So, You’re Thinking Of Taking Your Startup Public. Here’s What You Need To Know

Despite the tumultuous economy we’ve experienced over the past few years, the IPO market may be starting to turn a corner. While a plethora of companies went public in 2020 and 2021, the number has recently declined due to rising interest rates and inflation. However, as the economy slowly begins to stabilize, we’re seeing things shift once more.

I’ve worked alongside several companies as they go public — including tactical, hands-on work auditing every single transaction from the start of one company’s life. This work provided insight into key hires, sales deals and other critical strategic factors that greatly contribute to a thriving IPO. READ MORE

Private equity exits on the rebound; entries slide in September

As positive indicators for private equity have become scarce in 2023, exit totals are one metric that is moving in the right direction for fund managers.

Exit totals increased to 467 globally in the third quarter, up more than 5% quarter over quarter and nearly 22% year over year, according to S&P Global Market Intelligence data. Private equity has now recorded three consecutive quarters of improving exit data after bottoming out at just 286 in the fourth quarter of 2022. READ MORE

No Where To Run, No Where To Hide: The Private Equity Zombies Return

With the world’s most influential benchmark for the cost of debt, the U.S. federal funds rate, rising to 5.25-to-5.50 percent from a floor of zero over the 16 months through July - the fastest sustained hike in 40 years - the $9 trillion-in-assets private equity world must brace for a sharp rise in poorly performing portfolios and the emergence of a new class of the walking dead among private equity managers.

Exactly like the private equity zombie managers that emerged from the wreckage of the 2009 global financial crisis, the latest generation of the walking dead won’t be able to raise new capital because of poor performance. With private equity investments typically locked up for at least a decade, these ghouls will continue milking management fees from investors for mediocre and over-leveraged assets for years, just as they did in the decade following the GFC. READ MORE

Climate tech investment fell by 40%, but there's a silver lining

Investment in climate technologies fell dramatically 2023 as economic headwinds dented investor confidence in all sectors of the economy, the latest data from PwC has shown.

The consultancy giant's recently published State of Climate Tech report notes that venture capital and private equity investment in climate technology has fallen 40 percent year-on-year in 2023 amid a challenging economic environment and geopolitical turmoil. READ MORE

Stalemate over venture capital diversity drive as MPs tussle with government

The government has rejected a series of recommendations put forward by MPs aimed at bolstering diversity in the venture capital industry.

The Treasury Select Committee had called on the government to introduce sweeping measures after accusing VC firms of focusing their investments too heavily on London and the South East and warning that current diversity statistics were "unacceptable". READ MORE

1% of venture capital goes to Black founders. California’s new bill hopes to shame VCs into change

In 2022, just 1% of all venture capital funding went to Black-founded companies—an estimated $2.3 billion of a total $215.9 billion. For women founders, the rate was only slightly higher, at 1.9%.

In an attempt to increase transparency around diversity and make the industry more equitable, California passed a law requiring VC firms to disclose diversity data about the companies they fund. But while this might nudge some companies to make their funding more diverse, some VC firms have been taking this approach for years. Among those VCs, there are mixed feelings on the law and its potential effects on innovation. There are also questions as to whether simply exposing the data goes far enough to address the disparities. READ MORE

The Window Is Closing For LPs To Earn Their Place In History

I’ve said it before and I’ll say it again: Over the course of their careers, LPs have maybe two to three windows to buy at the bottom. Our current market is one of them.

We’ve all seen stories about how LPs are shying away from venture in the wake of macroeconomic trends, war, interest rates — the list goes on. The saying, “Those who fail to learn from history are doomed to repeat it” rings especially true in our current climate, and the window for LPs to nail one of those two or three career bottoms is beginning to close. READ MORE

Cybersecurity Funding Sees Slight Bounce Back From Q2, But Still Down From 2022

Venture funding to cybersecurity startups in the third quarter saw a slight uptick from Q2, but was still down 30% year to year.

According to Crunchbase data, cybersecurity startups raised nearly $1.9 billion through 153 deals announced in Q3, a 12% increase from the $1.7 billion raised in 181 deals the previous quarter. The number of deals represents a 15% dropoff. READ MORE

Private Equity Needs a New Talent Strategy

Private equity firms have historically paid little attention to the art and science of leadership. Yes, PE investors recognize that they need strong executives overseeing the companies they acquire. They examine target-company leadership when considering an acquisition, and they often install new top-level leaders, particularly in the CEO and CFO roles. They give portfolio company leaders tough targets and rich financial incentives to align the interests of management and investors. But that’s about it. READ MORE

As PE Company Exits Slow, Holding Periods Now Longest Ever

Corporate executives leading private equity backed companies may have noticed delayed liquidity events. If this is your concern, you are not alone.

