Private Equity May Be A Ticking Time Bomb For Public Pension Plans

Two years ago, when the economy was a runaway train, so were the returns on private equity investments. Among the biggest winners were large public pensions, which had invested a staggering $500 billion out of a total $4.5 trillion in private equity — one dollar out of every 10.

But with stock prices now plummeting, experts are fearful that private equity returns are not far behind. Accusations are flying that private equity firms are spinning an elaborate fiction to hide their losses. READ MORE

Venture capital funding drops 53% in first quarter amid ongoing macroeconomic issues

A new report today from Crunchbase Inc. finds that money flowing into venture capital continued to drop in the first quarter as growth investors further scaled back their investment pace amid ongoing worldwide macroeconomic issues.

For the quarter that ended March 31, global funding came in at $76 billion, down 53% from the $162 billion invested in the first quarter of 2022. Excluding two big rounds in the quarter — Microsoft Corp.’s investment of $10 billion into OpenAI Inc. in January and $6.5 billion invested in Stripe Inc. in March — the downturn is even more considerable, with a quarterly figure closer to $60 billion. READ MORE

Venture capital funding in start-ups halves as tech downturn bites

Venture capital funding of start-ups has plunged by more than 50 per cent in the past 12 months, as an economic downturn weighs on valuations at nascent tech groups. Globally, venture funds invested $76bn into start-ups in the first three months of 2023, less than half the $162bn they deployed in the same period a year ago, according to data provider Crunchbase. READ MORE

Are venture capital funds about to lift off?

Whether you like it or not, venture capital has become ever more widely available as an opportunity — albeit a risky one — for private investors. Until just a few years ago, those who put their money to work in early-stage private businesses did so through tax-efficient venture capital trusts (VCTs) where they benefited from an immediate tax subsidy to help compensate for the higher risks implicit in these assets. READ MORE

Global VC Funding Falls Dramatically Across All Stages In Rocky Q1

Venture and growth investors in private companies continued to scale back their investment pace in the first quarter of 2023, Crunchbase data shows.

Global funding in the first quarter reached $76 billion — marking a 53% decline year over year from $162 billion in the first quarter of 2022. That’s even including a reported $10 billion investment into OpenAI — largely from Microsoft — and a $6.5 billion round for payments giant Stripe. Without those two large deals, Q1 venture funding would have been down even more dramatically, close to $60 billion. READ MORE

Are private equity valuations too high—and would we know?

Should there be a better way to value private equity assets? It's a question that's been on my mind since last year, when public equities took a massive dip but private market valuations remained high.

I started working on this story in late February, just a couple of weeks before the failure of Silicon Valley Bank brought wider banking instability issues into stark relief. READ MORE

The World Of Venture Capital Has Changed: Venture Capital Must Pivot

Just one more narrative about the decline in the role that venture capital is playing in our current world.

Michael Casey, the founder of Portico Advisers, writes in the Financial Times:

"Venture capital blossomed from an artisanal strategy into a behemoth over the past decade, raising $163 billion last year in the U.S. alone." READ MORE

Why VC Is A Driving Force Of Innovation

Sometimes, it takes a monumental event in an unfamiliar sector to open our eyes to how complex and important things are, and how much the general public doesn’t understand. The recent banking crisis has been such an event. Despite the fact that private market investing and venture capital (VC) are critical factors in our nation’s position as a global innovation leader, it’s relatively unfamiliar to many people. READ MORE

VC environment tilts toward investors

SVB Financial Group's collapse added another concern to venture capital funding after the sector was already under pressure. The once high-flying asset class' roadblocks include higher interest rates, weaker public equity markets and valuations under pressure. But the shakeout might result in venture capital funds receiving more favorable investing terms from portfolio companies, which could lead to higher returns down the road. READ MORE

Founders Beware - The Devil's In The Term Sheet Details

In the high-stakes game of startup financing, founders must approach VC term sheets with a healthy dose of scepticism and due diligence. By understanding the potential red flags and negotiating for more founder-friendly terms, entrepreneurs can secure the funding they need while maintaining control over their company's destiny. READ MORE

Venture capital tries to find way in post-SVB era

More than two weeks after the collapse of Silicon Valley Bank sent shock waves through the venture capital industry, the broader startup ecosystem that revolved around the innovative lender is still grappling with the aftermath.

