On October 28, 2021, US President Joe Biden unveiled his slimmed down $1.75 trillion infrastructure spending plan and congressional leadership released H.R. 5376 (the Build Back Better Act (BBBA)), which contains revised proposals for tax law changes to pay for the various pieces of President Biden’s new agenda. The BBBA follows a set of proposals released by the House Ways and Means Committee on September 14, 2021 (W&M Proposal), and while it incorporates some of the W&M Proposal’s tax law changes, there are notable differences (including wholesale absences of certain changes from the W&M Proposal). Following is a brief summary of certain BBBA concepts which, if enacted in its current form, would potentially increase the overall tax burden on certain parties involved in private equity mergers and acquisitions (M&A) transactions and may have year-end planning implications as a result. READ MORE
Venture Debt: Leverage For Enhancing Venture Capital Returns
As the American comedian Bob Hope once quipped: “A bank is a place that will lend you money if you can prove that you don’t need it.” His words ring especially true in venture capital circles. READ MORE
Funding for start-ups founded by women is surging
Last year, venture capital funding for companies founded by women in the U.S. dropped substantially. But new research from PitchBook suggests that change is afoot. READ MORE
Buyout Boss Says Remote Work Is a Bad Fit for Private Equity
You can’t do private equity by Zoom.
That’s the view of Michael Psaros, co-founder of $13.5 billion private equity firm KPS Capital Partners.
Forget flexible days, don’t even think about remote work and please don’t mention video calls. READ MORE
Just how inclusive is your venture capital fund’s DEI strategy?
When it comes to diversity, equity, and inclusion (DEI) strategies, the “I” is often overlooked or considered half-heartedly—without any tactical plan to achieve and maintain a culture that is genuinely inclusive. But for DEI strategies, missing the “I” is missing the point. READ MORE
Venture capital exit values soar
Venture capital funds garnered $582.5 billion from exiting their investments through the end of September. The value realized is more than double the $289 billion for all of last year. The average exit value has climbed since 2015, rising to $506 million from $71.1 million during that span. READ MORE
Bootstrapping Versus Venture Capital: Finding What Is Right For Your Business
A common question for a founder is whether they should take on outside investment to accelerate growth. This typically means venture capital. Granted, this is a big decision — one that can determine the success or failure of the company and have a dramatic impact on the founder’s financial share when exiting. READ MORE
Sequoia Capital just blew up the VC fund model
Sequoia Capital, one of the world's oldest and most successful venture capital firms, is forming a single fund to hold all of its U.S. and European investments, including stakes in publicly-traded companies, Axios has learned.
Why it matters: Venture capital is the money of innovation, but the industry itself rarely innovates. This is a radical exception. READ MORE
Men Who Take Six Months of Parental Leave Are ‘Losers,’ Says a Prominent Venture Capitalist
Joe Lonsdale, a founder of Palantir Technologies Inc. and a prolific venture capitalist, stoked a debate on Twitter about parental leave, saying any prominent man who takes six months off with his newborn is “a loser.”
The comment was made in response to a tweet about Pete Buttigieg, the U.S. Transportation secretary who took time off to care for his child, and criticism from the podcast personality Joe Rogan. READ MORE
VC Dealmaking Has Reached a Crescendo, But This Isn’t 1999 All Over Again
Cries are starting to abound that VC investments have reached a 1999-esque fever pitch, and the bottom is due to fall out soon.
The pace of dealmaking is frenzied: The 61 percent year-over-year increase in funding for the first half of 2021 is a staggering leap, and the 136 new unicorns in the second quarter of this year are rightly raising eyebrows since the entirety of 2020 produced a mere 128. READ MORE
How Seed Funding Has Exploded In The Past 10 Years
Seed-stage funding to startups has exploded in the past decade and become an asset class of its own. If that wasn’t obvious already, consider that in just the past few months, three of Silicon Valley’s largest and best-known venture firms—Andreessen Horowitz, Greylock and Khosla Ventures—all announced large new dedicated seed funds.
To visualize this dramatic change in the venture ecosystem and understand how much seed investment grew in the past 10 years, we decided to look at the number of U.S. startups that were funded over various five-year time frames and at different stages. READ MORE
Trump’s $300 Million SPAC Deal May Have Skirted Securities Laws
Just days after Donald J. Trump left the White House, two former contestants on his reality show, “The Apprentice,” approached him with a pitch. Wes Moss and Andy Litinsky wanted to create a conservative media giant.