The median holding period for PE-backed portfolio companies is now 5.6 years, the highest value since we started tracking this metric in 2000.

Trends in portfolio holding periods across 23 years and three major economic downturns provide valuable insights for the M&A industry. READ MORE

Small Business Administration and Department of Defense Launch Small Business Investment Company Critical Technologies Initiative

On September 29, 2023, the U.S. Small Business Administration (SBA) and the Department of Defense (DoD) announced the rollout of the Small Business Investment Company Critical Technology (SBICCT) Initiative, a joint effort between the SBA and the DoD to increase private capital investment in critical technologies vital to U.S. national security interests. READ MORE

Venture Capital Founder: AI Bubble Will ‘Pop’ but Tech Will Persist

Is the artificial intelligence (AI) bubble set to burst soon?

It will likely happen in the next year, Yanev Suissa, the founder of venture capital firm SineWave Ventures, told Seeking Alpha in an interview published Saturday (Oct. 14). Still, that doesn’t mean the technology isn’t worthwhile, he added.

“AI is the next revolution in tech, but it’s also been around forever,” Suissa said. “It’s one of those things that’s going to pop and it’ll be a huge pop. And then it’ll sort itself out, right?” READ MORE

California Introduces New Diversity Disclosure Obligations for Venture Capital Companies

On October 8, 2023, in an effort to improve the diversity of venture capital investment in the state, California Governor Gavin Newsom signed Senate Bill No. 54 (SB 54) into law. SB 54 requires venture capital companies (VCC) to collect and report information about their funding determinations, including demographic information for the founding teams of each VCC’s portfolio companies, to the state’s Civil Rights Department (CRD). READ MORE

Climate tech startups get growing share of muted global venture capital

Investment and grants in climate tech startups have fallen just over 40% over the last 12 months, but that plunge is less precipitous than the broader venture capital industry globally, analysts at PwC said in a report released on Tuesday.

The report on the state of climate tech described investors as narrowing their focus to areas that need it most, such as heavy industries; climate tech has a "growing share of a muted market" hobbled by global economic and political conditions. READ MORE

Generalist Or Specialist? Deciding What Type Of Investor Is Right For Your Startup

Your startup is gaining momentum and you’re ready to raise capital to scale.

Great, but from whom?

Not all capital is created equal and choosing the right investment partner could be critical to your next phase of growth. Chances are you’ve started to compile a list of well-known VCs to target, but how do you evaluate the investors to determine who would be the best fit? READ MORE

Average U.S. venture capital exit value grows in third quarter

The third quarter's average U.S. venture capital exit value was $166 million, according to data from PitchBook and the National Venture Capital Association. It has been less than $100 million for six straight quarters and was $26 million in the second quarter. A year ago, it was $55 million. Looking back to 2012, average exit values peaked in the second quarter of 2021 at $559 million. READ MORE

How Generative A.I. Is Changing This VC's Investment Decisions

Linus Liang loves working with founders to build companies from the ground up. After eight years at venture capital firm Signia, Liang set out on his own this year, co-founding Kyber Knight Capital, a San Francisco-based firm that invests in early-stage tech companies, particularly those in artificial intelligence, e-commerce, and media. Kyber Knight's inaugural $120 million fund launched in June, with limited partners including former eBay and HP CEO Meg Whitman and former Walt Disney chairman and CEO Michael Eisner.

With his new fund, Liang's investment strategy has radically shifted in response to the boom in artificial intelligence startups, which he calls "the most exciting opportunity we've seen in a decade." READ MORE

Regardless of SBF Verdict, Crypto And Venture Have Significantly Changed

Sam Bankman-Fried’s trial kicked off this week in a Manhattan federal courthouse. The disgraced crypto wunderkind faces seven counts involving fraud and conspiracy charges related to the implosion of crypto exchange FTX.

The spectacularly colossal nature of SBF’s downfall has impacted not only the crypto startups and venture funding in the sector, but also venture capital in general. READ MORE