Litigation Finance Drives Profits For Private Equity And Venture Capital Firms And Their Lawyers

Lawyers representing private equity and venture capital portfolio firms understand that their clients routinely face important business decisions about whether to initiate meritorious litigation claims that could result in substantial recoveries.

Yet convincing their clients to move forward with litigation—no matter how lucrative it may ultimately be—is another matter entirely. The main culprit for this hesitancy is a simple one: PE and VC firms are loath to saddle their portfolio companies with the expense of litigation when that precious capital could be used to enhance a company’s operations or develop new products. READ MORE

The legal threat coming for venture capital

After being battered by rising interest rates and choppy markets, the venture capital industry is sweating new regulations that could expose fund managers to legal risks.

The SEC is putting the final touches on a rule that would make it easier for investors to sue VCs for bad behavior, negligence or recklessness. It would “open up all types of litigation risk to being a venture capitalist,” Justin Field, the National Venture Capital Association’s senior vice president of government affairs, told MM. READ MORE

Corporate Venture Capital: 4 Strategic Rationales To Understand

2022 will be remembered as the year that the tide turned on a historic era of easy money, and 2023 is looking like it will bring even greater challenges. Yet no matter how difficult the backdrop, there are still plenty of businesses that will need to raise venture capital. Especially in these tough market conditions, it is crucial for leaders to broaden their understanding of capital markets and multiple types of investors as they search for new sources of funding. READ MORE

Most Active Startup Investors Hit The Brakes In 2022

For multiple years, the most active startup investors kept upping their games. They did more deals, backed larger rounds, and kept pushing up valuations. 

In 2022, they took a breather. Per Crunchbase, virtually all of the most prolific venture and seed investors did fewer deals last year than the year before. The value of rounds they led shrunk too, with particularly steep declines for SoftBank Vision Fund and Tiger Global Management, which pulled back in the wake of heavy losses in their existing portfolios. READ MORE

Private equity's share of terminated M&A deals ticks up in Q4

Private equity's share of terminated M&A deals was on track to grow again in the fourth quarter after declining over the previous three-month period, according to S&P Global Market Intelligence data.

Through Dec. 15, private equity or venture capital had a hand in three out of the 30 deals canceled globally in the fourth quarter, or 10% of all terminated deals. If that rate holds through the end of the year, it will nearly double their 5.1% share of M&A deals called off in the third quarter. READ MORE

Investors Widely Prefer Small Private Equity And Hedge Funds

At a time when investors and fund managers have struggled to find returns, some corners of the alternative asset space have held up better than other areas of the markets, like public equities. As a result, it should be no surprise that institutional investors are planning to boost their allocations to alternative assets.

However, one interesting finding from a recent survey is that smaller hedge funds and private equity funds with less than $250 million in assets under management are in demand. READ MORE

Private equity dominated the top 10 enterprise M&A deals in 2022

It was a funny year in enterprise tech M&A, one in which the majority of activity came from private equity firms: As tech stock values plunged throughout the year, these companies went bargain hunting. They saw companies with lots of upside being vastly undervalued in the brutal market conditions of 2022.

But curiously, the year began with Microsoft announcing it was acquiring Activision Blizzard for a startling $69 billion in January, followed in April by Twitter being sold to Elon Musk for $44 billion. Neither of those deals made this list, however — they aren’t really enterprise companies. But they did show the promise and big money being tossed around this year. READ MORE

The Kroger-Albertsons Merger Spotlights a Popular Private Equity Tactic

Cerberus Capital Management, a big private equity firm, has long attracted controversy. In 2007, it took over Chrysler, but after two years of Cerberus ownership, the company needed a government bailout to stay in business. It spent years buying up companies that made guns — one of which was used by Adam Lanza in 2012 to kill 20 children and six teachers at Sandy Hook Elementary School in Newtown, Conn. READ MORE

Private Equity Managers May Face Increasing Headwinds In 2023

Multiple studies have shown over the years that private equity has become increasingly popular among investors, and it's easy to see why. Not only does private equity (PE) increase diversification within a portfolio, but the asset class' returns have generally outperformed the public markets.

Looking into 2023, private equity could see increasing headwinds, but opportunities to generate alpha are expected to remain in place. READ MORE

VC firms are getting stingier with startups

Venture firm Tribe Capital wrote to a select group of its co-investors earlier this month with some bad news.

Tribe was slashing its internal valuation of Canadian-British startup Invenia, on which it had bet $30 million, by 95%. Invenia co-founder and Chief Executive Officer Matthew Hudson had been “terminated” and a board-led investigation found he’d “secretly, systemically and repeatedly inflated the revenue and profitability of the company,” according to the memo, which was sent by Invenia board member and Tribe CEO Arjun Sethi.  READ MORE

For 2023, Novelty Is In, Copycats Are Out

For what’s seemed like forever in venture capital, startups and investors have sought an edge by associating themselves with the hot space of the moment.

When Uber was ascendant in the early 2010s, startups habitually touted themselves as “the next Uber” of their field. When e-commerce aggregators were hot last year, it seemed like everyone was doing it. Same holds for autonomous trucking, 3-D printing, “buy now, pay later,” i-buyers. … Wherever you saw a hot trend, you’d find a cluster of well-funded startups.  READ MORE

Agritech and foodtech sectors suffer funding slump

Venture capital investments into agritech and foodtech start-ups plunged in 2022 amid rising interest rates and questions over the start-ups’ business models, raising the prospect for industry consolidation and increased M&A in the year ahead. Companies in the two sectors raised just under $30bn in 2022, down 44 per cent from a year before, according to preliminary analysis from corporate data group PitchBook. READ MORE

How Alumni Ventures Grew to Become America’s Largest Venture Fund for Accredited Investors

Many companies succeed based on their ability to address an unmet need or tap into a new opportunity. This is the case for Alumni Ventures, a venture capital firm with over 8,000 investors and $1 billion in capital raised, that has quickly grown to be one of the most active venture investors in the world and America's largest venture capital fund for individual investors. READ MORE

VCs Stockpiled Record Funds This Year. Where Will All That ‘Dry Powder’ Go In 2023?

Venture firms have continued to raise record funds in 2022, even as startups received far less money than they did last year. That poses the question: What will happen with all that dry powder in 2023?

Dry powder is as high as $1.3 trillion globally for private equity and $580 billion globally for VC, according to one estimate from James Ephrati of Lightspeed Venture Partners. The dry powder in 2021 was roughly the same, he said, but investors were putting money to work at a record pace. READ MORE