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Global venture funding hit an all-time high in the first quarter of 2021, per Crunchbase data. That sort of increase in venture funding is typically attributable to growth in late-stage funding.
But, along with a surge in late-stage funding, we also saw a marked increase in early-stage funding last quarter, with $39 billion invested in nascent startups, up from $25 billion in the fourth quarter and $22 billion in the first quarter of 2021. READ MORE
What’s a fair price when you are selling something to yourself? On Wall Street, that’s not a trick question.
A growing number of private equity firms are establishing new funds to buy portfolio companies from funds they already control. With the buyer and seller each an entity controlled by the same private equity firm, scrutiny is growing over how they price such deals. READ MORE
Entrepreneurs rarely consider who will ultimately own their startups—and what that means for founders—when they court venture capitalists. New research suggests they should.
A startup funded by VCs who tend to work with the same group of partners are more likely to seek a faster exit by selling the company to a larger one. In contrast, startups funded by a VC syndicate with less familiar co-investors are most likely to exit through a potentially splashy IPO that could let founders retain more control, says Harvard Business School professor Rory McDonald, who evaluated more than 42,000 new ventures in a new study. READ MORE
Forward Partners’ More than Money report published earlier this month made uncomfortable reading for the U.K. VC community. While 92% of investors claim to add value, 65% of founders disagreed and gave their investors a low value-add rating, saying they "tried, but failed" to add value beyond capital. READ MORE
The National Venture Capital Association (NVCA) expressed strong support for a bill introduced in the Senate this week to increase investment in emerging technologies.
The Endless Frontier Act, sponsored by Sens. Chuck Schumer (D-NY) and Todd Young (R-IN), would provide increased investment in early research, education, training, facilities, and entrepreneurship to support U.S. leadership in key emerging technologies. Leveraging public-private partnerships, the legislation makes commercializing these technologies through new company formation a priority for many of the programs. It is seen as a critical activity for developing emerging startup ecosystems and spreading opportunities across the country. READ MORE
Paige Finn Doherty never pictured herself as a venture capitalist — until she binge-watched HBO’s “Silicon Valley” during winter break in college.
The TV series was supposed to be a satire about the tech industry’s myopia and monoculture, not career inspiration. But Doherty was intrigued by the show’s two female tech investors. READ MORE
President Biden’s expected proposal to double the U.S. capital gains tax rate, part of his $4 trillion economic plan for reshaping the American economy, is significant for the U.S. startup and venture capital sectors, but the proposed hike likely wouldn’t affect the average employee at a venture-backed startup.
Biden will propose increasing the capital gains tax rate for high-income earners from 20 percent to 39.6 percent, Bloomberg reported on Thursday. The proposal would affect people who earn $1 million or more and the federal tax rate for high-income investors could reach 43.4 percent (that’s the current surtax on investment income, plus the new capital gains tax rate), per Bloomberg. READ MORE
One of the hottest corners of financial markets is getting slightly less manic.
What's happening: Billionaires, celebrities and athletes have raced to create special-purpose acquisition companies, or SPACs, over the past six months. These "blank check" firms, which raise money from investors and then go hunting for takeover targets, have been flagged as a sign of overexcitement on Wall Street. READ MORE
We have formulas galore for valuing fast-growing, money-losing companies in hot sectors. But at the end of the day, there’s one metric that matters: How much are investors willing to pay?
When it comes to companies taking the SPAC route to public markets, it seems investors are willing to pay much less than a few weeks or months ago. Shares of many venture-backed companies that carried out the most highly valued mergers with blank-check acquirers are trading for a fraction of their former highs. READ MORE
Nearly a year ago, as the nation reckoned with the horrifying video of George Floyd’s murder in Minneapolis, Alejandro Guerrero, a general partner at early stage venture capital firm Act One Ventures, sat alone at his home in Los Angeles, coming to terms with what he had just seen and bracing for the fallout.
“All the signs were that LA would go up in flames,” Guerrero recalls of a city already on edge from the stress of the coronavirus pandemic, pushed further to the brink amid racial tensions. “I was at home, in the dark in my living room, watching the footage and just crying and processing.” READ MORE
A new report from eFront, the leading financial software and solutions provider dedicated to Alternative Investments, shows that private equity holding periods extended in 2020 to a record 5.4 years on average, at the same time as returns dipped.
The data also showed that investments held for longer periods tend to produce higher returns – though this was not the case in 2020. READ MORE
Overall funds raised fell slightly year-on-year due primarily to an apparent short-term discontinuity in the early months of the pandemic, but, the pre-pandemic pace of fundraising returned by Q4. AUM growth and investment performance in most asset classes eased off in the spring as the industry adjusted to new working norms, then came back strong in the latter half of the year. Private equity purchase multiples kept climbing and dry powder reached another new high, standing at USD1.4 trillion (60 percent of the private markets total), having grown 16.6 per cent annually since 2015. READ MORE
Private equity is carefully watching the D.C. debate on corporate taxes, in which Senate Democrats seem to be settling on a 25% rate.
Zoom in: Marginal rates obviously matter, but for PE it's just an appetizer before the weedier work begins on issues like corporate interest deductibility.
Why it matters: Corporate interest deductibility is a straw that stirs the PE drink, better enabling buyout firms to finance acquisitions by adding debt to portfolio company balance sheets. READ MORE
Robert Johnson was on CNBC (December 17, 2020 around 6:30 a.m. CST), and like many others, wanted someone to offer more venture capital for minority venture development. With all due respect, he needs to be clearer on exactly what he means, who should be funding this, and what risks are they taking? Also how can the risks be reduced?
Here's why. VCs like to fund after Aha when there is proof of potential. READ MORE
It's been a good time to go public for high profile unicorns lately. Coinbase, Roblox and Airbnb are just a few of the major private companies to make their Wall Street debuts in recent months.
But transitioning from a startup to a publicly traded firm with more investors and increased scrutiny from Wall Street analysts and government regulators is not easy. READ MORE
Sandhya Hegde is a partner at Unusual Ventures, leading investments in enterprise SaaS platforms. Prior to Unusual, she was an early employee at Amplitude, joining as a product manager at the single-digit ARR stage. She climbed the company ranks leading pivotal efforts across product development, fundraising, category creation, and go-to-market strategy. She went on to become the executive vice president of marketing and growth, helping establish Amplitude as a unicorn and category leader in product intelligence overseeing 20x growth in its ARR. READ MORE
The SPAC market has cooled considerably in recent weeks, with companies that went public by merging with a blank-check entity trading well off their highs, and a growing number of regulatory hurdles emerging for an investment strategy that often dominated financial news headlines in 2020.
The drama is almost certain to impact the private equity industry. READ MORE
It’s common knowledge that most startups fail before they find a strategic acquirer or IPO. Therefore, venture capital is an inherently high-risk industry. However, especially if you’re invested in a smart firm, it can potentially be the highest-returning asset class in your portfolio. READ MORE
As is customary among VCs, Vertex US tries to build relationships with founders in hopes that the startups will agree to let the early-stage firm lead their next round of financing. After recently meeting with one such founder about 30 times and helping the company put together diligence materials, Vertex was sure that they were the frontrunner to lead its Series A.
But at the last minute, a crossover fund stepped in with a proposal at a valuation that was about $40 million more than Vertex was offering. READ MORE
President Joe Biden’s ambitious infrastructure spending plan would see hundreds of billions of dollars spent on high-tech sectors including expanded broadband access, investment in domestic semiconductors, renewable energy and electric vehicles — all areas where venture capitalists and other startup investors spy business opportunities. READ MORE