Pounding the Table on Private Equity

The poet and journalist Carl Sandburg is most often credited with this bon mot for attorneys: If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell.

The problem with Gretchen Morgenson and Joshua Rosner’s These Are the Plunderers: How Private Equity Runs – and Wrecks – America is that while their moral and factual indictments of private equity operations find their mark, their pound-the-table-and-yell-like-hell tone detracts from its credibility. The book’s authors seem unaware that when you have the morality, law, and facts on your side, a quiet understated tone serves you better than hyperbolic overkill. READ MORE

The 'Emerging Manager' Needs A Rebrand

I’ve long been a champion of emerging managers. They see opportunities others don’t and often yield the best returns despite market conditions.

But the term “emerging manager” has lost its utility.

When it was first coined back in the 1980s, industry insiders used it to refer to managers with funds smaller than a certain size. But it soon became synonymous with funds run by women, by managers representing racial and ethnic minorities, and by other groups that are underrepresented in VC. READ MORE

A new Paradigm? The crypto VC fund insists it’s not pivoting to A.I., but some investors and founders are frustrated

You’ve probably seen the memes of the “pivot from Web3 to A.I.,” jesting that venture capital investors have ditched the old hot new thing, crypto, for the new hot new thing, artificial intelligence. For some crypto-focused VCs, like Paradigm, the allure of A.I.—and a potential shift in their interests—has sparked some backlash.

The firm, started by Coinbase cofounder Fred Ehrsam and former Sequoia Capital partner Matt Huang, recently erased all mention of crypto or Web3 from its website homepage—branding previously touted front and center—as crypto news site The Block spotted in late May. The report caught the attention of my colleague Leo Schwartz and me, and we decided to dig a bit deeper. We discovered that it wasn’t just Twitter users who were raising eyebrows over the changes. READ MORE

Level wants to back your fund — and your portfolio companies too

In 2023, funds of funds (FoFs) are on track to raise the smallest amount of money in more than a decade. At the same time, muted venture deal activity has many firms ditching their follow-on funds. Despite these twin trends, a new emerging manager is looking to find success with a fund that targets both.

Level Ventures has raised $104 million for its debut fund, a data-driven, three-pronged investing strategy that uses in-house algorithms to back other emerging managers, invest in promising companies from those managers’ portfolios and source deals of its own. READ MORE

What is corporate venture capital?

The 2008 Global Financial Crisis marked a period of decline across the capital markets, when exit value and public listings fell precipitously. But despite these challenges, corporate M&A and investment activity during that era remained resilient by comparison—based on a variety of factors at play, including record capital on corporate balance sheets.

In a recent report highlighting corporate venture capital (CVC) during economic downturns, PitchBook analysts say we’re seeing similar resiliency amid the present-day slump. In the Q1 2023 Analyst Note, PitchBook VC Analyst Vincent Harrison reports that 26.2% of all US VC rounds in 2022 included a CVC investor—the highest proportion of overall US VC deal count ever observed for CVC deals. READ MORE

Survey finds majority of venture capitalists have invested in AI

PitchBook, the premier data provider for the private and public equity markets, today released findings from a new survey conducted in partnership with Collision, a Web Summit event and North America's fastest growing technology conference, which takes place June 26-29, 2023 at Enercare Centre in Toronto, Ontario. PitchBook is sponsoring the Investor Lounge at Collision, where investors in attendance can work, take meetings and network.

This is the seventh survey PitchBook and Collision have partnered on at Web Summit conferences and provides an insight into investment strategies, representation of women in VC, and sentiment toward emerging technologies, such as artificial intelligence, climate tech and fintech have changed amid market uncertainty. Nearly 100 global venture capital (VC) investors attending the conference completed the survey. READ MORE

Tips to reinvent venture capital

According to Chad Cardenas, Founder & CEO of The Syndicate Group (TSG) and Managing Director of Syndicate Venture Partners, the Silicon Valley ecosystem has long relied on a traditional model of venture capital funding to nurture tech startups, but this has caused the ecosystem to stagnate last year, creating a financial dilemma for many startups. READ MORE

Cash Is Drying Up in the Late-Stage VC Market

The second half of the year is looking bleak for companies backed by venture capital firms, especially for those at later stages.

The companies that are most starved for capital are those that are currently in Series C and D round fundraising. These are most likely to raise at lower valuations compared to their previous funding rounds, according to PitchBook’s latest VC outlook. For such companies, which are defined as late-stage companies by PitchBook, the current demand for capital exceeds the available supply by approximately 2.8 times. In the second quarter, 12.3 percent of late-stage companies that raised funds experienced a down round, up from 8.5 percent in the first quarter. READ MORE

Are Small, Early-Stage Venture Capital Funds The Next Big Thing?

In recent conversations with venture capital professionals, one thing is abundantly clear: This current market is a profoundly challenging time to be fundraising as an emerging manager. As the market turned down last year, the percentage of limited partner dollars going into emerging funds decreased, a trend that appears to be continuing into 2023. Many LPs are either refraining from investing in the VC asset class entirely or, in a “flight to safety,” are focused only on investing in “brand name” funds. This leads to a concentration of LP capital in the same big funds that have been around for decades, despite their recent vintages likely struggling as the market and private valuations majorly reset. READ MORE

Sustainability Funding Sees Only Modest Decline As Urgency Trumps Frugality

Catastrophic climate change projections are only getting more pronounced. And across the globe, overall startup investment is on the decline.

These two trajectories don’t fundamentally have anything to do with each other. The planet doesn’t check startup funding data before deciding how many record heat waves and hurricanes to unleash. And the venture pullback, a comedown from a cyclical bubble, has nothing to do with climate dynamics. READ MORE

Venture capitalist Marc Andreessen: AI sent world into a ‘freeze-frame moment’

The world is in a "freeze-frame moment" with artificial intelligence, according to Netscape co-founder Marc Andreessen.

He told the "Lex Fridman Podcast" last week that "everybody is kind of starting at [AI tools] wondering what to do," pointing to models like GPT-4.

However, the co-founder of the venture capital firm Andreessen Horowitz told Fridman that the ability to learn and produce has increased "a million-fold."  READ MORE

What A Changing Fundraising Landscape Means For Founders

2021 was a whirlwind year for Venture Capital, marked by seemingly endless capital, rapid markups and unprecedented valuation multiples. Fast forward to today, and the VC market has undergone a massive reset, changing the game for both early-stage founders and investors. While some changes are obvious, there are also subtler shifts impacting VC firms that founders must navigate in this transformed landscape. READ MORE

These Are The Sectors Where Hot Seed-Stage Startups Are Clustering In 2023

The clustering effect is clear in this year’s vintage of seed-funded startups. A handful of categories accounted for an outsized number of investments.

What were some of the standout areas? Using Crunchbase data, we scoured through hundreds of the largest seed and pre-seed rounds in 2023 

 to identify trends. The following is an assortment of a few that stood out, from AI assistants to clean power to esports. READ MORE