Private Equity’s Mid-Life Crisis

There’s trouble on the horizon for private equity. As the 50-year-old industry matures, investment returns are falling. In fact, for the past three decades, average buyout performance — the return a buyout firm generates from buying, improving, and then selling a company — has been on a downward trend. A study by Harvard professor Josh Lerner, State Street, and Bain, for example, found a meaningful drop of six percentage points between the 10-year annualized return in 1999 and the comparable return in 2019. READ MORE

Funding, New Unicorns And Exits Continue At A Strong Pace In May 2021

May 2021 marked the third-highest funding month for global venture funding in the past decade, with venture investors spending  $43.7 billion last month, up 50 percent year over year.

That ranks May behind only two other months that saw greater amounts of venture funding: April 2021, and March 2021, which holds the high-water mark with $54 billion spent by venture investors around the world in a single month. READ MORE

Private Equity Market Poised For Growth

The private equity (PE) market is poised for growth as it continues to play a critical role in the economic recovery.

Six months into 2021, it is safe to say that the successful vaccine rollout and upbeat market expectations are helping the United States economy recover from the hardships it faced during 2020. The International Monetary Fund expects the U.S. economy to grow by 6.4% in 2021. Similarly, the private equity market is slated to grow over the next several years. Worldwide private equity assets under management are predicted to reach $5.8 trillion by 2025, according to a report by Deloitte, a global consulting firm. READ MORE

Are SPACs Here to Stay?

SPACs (or special-purpose acquisition companies) seemingly became an overnight sensation as the alternative way to take a company public. But, according to a report published by UBS in April, SPACs actually entered a cooling period this spring after a hot winter.

“SPAC return patterns over the last six months also suggest fairly convincingly that speculation, not fundamentals, was driving prices. Consequently, SPACs…became a quintessential ‘buy the rumor, sell the news’ asset,” the report stated. READ MORE

Bill Ackman’s Universal Music deal heralds the era of Spac 2.0

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Bill Ackman has already once tried — and failed — to redefine the Spac. Now he is trying again. The hedge fund manager’s special purpose acquisition company, Pershing Square Tontine Holdings, which raised $4bn last year, was not just the largest blank-cheque vehicle ever launched. It did away with some of the perks for founders, such as free shares, which have given the Spac phenomenon a bad name in some quarters. READ MORE

As Americans Head Out Of The House, These Startup Sectors Hope To Tag Along

More than half of American adults are now fully vaccinated, and with that millions of people are leaving the confines of their homes to once again dine out, meet new people, celebrate weddings and take road trips after more than a year of social distancing. 

For tech startups, many of which have been beneficiaries of lockdown life, the impacts of the economic reopening aren’t entirely straightforward. Some companies, including dating apps, expect a boom as vaccinated singles kick their romantic pursuits back into gear. Ditto for wedding planning platforms helping couples plot out COVID-postponed nuptials. READ MORE

Funding Surges For Startups Serving Older Adults

Over the past 100 years, the average human lifespan has roughly doubled. And as life expectancy rises, the senior population is growing, too. By 2050, well over a fifth of Americans are expected to be 65 and over. An American born today, meanwhile, can expect to live to nearly 80.

In short, we’re getting older. And startups and venture investors — ever cognizant of growth markets — are scaling up efforts to serve our fast-growing aging population. READ MORE

SPAC Merger Madness with 21 Deal Votes in June

SPAC investors should expect June to play out similar to how May ended -- light on-going S-1, IPO, and deal activity; pre-deal SPACs at a discount; limited IPO and deal pops; and heavy downward pressure on de-SPACs. But, the good news is that the June SPAC market is healthier than February/March's "peak SPAC" market. 

The current negative narrative around SPACs could finally change this month though as the media loses interest in the old, "bash SPACs" take and sees more investors taking advantage of the yield+optionality play. SPAC true believers know that the $10 backstop of redemptions provides downside protection that isn't available elsewhere in equities, yet still enables them capture the large equity upside. READ MORE

Venture Capital’s New Favorite Industry

The Covid-19 pandemic brought digital health and wellness into the mainstream — and it’s made the retail health and wellness tech industry an increasingly attractive target for venture capitalists. 

