SkyBridge Capital, Atlas Merchant Capital and Vector Capital are no longer moving forward in a process to bid for SVB Capital, the venture-capital unit of bankrupt SVB Financial, the ex-parent of Silicon Valley Bank, according to a Friday media report. READ MORE
VC secondaries: types, trends and a comparison to PE secondaries
Secondaries transactions have become increasingly popular as a solution for LP liquidity across the private investment funds industry. For decades, the term "secondaries" has been used to broadly cover a wide range of transaction types across asset classes and investment strategies. However, with the development of various individual market segments, casual reference to the "secondaries market" risks obscuring key differences in how such transactions are structured and transacted for specific asset classes and investment strategies. READ MORE
What is happening with all these new venture funds?
A growing number of venture firms may be uncorking champagne ahead of the New Year. Today, a handful of investment firms announced new funds: Artis Ventures, BoxGroup, Playground Global and Singular all closed on funds, while Partech said it was launching a €360 million venture fund.
Against a backdrop of layoffs and continuing economic uncertainty, the announcements — particularly in such quick succession — are something of a shock. But they point to a few underlying truths about the market right now. READ MORE
The long, brutal reign of Wall Street's private-equity kings is over
When Wall Street money managers fall from grace, there's usually some kind of discernible ruckus: the wail of angry investors, the steady drone of thousands of lawyers filing cases, and the rush of doomer headlines in the financial press. But even as some of Wall Street's elite are getting decimated, you can barely hear a sound. READ MORE
The Tax Court Says Limited Partners Must Pay Self-Employment Taxes
In a decision that will come as potentially bad news to many private equity and hedge funds, on November 28, 2023, the U. S. Tax Court opined in Soroban Capital Partners LP versus Comm’r that limited partners in a limited partnership who actively participate in the limited partnership are required to treat their entire distributive share of the partnership’s ordinary income as net earnings from self-employment income subject to self-employment (“SECA”) taxes. It has been common practice for limited partnerships to only treat amounts paid to limited partners that are specifically denominated as compensation as being subject to SECA taxes. READ MORE
Startups are doing fine, but scale-ups and unicorns are in deep water
It seems the younger a startup is today, the better its fundraising prospects.
Recent data from Carta pushes back against the narrative that 2023 has been tough on startups that are not building an AI product. In fact, grouping startups by maturity yields a very different picture. READ MORE
Where could VC funding be going into in 2024?
Crunchbase data reveals that early-stage startup funding plunged 34% year-over-year in November. Lux Capital General Partner Bilal Zuberi joined Yahoo Finance’s Seana Smith at the Barclays Global Technology Conference to discuss implications for venture capital funding
Zuberi stated the last year has been a “downer” for VCs amid scarce liquidity events like IPOs. This forced startups to take on cost-saving strategies through layoffs and operational changes to achieve profitability. However, he sees areas like defense tech, AI, and human productivity enhancement as needed areas of investment, calling them “important for society” and venture returns. READ MORE
2023 was an ‘extinction’ level year for tech startups. Where did all the money go?
Startups are not having a good 2023. And the investors who handed out billions of dollars to fund them aren’t very happy about it.
During more flush years, venture capitalists, angel investors and billionaire evangelists poured their cash into tech startups – the easy money pipe was seemingly open to any Tom, Dick or Harry who had an idea and was willing to attach a buzzy phrase like ‘blockchain’ or ‘AI’ to it. Valuations soared and unicorn companies, those startups said to be worth $1 billion or more, proliferated. READ MORE
The Impact Of Emerging Technologies On The Venture Capital Ecosystem
Two key areas stand out in regard to the impact of emerging technologies on the venture capital ecosystem – robotics and autonomy.
Robotics is experiencing a surge in interest and investment within venture capital. The confluence of various technologies, such as high performance compute, AI, next gen sensors, new battery technology, advanced materials, 3D printing and manufacturing techniques, has enabled viable business models for today’s use cases. READ MORE
Senators probe private equity hospital deals following CBS News investigation
The top Democrat and Republican on a powerful Senate committee launched a wide-ranging investigation into private equity's impact on the U.S. health care system on Wednesday. Democratic Sen. Sheldon Whitehouse of Rhode Island and Republican Sen. Charles Grassley of Iowa sent letters to a constellation of financial firms seeking information about how their dealings in the healthcare space impact patient care.