That ecosystem includes startups with deposits in the bank, venture capital funds that invested in the startups, and limited partners that financed the venture funds. READ MORE

The Relevance Of Private Equity Investments For Medium-Sized Companies

As someone who has worked in consulting, venture capital and private banking, I have seen firsthand the many advantages that private equity investment can bring to midsized companies. Private equity firms have a unique set of skills and resources that can help these companies achieve their growth objectives and maximize their value. READ MORE

Private Credit Funds, Banks Will Aggressively Push To Fill SVB’s Role — Likely At Higher Rates

With much of what once was Silicon Valley Bank falling into the hands of Raleigh, North Carolina-based First Citizens BancShares, it is fair to wonder what the future of lending and credit may look like for venture-backed startups.

SVB’s outsized role in venture debt and lending will be taken over not just by a few smaller banks, but also likely will raise interest in many private credit funds — or shadow banks — and others that have eyed the industry for a while, say those in the venture world. READ MORE

Startups Turn To New Metrics To Measure Traction

Every money-making company describes its bottom line in the same way: profitable.

Every unprofitable company, however, seems to have its own metrics for putting the most positive spin on financial results. READ MORE

VCs Plow Money Into Indoor Farming

When a hurricane in Florida and a virus in California killed a promising lettuce bounty late in 2022 and earlier this year, some hobbyists turned to indoor farms to supply their winter fuel of hearty salads.

Indoor farming is something venture firms have deemed the future of agriculture. Armed with temperature control, hydroponics and controlled environments, indoor farms can better shield crops from weather disturbances and pests. READ MORE

Why bankers are bracing for more private equity failures

The country’s biggest banks are bracing for more highly geared, private equity backed businesses to collapse as operating conditions continue to deteriorate amid surging borrowing costs.

Last month, Anchorage Capital Partners, a specialised private equity firm, placed Scott’s Refrigerated Logistics into administration. READ MORE

Why some VCs bet on people over businesses

It’s been tough to raise funds in the last few years for most sectors, and many VCs will tell you that a startup needs to have a killer product-market fit before getting that check. But Eric Tarczynski of Contrary Capital believes in investing in people over businesses, and the wisdom to this approach has been proven out with AtoB. READ MORE

How to create a successful pitch deck, according to a VC and entrepreneur

Lea-Sophie Cramer founded Amorelie, a leading e-commerce company that sells sex toys.

She's now one of Germany's most active angel investors, investing in a wide variety of startups through her venture-capital firm, Pink Capital. Alongside this, she advises companies like the global investment firm KKR on identifying new investments.

Cramer has dealt with a huge number of pitch decks in her time as an entrepreneur and VC. READ MORE

What the end of the bull run means for venture capitalists and entrepreneurs

In recent years, the low cost of capital allowed record amounts of dry powder to be raised and dispersed into the venture capital and startup ecosystem. As the landscape began shifting last year, we started to see a course correction by investors who had been freely pouring money into VC-backed startups. The recent bank failures introduce another hurdle into a rapidly shifting environment and dramatically highlight the challenges of our high-interest-rate, inflationary climate. READ MORE

Upheaval in venture banking can help us get back to basics: efficient growth

With the collapse of Silicon Valley Bank, founders find themselves in a predicament when looking to raise either equity or debt. Most companies run their business on equity capital alone and have access to a venture debt facility. Access to venture debt is a “break glass in case of emergency” facility in that it enables companies not to be as hardened when they must raise rather than raising tied to business milestones. When a majority of the venture debt market is slowing or pausing new loan originations, one thing’s for sure, this loss of runway capacity will inevitably drive behavior change on all sides. READ MORE