Digitized health and wellness investment activity hit a peak in 2020, generating $7.3 billion in venture capital deal value across 449 deals, according to PitchBook. The industry started off the new year strong, as well: In the first quarter of 2021, industry deal value hit a quarterly record of $4.2 billion across 153 deals, PitchBook said in a first quarter report on emerging technology investments. READ MORE

How to win consulting, board and deal roles with PE and VC funds

Would you like to work with private equity and venture capital funds?

There are relatively few jobs directly inside private equity and venture capital funds, and those jobs are highly competitive. However, there are many other ways you can work and earn money within the industry — as a consultant, an interim executive, a board member, a deal executive partnering to buy a company, an executive in residence or as an entrepreneur in residence. READ MORE

Venture Dollars Flood Into Semiconductor Space

The global computer chip shortage is not just causing headaches for laptop- and smartphone-makers. It also appears to be pushing significant venture capital dollars into a space often shunned by investors fixated on the next big software play or social app.

Already this year, chipmakers and designers have hauled in massive venture funding rounds, as a combination of factors have thrown the industry into disarray. READ MORE

Wall Street’s Spac gravy train hits the buffers

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The fees US banks earn from special purpose acquisition companies have plunged in the past two months, disrupting what had been a main profit generator on Wall Street. Investment banks made a little over $430m from initial public offerings of Spacs and mergers between Spacs and private companies in April and May, according to data from Refinitiv. That accounted for 4.5 per cent of overall investment banking fees for the period. READ MORE

Private capital investors pushed to invest in tech

“As limited partners (LPs) and regulators demand greater transparency and insight, fund managers are under pressure to adopt reporting technology to satisfy these demands,” explains Moritz Haarmann, Head of Product Development, AssetMetrix. “The trend for digitisation in private capital has been in action for several years, but it has come into the spotlight even more over the course of the past year. Covid has forced private capital investors to adapt and invest in technology in order to maintain or even create operational excellence.” READ MORE

Private equity groups on diverging paths with post-pandemic bets

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The reopening of the US economy from the pandemic is setting up a contest between the most powerful investment firms on Wall Street. Private capital groups including Blackstone, Apollo Global Management and Carlyle Group built up sharply different portfolios before and during the pandemic, putting billions of dollars to work even as the first wave of infections gathered pace last spring. READ MORE

We need more ‘patient’ capital behind early-stage climate tech

According to a recent PwC report, venture capital investment in clean technologies aimed at slowing the climate crisis increased from $418 million in 2013 to $16.3 billion in 2019, or a whopping 3,750 percent.

In addition, during the past year, more than 300 global companies — including Microsoft, Delta Air Lines and Amazon — have committed to achieving net-zero emissions before 2050, and many also have pledged to fund innovation. READ MORE

Why Startup Acquisitions Are On Fire

The public markets usually get all the attention when it comes to exits, but acquisitions of venture-backed companies have been rapid-fire this year, with 2021 set to outpace the previous three years.

So far this year, there have been 1,070 acquisitions of venture-backed companies with a reported total of $91.9 billion, according to Crunchbase data. We’re not even halfway through the year yet, but that puts us on pace to surpass 2018 (which saw 1,945 deals with a reported total of $129.9 billion), 2019 (1,946 deals with a reported total of $87.7 billion) and 2020 (1,692 deals with a reported total of $154.9 billion). READ MORE

Gensler pledges tough SEC scrutiny of SPACs, warning of fraud risk

The SEC slowed the market for SPACs earlier this year when staff accountants released a memo saying that warrants attached to SPAC shares should be treated as liabilities rather than as equity. The agency approved only 13 SPACs last month compared with 109 in March.

In order to comply with the new guidance, SPAC sponsors need to hire accountants and auditors to value the warrants each quarter using a complex calculation. When treating warrants as equity, sponsors make a simpler, up-front calculation. READ MORE