The stock market is coming back and interest rates are poised to come down, yet the picture feels less rosy in tech. More so than in past years, the tech ecosystem feels at odds with the macro environment: the tech IPO window remains largely shut, investors face liquidity crunches and many startups are struggling to raise capital. The question on everyone’s mind is what is in store for 2024? READ MORE
2024 venture capital outlook: moderate rebound to 2020 levels amid economic optimism
Venture capital invested into startups in 2024 is expected to rebound thanks to positive economic signals but only to a level similar to 2020, according to the 2024 U.S. Venture Capital Outlook published early Tuesday by PitchBook Data Inc.
The report details that though 2023 held a few surprises, notable among them the collapse of Silicon Valley Bank in March, there was little disruption in the market overall. A few high-profile initial public offerings, including Arm Holdings PLC and Instacart, generated little momentum for the market, further securing 2023 as a poor one for exits. Then, thrown into the mix was the clown show at OpenAI as Chief Executive Sam Altman was fired and rehired over the space of a few days. READ MORE
Venture Capital Explored: The Engine of Startup Growth and Innovation
Venture capital (VC) represents a critical and vibrant segment of the financial world, known for its pivotal role in transforming nascent startups into industry giants. This form of private equity financing is not just about infusing young companies with the necessary capital to grow, but also about instilling them with the expertise, guidance, and strategic networks needed to navigate the challenging waters of the business world. In this comprehensive introduction, we delve into the intricacies of venture capital, a domain where risk meets opportunity, and where investors and entrepreneurs alike embark on a journey of innovation and growth. READ MORE
The times for private equity and venture capital transactions are a-changin': 2024 challenges
The last 18 months have been a challenging time for private equity and venture capital funds and their portfolio companies across the globe, impacting the availability and cost of capital, deal valuations and exit opportunities. High inflation, rapidly increasing interest rates, volatility in the public equity markets, the collapse of certain banks that support the PE and VC ecosystem and significant reductions in valuations of portfolio companies post-pandemic has led to massive economic challenges; U.S. and global political unrest has created uncertainty in the markets; and unions across the United States have led strikes driven in part by the current macroeconomic environment as well as innovative technologies that are changing the way that many companies do business. READ MORE
US Securities and Exchange Commission responds to challenge to new rules by private funds
The U.S. Securities and Exchange Commission (SEC) on Friday defended its overhaul of rules for private funds, responding in a court filing to a lawsuit from six private equity and hedge fund trade groups.
The trade lobbying groups in September sued the top U.S. markets regulator, saying the agency overstepped its authorities when adopting sweeping new expense and disclosure rules. The changes require private funds to issue a swath of new reports and to perform annual audits, as well as disclose certain fee structures. READ MORE
Private equity firms face pressure as dry powder hits record $2.59 trillion
Global private equity dry powder has soared to an unprecedented $2.59 trillion in 2023 as a slow year in dealmaking closes with limited opportunities for firms to deploy capital raised in previous years.
The dry powder total as of Dec. 1 represented close to an 8% increase over the December 2022 total of $2.39 trillion, according to S&P Global Market Intelligence and Preqin data. READ MORE
Private Equity’s New Way to Defer M&A Debt Costs
Private equity giants are turning to a new take on an old solution to higher debt costs for M&A deals: borrow all of the money they can and defer paying it back.
KKR & Co. is asking private credit funds for a so-called payment-in-kind feature that would allow it to push off all cash interest payments if and when it purchases a 50% stake in health care analytics company Cotiviti Inc. The company is looking for $5 billion to $6 billion of debt for the deal. READ MORE
Startup valuation correction will continue in 2024 but worst may be yet to come, say a third of agrifoodtech VCs
The market correction for startup valuations in agrifoodtech, which is taking place across tech industries too, will continue into 2024, according to all but one agrifoodtech venture capital investor surveyed by AgFunderNews.
And 30% of the 28 leading agrifoodtech investors who responded believe the worst is yet to come for startups trying to raise capital. Some 44% were more positive, believing we’re at the lowest point now for startup valuations, while 11% believe we are “over the worst of it,” with “better times ahead.” The remainder said they didn’t know where we were in the cycle. READ MORE
Sale process of SVB's $10B venture-capital unit encounters issue
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