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In 2023, private equity firms continued to integrate ESG considerations into their investment processes with Limited partners (LPs) and regulators continued to prioritise the importance of transparency and reporting related to ESG factors.
Whether the ESG acronym continues to be used over the long term remains to be seen but ESG in one form or another has cemented itself into the private equity landscape. READ MORE
Have things gone from bad to worse for startups in 2023?
If you look at the deal values, deal counts and valuations of the most prominent sectors in the VC ecosystem and compare the results to 2022—which was itself a weak year relative to 2021 highs—it will certainly feel that way. READ MORE
After a painful year, venture capitalists are feeling upbeat about fundraising in 2024. But they are less confident about the exit options available to their portfolio companies next year.
Strong deal volume and valuations led to stratospheric fundraising in recent years. In 2021, 1,397 U.S.-based venture funds raised $157.8 billion and in 2022, 1,057 funds brought in $168.3 billion (more than twice the number of funds and more than four times the capital raised 10 years ago), according to PitchBook. Those totals dramatically slumped this year under the pressure of higher interest rates and a slower economy. Halfway through 2023, just 197 funds raised $27.6 billion. The biggest venture capital funds are having an especially tough time raising capital and investing it. READ MORE
Venture and private equity funds that own equity securities of public companies may have numerous Securities and Exchange Commission filing requirements, including filings based on the size of the holdings of a particular portfolio company, aggregate holdings of securities across all public portfolio companies, and filings triggered by the volume of sales and purchases of portfolio company equity securities. Many of these filing requirements are annual or quarterly. READ MORE
We all know funding for startups has been in short supply over the past year, but a recent PitchBook article points to a large drop in active venture capital investors in the US. They define active investors as those who have made two or more deals, which dropped by 38% in the first three quarters of 2023 compared to the same period last year. That means 2,725 fewer firms are making deals in 2023.
They also point out that the drop in investors exceeds the drop in deal count during the same period, which was 28%. And their data shows it’s not just a lack of deals being done; in some cases, funds could have run out or become “zombie funds,” and some may have stopped allocating to the VC asset class. These inactive investors might sell VC assets on secondary markets or wait for a rebound valuation. READ MORE
Venture-backed companies are in the midst of a significant valuation reset that began in 2022 and deepened in 2023. The entire ecosystem — from seed to late-stage venture —has been impacted, leading to flat rounds, down rounds, delayed rounds, layoffs and closures.
Here, we look back at some of the most high-profile companies with disclosed values in 2023 that raised at significant markups, as well as those that saw their valuations slashed. READ MORE
Private equity investments into startups in 2024 are predicted to see significant strategic shifts, including the rise of continuation funds, longer holding periods due to the challenging exit environment, and an increase in founder-owned company deals, according to the 2024 U.S. Private Equity Outlook report published today by PitchBook Data Inc.
The report comes as 2023 saw PE activity falling to unprecedented lows relative to the industry’s capital under management. U.S. PE assets under management were just shy of $3 trillion entering 2023, with firms only since having invested $227.2 billion in holdings based on the deal value of exited companies, or 7.6% of the beginning value. The figure is worse than during the global financial crisis in 2009, when it was 11.3%. READ MORE
With higher interest rates and a more challenging financing environment, private equity firms are shifting their strategies and timing when it comes to exiting their investments.
“A lot of portfolio companies, especially those acquired during the high-valuation period of 2021 to 2022, would sell at lower multiples now compared with when they were acquired,” said Colin Singleton, a Grant Thornton Transaction Advisory Services Partner.
Through the third quarter, nearly 70% of deals in 2023 were worth less than $500 million, according to PitchBook data. That’s a greater portion of deals worth $500 million or less than in any of the previous 10 years. READ MORE
Boston-based OpenView stunned the VC world with news in early December that it laid off most of its employees and would stop all new investments months after raising its $570 million seventh fund. The 17-year-old firm, which managed $2.4 billion, was too prominent to keep its closure under wraps.
But OpenView was far from the only investor that stopped backing startups this year. READ MORE
There is no question that 2023 was a tough year for the venture and tech ecosystem. Carta revealed a dramatic decline in funding rounds and total investment, showing the total number of rounds in Q1 2023 dropping 64% and the total dollars invested dropping 86% from the peak in Q4 2021. Forum Ventures has seen firsthand how difficult the fundraising environment is for founders at all stages of this market, having invested in 100+ B2B SaaS companies this year across their accelerator and seed funds. Michael Cardamone, CEO and managing partner at Forum Ventures, spoke to emerging managers about the state of this market and reflected that “this is the hardest it has been to raise a fund in a long time.” READ MORE
Embarking on the entrepreneurial journey demands not just vision but also the financial fuel to power it forward. The perennial question echoing in the minds of business owners is, "How will I fund my business?" Let's explore actionable strategies for securing the financial foundation your venture needs. READ MORE
In its Annual Report (the “Report”), the Securities and Exchange Commission’s Office of the Advocate for Small Business Capital Formation (OASB) provides data on the reliance by private and public companies on exempt offerings to raise capital. Based on data provided by the SEC’s Division of Economic and Risk Analysis, between July 1, 2022 and June 30, 2023, companies raised approximately $4.2 trillion in private and exempt offerings. The Report breaks down the data based on the exemption relied upon by the companies. For example, companies raised $169 billion in Rule 506(c) offerings, $2.7 trillion in Rule 506(b) private placements, and $258 million in Rule 504 limited offerings. Companies raised $352 million through Regulation Crowdfunding. Companies raised $1.3 trillion in all other exempt offerings, including Regulation S and Rule 144A offerings. Of course, these numbers do not account for amounts raised in Section 4(a)(2) offerings. READ MORE
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
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 (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 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
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
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 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
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