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A decade after one of its co-founders wrote the five words that would go on to define the future of Silicon Valley — “software is eating the world” — the venture firm Andreessen Horowitz is having its best exit year yet.
A16z — as the firm is also known, for the 16 letters between the A in founding partner Marc Andreessen’s name and the Z in Ben Horowitz’s — is closing out the first half of 2021 with its biggest exit yet, Coinbase’s direct listing, under its belt. READ MORE
A burnout crisis in investment banking is giving an unexpected boost to private equity ﹘ a flood of junior dealmakers vying to jump to the buyside.
That has led to a recruitment spree. Private equity firms in the City have seen a surge in interest, with applications up by 20% for associate level positions in the first three months of the year, said Gail McManus, founder of Private Equity Recruitment. These roles already attracted more than 300 candidates for each available position, she said. READ MORE
The secondary market for private equity, where stakes in funds and in their assets change hands or are sold into new structures in order to raise liquidity for investors, has finally come into its own. The market’s almost certain upward trajectory over the next few years should vastly increase the appeal of private equity - encompassing buyout, credit, growth, real asset and venture capital strategies - for investors of all stripes, institutional and retail. READ MORE
The incredible success of the cloud business applications space in recent years has driven up valuations and fundraising across all stages of venture investment. That has in turn increased VC fund sizes, led to massive cloud IPOs and brought a new cadre of investors to further fuel the fire.
The median Series A raised by cloud companies these days is about $8 million and can often go well above $10 million, according to PitchBook data from the first quarter of 2021. Series Cs now routinely include secondary capital for founders, and many Series Ds are above $100 million with valuations in the billions. READ MORE
There’s a saying, often attributed to Thomas Edison, that goes, “Opportunity is missed by most people because it is dressed in overalls and looks like work.”
Contrarian investing is not a new strategy. It has existed ever since humans started operating markets driven by demand-supply forces with information as the main medium. READ MORE
Back in the '00 days, there were dozens of venture capital (VC) funds. Today there are several hundred, each vying to find the next unicorn to bet on. Despite the “softening” of deals that Sequoia predicted in 2020 due to Covid-19, more than 10,000 deals were done, nearly on par with 2017’s deal total. The hunt for unicorns certainly continues.
In order to stand out from other funds, some VCs have turned to PR campaigns to elevate their allure to those they sign checks for (founders) and to those they take checks from (limited partners). READ MORE
For a sense of just how big everything crypto has become, you can, of course, just take a look at coin and token prices. And then you can check again five minutes later to see if the space’s notorious volatility has markedly changed the first observation.
But for a more stable measure of the industry’s growth, consider this: venture capital funds have already poured $17 billion this year into companies that operate in the space, according to data provider PitchBook. That’s by far the most in any single year and nearly equal to the total amount raised in all previous years combined. READ MORE
Shareholder approval of SPAC mergers are almost a check-the-box formality these days, provided SPAC sponsors can get enough of a quorum to actually pay attention and vote their shares. However, important to note that shareholders can both a) vote in favor of a merger AND b) redeem their shares at the same time. Historically it was a common trade: buy SPACs at IPO, redeem shares at merger and hang onto warrants for the option value and upside. READ MORE
Venture capitalists know that their advantage lies in identifying the most promising opportunities before their competitors do. This is confirmed by a University of Chicago study by Morten Sorensen, which shows that investors create 60% of their value from the upper part of the funnel, specifically from sourcing and screening.
In which case, sourcing and screening must be a constant target for improvement, right? No — apart from a few VCs who have reinforced their sourcing with web crawlers, sourcing and screening practices have remained the same since the inception of the VC asset class around 1940. However, AI is uniquely suited to solve these challenges and create greater value for investors. READ MORE
Last year was a big year for initial public offerings, despite the COVID-19 pandemic and the temporary pause it put on public market debuts. But many of those newly public companies have seen their stock prices dip from their levels at the beginning of the year.
Last year ended with notable startups going public in mega-deals, including Snowflake as the largest software IPO ever, with Snowflake, Airbnb, DoorDash, Unity and Palantir among the largest venture-backed IPOs of the year. READ MORE
For decades, startups and the venture capital industry have touted themselves as engines of job creation.
Sure, they’ve ushered in technologies that decimated scores of jobs and occupational categories from newspaper deliverers and taxi operators to travel agents to telephone operators. READ MORE
The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors. The AI startup market may be even hotter than the average technology niche.
This should not surprise. READ MORE
Wall Street accountants and lawyers are trying to figure out new equity agreements to lure investors back to the blank-check company market after the U.S. regulator cracked down on the use of warrants, six industry executives told Reuters.
They are discussing jettisoning warrants issued by special-purpose acquisition companies, or SPACs, in favor of rights agreements, or dramatically restructuring the warrants after the Securities and Exchange Commission (SEC) said many SPAC equity warrants should be considered liabilities. READ MORE
The continuing saga of Lordstown Motor’s struggles as a public company took a new turn today as the electric truck manufacturer made yet more news. Bad news.
Shares of Lordstown are down sharply today after the company reported in an SEC filing that it does not have enough capital to build and launch its electric truck. READ MORE
Many private-equity firms have embraced the recent boom of special-purpose acquisition companies, but whether they rely on their own money or the funds they manage is a decision that some investors hotly debate.
“Who’s sponsoring the SPAC—the firm or the fund—is probably the most important question,” said Brendon Parry, a managing director who oversees private investments at TIFF Investment Management, an asset manager for nonprofit organizations. READ MORE
Words can be cheap in the market for loans, now some lenders want to change that.
In recent years, borrowers have been able to get a reduction in their interest costs in return for meeting targets linked to environmental, social and governance (ESG) goals. That trend has been turbocharged this year by private equity firms seeking a piece of the action. READ MORE
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
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
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
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