Europe’s Unfair Advantages

In the eyes of many, Europe lacks the entrepreneurial spirit and innovation drive that has come to define Silicon Valley and the broader US start-up ecosystem. The common narrative suggests that European founders are less driven, that venture capital in Europe lags far behind, and that the continent’s fragmented markets and complicated regulatory environments stifle creativity and innovation. Add to this the economic downturns of recent years, and you would be forgiven for assuming Europe is a less-than-favourable environment for start-ups and venture capital.

But that view ignores a deeper truth. While Europe may indeed have some hurdles to overcome, it also possesses several unique advantages that make it a formidable region for entrepreneurial and venture capital success. As Jyri Engeström, a Finnish venture capitalist with more than a decade of experience from Silicon Valley and now a partner at Lifeline Ventures in Helsinki, puts it, Europe has some "unfair advantages." It’s time we take a closer look at these advantages that could foster a rethink of the European start-up narrative. READ MORE

VC megadeals are booming — and AI is surprisingly not the top category

Ask any VC if we’re still in a venture capital bear market and that investor will almost certainly tell you no, that funding is still flowing for good companies.

That might sound like spin, because anecdotes abound about how rough it still is for those raising now. And for good reason. Down rounds — that is, raising at a lower valuation than a previous round, which founders want to avoid unless they have no choice — were still at near record highs through the first half of 2024, according to Aumni’s Venture Beacon report. Around 39% of late-stage deals were a down round, according to Aumni’s report. That covers Series B and beyond, with the biggest percentage of down rounds at Series C and beyond. READ MORE

4 Areas Where Seed Funding Is Strong

In the not-that-distant future, robots and AI assistants will be taking on a much larger share of our work. Humans will consume growing quantities of increasingly elaborate digital content. And we’ll find more creative ways to store the carbon generated by all our activity. READ MORE

Does US Startup Funding Rise In Post-Election Years?

U.S. startup investors don’t base funding decisions on who is in the Oval Office. But even so, election year uncertainties do appear to impact investment tallies.

That was the broad finding from a Crunchbase survey of U.S. startup funding for the past six presidential election cycles. Data showed that total investment across stages rose moderately to sharply in four post-election years. READ MORE

The Power of Bootstrapping — How to Build a Thriving Business Without Venture Capital

After recent conversations with Y Combinator alumni and other promising entrepreneurs, I hear many of them have no plans to raise venture capital — ever. While raising funds is often crucial, bootstrapping is an approach every entrepreneur should consider.

Contrary to the "move fast and break things" mantra that echoes through Silicon Valley, bootstrapping often means adopting a steady and deliberate approach. This allows for a deeper understanding of your market and more meaningful connections with early customers. READ MORE

Private equity management fees fall to lowest level since records began

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Management fees on private equity buyout funds have fallen to their lowest levels since records began in 2005 as fund managers fight to attract investors in a tough fundraising environment. According to industry specialist Preqin, the average management fee for buyout funds that closed this year or were still raising money in June was 1.74 per cent of investors’ committed capital. The previous low was 1.85 per cent in 2023. READ MORE

FoodTech: The Next Frontier for Venture Capital

The world of FoodTech is rapidly evolving, capturing the attention of venture capitalists eager to invest in the future of food. As technology transforms how we grow, process, and consume food, understanding the landscape of FoodTech investments becomes crucial. This article explores the journey of FoodTech in the venture capital space, highlighting key trends, challenges, and success stories that are shaping this exciting frontier. READ MORE

Venture capital is going to war over the election. Here's the data to prove it.

America is bitterly divided over politics, and the tech industry — once portrayed as a liberal bastion — is no different. Among the sector's investor class, these disputes typically play out behind closed doors, with checkbooks rather than angry social media posts.

This election cycle, investors at the top venture capital firms have plowed tens of millions of dollars into the election, both backing their favored political candidates and just cannily promoting commercial interests. READ MORE

Private Equity M&A Moves Will Face Sharper Focus From Regulators

US antitrust regulators are directing their gaze on the role of private capital in mergers and acquisitions as they scrutinize the strategies of an industry involved in an increasing share of deals.

The Federal Trade Commission and Justice Department’s Oct. 10 updates to a merger notification program will require disclosures that the regulators say will shed more light on private equity firms and minority investors. READ MORE

Secondary sales of private equity stakes set for record levels amid cash crunch

Private equity investors are selling second-hand stakes in ageing funds at a blistering pace this year, as pensions and endowments find ways to get out of unlisted investments amid a slump in deal activity that has curtailed cash payouts. So-called secondary deals, in which investors in private equity funds sell their stakes to new investors for cash, or a PE firm arranges the sale of a company stake to a new fund, are forecast to smash all-time records, according to investors and advisers who spoke to the Financial Times. READ MORE

Private equity skirts losses to the economy’s cost

Private equity firms made poor bets in the decade leading up to the 2022-2023 Federal Reserve tightening cycle. So why do creditors seem so eager to let the Masters of the Universe off the hook? A Moody’s research report showed last week that PE-backed companies have defaulted at a 15 per cent rate in the past two years. That is twice the proportion of companies that are not owned by a financial sponsor firm. The differential should not be surprising given the elevated leverage in PE transactions. But “default” increasingly does not mean “bankruptcy”. Rather the rating agency contends that so-called “distressed exchanges” counts — where lenders or bondholders swap into new paper at a discount to 100 cents on the dollar — are a blight. READ MORE

These 10 Charts Show Startup Funding Downturn Continues Despite AI’s Ascent

Despite a strong pull from the AI sector, venture investment in the third quarter of 2024 wasn’t able to overcome its now more than two-year-long slump.

That’s the broad takeaway from our third-quarter venture funding numbers. In every major startup region in the world — North America, Europe and Asia — startup investment fell in Q3, Crunchbase data shows. The only region we track that saw a modest uptick was Latin America, but even there, it’s hard to ignore just how far venture funding has fallen since its 2021 highs. READ MORE

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