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Recently, a couple of venture capitalists knocked on Ben Pham’s door to hear a pitch on his new advertising startup named Obello
Pham had decades of experience in advertising with Character, a branding agency he co-founded with Oliver Ralph that worked closely with the likes of Apple, Netflix and Facebook. After selling the company to marketing giant Dentsu, Pham and Ralph were working on a new generative AI product. READ MORE
Private equity is one of the most potent forces in the world of finance. PE firms buy companies and participate actively in their businesses to help them grow and achieve their full potential.
These investment firms operate in some of the most dynamic sectors in the economy, particularly technology, and they foster innovation that has a deep impact across the economy. The U.S. dominates the private equity industry globally, and private equity firms control more than $6 trillion in assets in the U.S. READ MORE
Private equity firms are saying that talent is the most important factor in driving growth. While financial engineering, inorganic growth, and market expansion remain important tools in the private equity toolbox, talent continues to emerge as key to growing companies and achieving the investment thesis, according to a report from Bespoke Partners. Yet unlike strategic assets, intellectual property, or other resources that fuel growth, talent can be notoriously difficult to optimize. In fact, the biggest challenge for the PE sector is getting talent right, according to Nat Schiffer, managing partner at The Christopher Group. “PE firms often compete with other financial services firms, technology companies, start-ups, and other industries for the limited pool of qualified talent with the necessary skill-sets and experience for the PE industry,” he said. “The intense competition for top talent can make it challenging to attract and retain qualified candidates who may have multiple options.” READ MORE
A gathering of 300 entrepreneurs, venture capitalists, journalists, and self-proclaimed thought leaders took place at Shack15, a stylish social club in San Francisco’s Ferry Building in late May. according to Bloomberg, The event, called a “Generative AI Meeting of the Minds,” marked a significant shift from the challenges faced during the pandemic and earlier this year. The atmosphere was filled with optimism and excitement, as participants discussed the resurgence of Silicon Valley and its potential for reinvention. Futurist writer Peter Leyden, the host of the evening, captured the prevailing sentiment, highlighting the turning point for the region and receiving applause for his inspiring speech. READ MORE
The crisis in the high-tech industry continues to impact American venture capital funds, leading them to announce reductions in their capital raising targets one after another. The latest fund to be affected is Tiger Global, which played a significant role in Israeli high-tech during the bubble years of 2020-2021. Many believe it was responsible for the inflated valuations of companies. Tiger Global has raised only $2.7 billion for its new fund, 55% less than its initial target, and stated its ongoing efforts to raise funds. Another fund, TCV, also reduced its fundraising target to 55%-75% of the planned amount, originally set at $5.5 billion. READ MORE
A decade ago, Aurora James, founder of the luxury shoe label Brother Vellies, was eager to grow her nascent business. She needed a cash infusion to expand production and create a more robust website. But as a Black woman, it wasn’t easy to secure funds. READ MORE
Smaller venture funds are finding a way to manage in the midst of a conservative market.
As with all bear markets, the appetite for risk drops, and although emerging fund managers are often noted to outperform their more established counterparts, some limited partners are weary of bringing on new venture partners. Instead, they retreat to their trusted, established partners. READ MORE
Private equity took on a larger role in the market for special purpose acquisition companies even as the number of so-called blank-check companies contracted sharply in the wake of the 2021 SPAC boom.
More than 18% of SPACs that held an initial public offering in 2022 were backed by private equity, up 7 percentage points from 2021 and 14 percentage points from 2020, according to an S&P Global Market Intelligence analysis that tracked SPACs with at least 5% ownership by a private equity or venture capital firm. In the first five months of 2023, as some SPAC activity shifted to Asia from North America, nearly 17% of all SPAC IPOs globally were private equity-backed SPACs. READ MORE
The number of publicly traded U.S. companies has fallen by more than half since 1996, said Nicole Goodkind at CNN. "Back then, the number exceeded 8,000 companies." Today, the count has dropped to just 3,700, according to data from the Center for Research in Security Prices. "It's not that America has half as many companies as 30 years ago — it's that companies are increasingly staying private." The IPO market fell by nearly 95% in 2022 after lackluster returns the year before. There are also "about five times as many private equity-backed firms in the U.S. as there are publicly held companies," holding more companies back from listing. In 1999, the average U.S. tech firm went public after four years. It's now about 11 years. READ MORE
Private-capital pioneers, such as Blackstone’s (BX.N) Steve Schwarzman, benefit from public-market inefficiencies even as their listed buyout shops grapple with chronic valuation problems. Investors prefer pedestrian but steady management fees over the lumpy share of fund profit that is the industry’s special sauce. It’s yet another inefficiency on which to capitalize, but only up to a point. READ MORE
2023 has proved to be challenging for many cash-conscious startups, especially those that anticipated raising venture capital in the first half of the year. As the Federal Reserve continues to increase interest rates in an effort to curb high inflation, the public market pullback, especially in the tech sector, and fears of a looming recession have made many investors hesitant to deploy new capital. Such fears have largely quelled the pandemic era of high valuations and easy access to cash for startups. During the “good times” of the past few years, many startups (including those with relatively limited track records) and their founders were able to access venture debt to bolster balance sheets and extend cash runways without the dilutive effect of raising investor money. However, the recent bank failures have significantly impacted the venture community, threatening to upend access to venture debt facilities. Although there are a few bright spots (like artificial intelligence and climate tech), with private company valuations falling and lower availability of venture debt, we expect startups will need to further preserve cash and resources to navigate the expected continued rocky terrain ahead. READ MORE
There’s tons of advice out there about how to approach venture capitalists for startup fundraising, but in my experience as both a former VC and current founder, I’ve found there is no one-size-fits-all method.
