Should You Accept or Reject VC Funding?

Venture capital for startups often comes with strings attached. Some investors want more than an equity stake; they also want executive power. Such intrusion warrants consideration of the unthinkable: rejecting VC funding. A few anecdotes from the startup world illustrate the need to be careful in who you select for investors. The goal is to ensure a stable source of funding that avoids undue intrusion and threatens your future equity stake. READ MORE

America Has Central Planners. We Just Call Them ‘Venture Capitalists.’

In 2009, the U.S. government extended a $535 million dollar loan guarantee to a manufacturer of solar panels named Solyndra. The aim of this subsidy was to expedite the development of renewable energy technology, as the global economy’s reliance on carbon energy was threatening the long-term survival of human civilization. Shortly after Uncle Sam bankrolled the solar firm, the price of a material called polysilicon plummeted by 89 percent. Solyndra’s competitors used polysilicon in their solar panels, and thus, enjoyed a rapid collapse in their costs of production. Solyndra did not. The firm abruptly failed, taking $528 million in federal funds down with it. READ MORE

Startup managers show their mettle

Due to the general trend of the markets over the past few years, startup managers found it difficult to raise money, given investors could source better returns elsewhere, usually at a lower cost. The situation has now changed. As the Covid-19 pandemic hit the world, markets have been turbulent, giving emerging managers the opportunity to generate uncorrelated returns. READ MORE

Private equity firms, investors sign global initiative on diversity

Nearly 50 buyout firms and investors have signed a global initiative that aims to improve diversity and inclusion among their ranks, a U.S. private equity investor association said on Monday.

The move comes as Wall Street tries to shake off its male- and white-dominated image. Only about a fifth of the employees in the alternative asset management industry are women, a Preqin survey found in February. READ MORE

SPACs meet GP stakes in a $13B mega-deal

Dyal Capital Partners is one of a few names driving a recent surge among private equity firms acquiring minority stakes in other asset managers. Dyal holds so-called GP stakes in more than 40 different investors. That has effectively turned its portfolio into a sort of privately held index for a not-insignificant chunk of the PE industry, with a piece of investors such as Vista Equity Partners and Silver Lake. READ MORE

VCs who want better outcomes should use data to reduce founder team risk

VCs expect the companies they invest in to use data to improve their decision-making. So why aren’t they doing that when evaluating startup teams?

Sure, venture capital is a people business, and the power of gut feeling is real. But using an objective, data-backed process to evaluate teams — the same way we do when evaluating financial KPIs, product, timing and market opportunities — will help us make better investment decisions, avoid costly mistakes and discover opportunities we might have otherwise overlooked. READ MORE

Pulling off private equity in a pandemic

MLC AM’s Private Equity Fund III had its first close with $140 million in committed capital at the end of October, but conversations around the fund began in late 2019 – shortly before COVID-19 emerged in the city of Wuhan, China. 

With international travel quickly halted, chief investment officer Mr Armitage told InvestorDaily that it was “fortuitous” that Zoom was one of the companies that already sat within MLC AM’s investment portfolios as the raising process went entirely online, allowing conversations with clients to continue even as domestic and international borders slammed shut. READ MORE

Are women in the startup world being unfairly targeted?

Last fall, Audrey Gelman seemed to be on top of the business world—or at least one pale-pink corner of it. At 32 years old, the former political operative and well-connected New Yorker had raised more than $117 million in venture capital for the Wing, the upscale women’s club and coworking startup she had cofounded in 2016. Women from Los Angeles to London flocked to the Wing’s pastel-painted offices and star-studded events, where movie stars and presidential candidates alike talked about “asking for what you want” and “blazing your own trail.” READ MORE

Monthly Funding Recap November 2020

Global funding slowed down a little in November, year over year, following a blockbuster third quarter. All told, global funding last month came in at $23 billion, down 12 percent from November 2019, according to Crunchbase data.

Invested dollars in 2020 outpaced 2019 in both the second and third quarters, but is unlikely to do so in the final quarter of the year. READ MORE

8 Myths of Private Equity

If you mention private equity to the average person, their first thought will likely be negative. They’ll think of an industry that destroys companies in search of the almighty profit, irrespective of who gets in the way.

In reality, private equity is an important instrument. At a certain point as a founder, you will have taken your company as far as you can on your own. To continue growing, you’ll need private equity. READ MORE

Private equity remains resilient in the face of pandemic-induced volatility

Published today, 2021 Global Private Equity Outlook, a report produced by global law firm Dechert LLP in association with Mergermarket, finds that private equity (PE) funds still have plenty of dry powder to invest and are far more agile and less risk averse than their corporate counterparts.

Key findings of the report, which examines how PE firms continue to successfully navigate unprecedented market volatility, include: READ MORE

25 Years in Private Equity: Three Key Evolutions

The year 2020 has been, perhaps, the most volatile year ever for private equity. The industry came into the new year with record levels of dry powder, then saw a vigorous Q1 deal market succumb quickly to almost no transactions due to the economic and health impacts of COVID-19, followed by a period in which the laser focus was on helping portfolio company management teams navigate a difficult environment and seize opportunities in the marketplace where available. As we look forward with the hope of returning to normalcy in 2021, this is a good time to assess how the industry has evolved and ensure we don’t lose sight of the lessons that have been learned along the way. READ MORE