"The American people deserve to understand the role that PE [private equity] firms play — and any potential resulting negative financial or patient care impacts — in the delivery of their health care," wrote the senators, who lead the Senate Budget Committee. READ MORE
Venture capital moves — slowly — to middle of the country
Venture capital investment in heartland companies more than tripled in a decade, reaching $55 billion by the end of 2021, according to a recent Heartland Forward report.
Why it matters: The jump means more startups in the 20-state region of the nation's midsection. New companies tend to spur clusters, or hubs, of related firms — creating more jobs, attracting talent and generating economic activity. READ MORE
3,200 VC-Backed Companies Go Under in ‘Difficult Year’ for Startups
Investors in America’s tech startup sector are bracing for a collapse.
That’s according to a report Thursday (Dec. 7) by the New York Times (NYT) which chronicles the rise and fall of a number of once high-flying companies — WeWork, Convoy, Olive AI — that have either filed for bankruptcy or closed up shop in recent weeks. READ MORE
Where US Tech Investment Is Growing the Most
The geography of innovation in America is changing, but not in the way you might think. Despite projections of doom for coastal tech bubbles like the San Francisco Bay Area and Boston, such regions are as important as ever when it comes to venture capital investment in high-tech startup companies. But the massive increase in VC funding has also enabled the growth of viable startup ecosystems straight across the US, especially in the middle of the country. READ MORE
Big VC Funds Are Underperforming Smaller Ones and Their Future Is Dim
Kevin Lalande, who founded two companies before attending business school, said he joined Austin Ventures in 2000 because it had a “better brand than any at the time” and was a great place to learn how to identify promising startups.
But the next year, Austin Ventures raised a $1.5 billion fund — only the sixth $1 billion-plus venture fund at the time. Lalande said that was a mistake, one that is still made today. It raised too much money and couldn’t keep up its performance, even with its respected brand and talent. READ MORE
San Francisco Bay Area’s venture capital-based economy is heading to court
This week, the U.S. Court of Appeals for the Ninth Circuit will hear oral arguments on the federal government’s attempt to block Microsoft from acquiring game developer Activision Blizzard. A lower California court already blocked the government’s challenge to the acquisition.
The appeals court’s decision will impact far more than video games or the stakeholders for this one case. If the Ninth Circuit rules against the lower court, the resulting precedent could have significant ramifications for venture capital investing and the San Francisco Bay Area’s economy. READ MORE
From Unicorns to Zombies: Tech Start-Ups Run Out of Time and Money
WeWork raised more than $11 billion in funding as a private company. Olive AI, a health care start-up, gathered $852 million. Convoy, a freight start-up, raised $900 million. And Veev, a home construction start-up, amassed $647 million.
In the last six weeks, they all filed for bankruptcy or shut down. They are the most recent failures in a tech start-up collapse that investors say is only beginning. READ MORE
In 2023, Even Big Startup Exits Come With Markdowns
Generally speaking, when a startup gets acquired by a big company or goes public at a valuation over a billion dollars, prior backers at all stages come out ahead.
This year, however, that often hasn’t been the case. Because private company valuations hit such frothy heights a couple years ago, even good-sized exits are commonly well below peak. READ MORE
Shein and Reddit IPOs don’t herald a Wall Street boom. Here’s why
It’s been an exciting few weeks for the IPO market.
Chinese fast-fashion brand Shein filed for a US IPO last week, according to reports from Reuters. Reddit, Skims and Microsoft-backed Rubrik are also reportedly planning to make their public debuts in the coming months. READ MORE
Global Venture Funding In November Slows At Early Stage
Global venture funding reached $19.2 billion in November 2023, down marginally month over month, Crunchbase data shows. Funding fell around 16% from the $23 billion invested in November 2022, which was already down by two-thirds from November 2021.
Early-stage funding declined the most year over year — falling 34% — an indication that venture investors continue to scale back even when investing in younger startups. Seed funding slowed more than 15%. READ MORE
Why is cybersecurity venture funding so tepid despite the strong demand?
If you looked at venture capital investment trends in the cybersecurity market, you’d be excused for thinking that the sector was struggling.
Crunchbase data indicates that cybersecurity startups raised $1.9 billion in the third quarter, across 153 deals. The amount was better than the $1.7 billion startups in the sector raised in Q2 2023, but deal count declined from 181 deals. READ MORE