Venture capital investors get into the industry for many different reasons and come from a wide variety of backgrounds that shape their perspectives on the companies they consider for investments. READ MORE
Women have historically been left out of many industries over the decades but none more so than the world of finance. There is a glaring level of gender inequality in women’s financial literacy, raising capital, and venture investing that leaves women underrepresented, underserved, and underestimated. READ MORE
“Every major change we've seen in our society, those changes have been led by startups,” says David Miller, managing partner at Clean Energy Ventures, while we’re discussing the role of venture capital in tackling climate change.
The clearest route to averting the worst impacts of climate change is to dramatically reduce our use of fossil fuels, but doing so will require innovators to develop new or nascent technologies to help wean us off our carbon addiction. Meanwhile, with a certain amount of global warming already locked in, other entrepreneurs will have to create solutions to help humanity adapt to the world’s growing climate catastrophes. READ MORE
A pending $23 billion deal between Black Spade Acquisition Co. and VinFast Auto Pte. Ltd. would mark the largest M&A transaction involving a special purpose acquisition company in almost two years.
Black Spade and VinFast, an electric-vehicle maker, announced an agreement in May for the transaction, the second-largest M&A deal announced in 2023 and one of nine $10 billion-plus M&A deals announced through the first five months of the year. READ MORE
It has never been harder to attract top talent to private equity and PE portfolio companies. “We’re seeing a huge reluctance to leave jobs for anything less than top brands, and successfully recruiting out the absolute all-stars is requiring more than just outsized economics,” said Jordan Brugg, global head of private equity for Spencer Stuart. So, what can PE firms do? A recent report from Spencer Stuart lays out a few ideas. Start the process early. “It bears repeating that the war for talent has never been more fierce, so you need to move extremely fast when you see someone who fits,” the Spencer Stuart report said. “As a result, our clients are spending more time at the outset before launching searches to get all the stakeholders in agreement; candidates can smell misalignment. This means you need to iron out the business strategy, the case for the role, and the compensation parameters early on.” READ MORE
Brendan Ballou is the author of Plunder: Private Equity’s Plan to Pillage America. Brendan is also a federal prosecutor, and served as special counsel for private equity in the antitrust division at the Department of Justice. (Although, he will be the first to tell you, the book does not reflect the views of the DOJ.)
Now, the idea behind private equity or PE is simple: a private equity firm gathers up a bunch of cash, raises some investor cash, and takes on a lot of debt to buy various companies, often taking them off the public stock market. Then, they usually install new management and embark on aggressive cost cutting and turnaround programs mostly because they have to pay down all that debt pretty fast. The company can then be sold or taken public again for a hefty profit. But don’t worry — if it doesn’t work out, the PE firms are extracting fees at every step of the process, so they get paid no matter what happens. READ MORE
Smaller funds, those that have $50 million or less in assets under management, are helping to usher in a new wave of diversity within venture capital. And the reasons for this are simple.
The latest crop of investors stems from historically overlooked or marginalized communities that are setting up funds and then investing back in those funds. “Small funds operate with a sense of purpose, leveraging their limited resources to drive positive change and foster diversity in the entrepreneurial landscape,” B. Pagles Minor, the founder of DVRGNT Ventures, told TechCrunch+. READ MORE
Startups that raise Series A rounds typically have only a short break before they’re fundraising again.
Among U.S. companies that go on to close Series B funding, the median is just under two years to do so, according to a Crunchbase analysis from 2012 to today. For the speediest quartile, the median is under 18 months. READ MORE
The pandemic changed many things about how Americans build and fund startups, from the rise of remote teams to the willingness of investors to back companies located far from the home office.
One thing that hasn’t changed, however, is the dominance of three universities — Stanford, Harvard and MIT — in churning out founders of funded companies. READ MORE