part ownership of their firms.

All about ESOPs. The structure of the benefit, known as an employee stock ownership plan (ESOP), was made possible by the 1974 Employee Retirement Income Security Act (ERISA), and is often offered as a type of retirement plan. Companies typically offer shares to their workers through a trust, with the amount of stock they receive growing as they spend more time at the firm. READ MORE

When Will Public and Private Equity Markets Finally Converge?

The investment world is abuzz with plans for mixing public and private assets in single vehicles that the masses can buy. Private assets, fund companies say, have been out of everyday investors’ grasp for too long, and they are eager to extend their hand.

Mutual funds, though, have been mixing public and private equities for years, though the SEC limits them to holding a maximum of 15% in such illiquid holdings in open-end funds. Much of the current excitement around private assets surrounds closed-end vehicles like interval funds. In those structures, fund companies can create portfolios made up entirely of private companies. READ MORE

PE-Backed Firms Suffering Higher Default Rates, Moody’s Says

Companies owned by private equity firms are landing in default more frequently than other speculative-grade borrowers, according to a report from Moody’s Ratings.

Private equity-backed companies defaulted at a rate of 17% between January 2022 and August of this year, twice the rate of non-private equity-backed companies, Moody’s said in the report released Thursday. Among the 12 largest private equity sponsors — as ranked by Moody’s — the default rate was slightly lower at around 14%. READ MORE

Is private equity in trouble?

Private equity has had quite a boom over the last couple of decades. Here are some stats: The number of private equity firms has grown from just 24 in 1980 to 17,000 in the U.S. alone today. In 2000, the global private equity market was $579 billion. Today it’s over $8 trillion.

We’ve reported on how private equity firms have bought up companies in everything from nursing homes to restaurants and real estate. But is there trouble ahead for private equity? READ MORE

Jamie Dimon questions public funds' private investments

JPMorgan Chase & Co CEO Jamie Dimon recently confronted public pension fund managers about channeling more of their investments into private assets, a trend he said could be at odds with their stated policy concerns.

"You call me up and talk to us about all the issues you're interested in. But when you make huge investments in the private side, you don't get that kind of transparency," he told a meeting of the Council of Institutional Investors in New York on Sept 10.

The gathering included many public pension fund officials, whose decisions Dimon said are a major reason many more companies are now choosing to raise capital outside U.S. public equity markets. READ MORE

Slash and burn: is private equity out of control?

Whenever I ponder the enormity of the multitrillion-dollar industry known as private equity, I picture the lavish parties thrown by Stephen Schwarzman – and then I think of the root canals. Schwarzman is the billionaire impresario of Blackstone, the world’s most colossal private equity firm. In August, he hosted a 200-person housewarming party at his $27m (£21m) French neoclassical mansion in Newport, Rhode Island. It was a modest affair compared to the grand soiree he threw himself at his Palm Beach, Florida, estate for his 70th birthday, in 2017. That black-tie bash was itself a sequel to his multimillion-dollar 60th, in 2007, which became a symbol of the sort of Wall Street excess that led to the global financial crisis. The Palm Beach party, which some reports say cost more than $10m, featured Venetian gondolas, Arabian camels, Mongolian acrobats and a giant cake in the shape of a Chinese temple. “Brilliantly stimulating” was the billionaire industrialist David Koch’s review. Gwen Stefani serenaded Schwarzman as Jared Kushner, Ivanka Trump and several members of her father’s cabinet looked on. It was a world in miniature, ruled over by a modern Croesus – the perfect symbol for a form of money-making that has infiltrated almost every facet of modern life. READ MORE

Interest Rates And The Search For Liquidity In Venture Capital

I was at a venture investor dinner last month where our host asked each of us to stand up and, as part of our self-introductions, to state where we needed help from the group and where we could help others. One of my fellow investors, a partner at a well-known firm, joked that he was “looking for this thing called liquidity” and asked if anyone knew where to find it. The wave of laughter from the crowd spoke volumes. This also caused me to reflect on the things we’ve learned about liquidity over the last few years. Fortunately, it appears that the decline in interest rates means that many of us will begin to find liquidity in 2025 and beyond. READ MORE

VCs bet on data infrastructure to keep fueling AI

Data is fueling the AI machine—but amid unprecedented expansion, its engine shows signs of strain.

That’s why investors are pumping money into data infrastructure startups. These companies design tools and frameworks to collect, manage, process, store and analyze massive amounts of data. They are a core part of the foundation for the large language models on which generative AI is built. READ MORE

The CIA runs a nonprofit venture capital firm. What’s it investing in?

The Central Intelligence Agency is responsible for collecting information relevant to national security, updating policymakers and conducting top-secret actions. Also running an investment firm called In-Q-Tel. According to its website, its mission is to “be the premier partner trusted to identify, evaluate, and leverage emerging commercial technologies for the U.S. national security community and America’s allies.” READ MORE

Venture capital investors wary of dealmaking despite stock market momentum

Venture capital investors in the United States remained cautious about dealmaking amid economic uncertainty, according to a PitchBook-NVCA report released on Thursday, underscoring challenges in the industry despite a rally in public markets.

About $37.5 billion of deals were clinched in the third quarter ended Sept. 30, nearly 32% lower than the preceding quarter, the report said. READ MORE

Private equity giants are ‘creating and collecting’ $220B in medical debt from 14M Americans

If you’ve recently endured surgery or some illness that required hospitalization, here’s something else to make you feel ill: Private equity has fueled a medical debt spiral in pursuit of profit, according to an industry watchdog.

A just-released report from the Private Equity Stakeholder Project reveals that medical debt now impacts 14 million people and totals at least $220 billion. Remarkably — sickeningly, even — this averages $15,714.29 per person or roughly one-quarter of the median American salary of $59,436 per the U.S. Bureau of Labor Statistics. READ MORE