Mr. Trump was taken with the idea. But he had to figure out how to pay for it. READ MORE
As US Early-Stage Funding Soared, These States Outperformed
U.S. early-stage funding has more than doubled year over year in the past two quarters. But not all tech hubs are sharing equally in the gains.
At least 11 states have seen early-stage funding more than triple, according to a Crunchbase analysis of U.S. states with $100 million or more in Series A and B investment. Top gainers by percentage, deal count and total investment include New York, Florida, Ohio and Michigan. READ MORE
Why Many VCs Are Now Heading Back Through The Revolving Door To Become Founders
There’s a constant balance of power between founders and investors. The recent influx of capital into venture has created massive competition among VCs to get in on the hottest deals. This is spiking valuations and resulting in massive funding rounds, even at the earliest stages. Currently, the negotiating power is entirely in the hands of founders. READ MORE
Private Equity Investors at Risk: A New Defendant in False Claims Act Cases?
As a generally held principle, mere investment or ownership interest in a company does not expose the investor to liability for acts undertaken by the company. However, that principle is being called into question in the context of private equity firms investing in healthcare companies. In two recent cases, healthcare companies along with their sole or majority private equity firm owners settled False Claims Act (“FCA”) cases. These cases illustrate the risk that private equity investors in the healthcare space may face under the FCA, particularly to the extent that they actively manage their portfolio companies. READ MORE
Democrats revive legislation to crack down on private-equity buyouts
A handful of the nation’s most powerful Democrats on Wednesday introduced private-equity legislation that, if passed, would represent one of the largest crackdowns on the industry in decades.
The bill, known as the Stop Wall Street Looting Act, would prevent private-equity funds from forcing companies they purchase to take on new loans to extract dividends they could not otherwise afford. READ MORE
SEC Moves to Increase Oversight Amid Meteoric Rise in Use of “Blank-Check” Companies
In early September, a U.S. Securities and Exchange Commission (SEC) advisory committee endorsed rule changes to increase disclosure regulations for special purpose acquisition companies (SPACs). For almost a year now, the SEC has signaled that there may be a need to beef up rules around SPAC mergers, and this recent move all but confirms its plans to do so. SEC Chairman Gary Gensler, who pushed for stricter investor protection, asked staff to “look closely at each stage of the SPAC process to ensure that all investors are being protected.” And while any action on SPAC regulation changes likely remain months away, the agency listed the matter as a “rulemaking priority.” If the previously issued guidance, public warnings from SEC officials, and a July 2021 enforcement action are any indication, the SEC will most likely look closely at stock dilution, SPAC founder incentives, conflicts, and a safe harbor for mergers allowing the use of financial projections. READ MORE
In record M&A year, first trillion-dollar year for private equity within sight
Technology deals are driving what is shaping up to be a record year for M&A, one where so-called megadeals and club deals came roaring back and helped power what is expected to be the first $1 trillion deal year for private-equity firms.
As of the third quarter, private-equity firms had disclosed $868 billion in deals, topping the high-water mark of 2006-07 when PE firms collectively announced more than $750 billion in deals, according to Ernst & Young LLP. READ MORE
Cybersecurity VC deals were ‘less bouncy’ in the third quarter
Despite the overall venture capital market hitting record highs, a new report finds that investments in cybersecurity companies are currently seeing mixed results.
The DataTribe Insights Q3 report, released early Tuesday, found that although venture capital funding in cybersecurity was “quite active” in the third quarter and it remains a good time to raise money, a peak in the market may have already passed. READ MORE
Venture capital funds are doing well – maybe too well
The booming stock market has provided fertile ground for startups to notch impressive wins and generate profits for the venture capital funds that back them. But as the exuberance in the private capital markets show signs of descending into irrational euphoria, the managers behind those funds are getting worried.
According to data from Pitchbook, the value of U.S.-based venture-backed companies that were acquired or made their public debut this year through the third quarter reached US$582.5 billion, the Wall Street Journal reported. That’s sharply up from US$289 billion in 2020 and the first time the US$500-billion bar has been cleared. READ MORE