Private equity has a serious case of indigestion

Readers of Antoine De Saint-Exupery’s The Little Prince may recall the hatlike appearance of the snake that swallowed an elephant. After the festive season, some may empathise with that swollen reptile. The private equity industry has ended 2023 in something of a similar state. Private equity companies have struggled to find buyers for their portfolio companies for a number of years now. Companies have had their hands full managing snarled-up supply chains and rampant inflation. Opportunities for successful initial public offerings are few and far between. High valuations for private equity portfolio companies have not helped. READ MORE

Decoding The Evaluation Process Of Generative AI Companies By Venture Capitalists

In the fast-paced world of venture capital, investment opportunities in generative AI companies have become increasingly appealing. These companies, leveraging cutting-edge technology, are driving innovation across industries such as healthcare, finance, media and entertainment. However, venture capitalists face unique challenges when analyzing and evaluating such companies due to the complex nature of generative AI. This article explains the intricacies of the evaluation process, exploring the technical details, tools, and regulations that VCs employ to make informed investment decisions. READ MORE

Venture Capital Is Going To Heat Back Up

Everyone knows how Amazon AMZN -1% started as a simple book store or how Meta began in a dorm room. At some point all of today’s great companies were just a passion project, a great idea in need of capital, employees, and the first real customer. While some ideas grow to become companies organically without outside investors, most companies need help. They need capital, they need expertise, they need connections and support. READ MORE

Venture Capital Outlook 2024: Challenges and Strategic Shifts

As we look ahead to 2024, the venture capital industry appears to be approaching a critical juncture, shaped by recent stumbles and an uncertain macroeconomic environment. High-profile turnovers at leading firms like Sequoia Capital and Tiger Global, alongside a general slowdown in dealmaking, have marked a challenging year. While some view these developments as a healthy market correction, questions remain about the industry’s trajectory. READ MORE

Debunking the myth that crowdfunding is only good for cash

Equity crowdfunding, or raising funds from both unaccredited and accredited investors, can be a great alternative to venture capital for startups. The strategy has become significantly more popular in recent years now that venture capital is harder to come by, and changes in regulations allow companies to raise more money at one time.

But even though crowdfunding is growing in prominence and offers a whole host of benefits to the startups that choose it, many VCs continue to talk negatively about the strategy. Many traditional investors feel equity crowdfunding is only for startups that can’t raise venture money. And they even deem capital raised this way as just cash that lacks the value an investor brings, be it their network that can help with hiring and connections to customers, or their own mentorship and experience. READ MORE

Three Game-Changing Tips To Master Bootstrapping For Entrepreneurial Success

In the world of entrepreneurship, the age-old debate rages on: To bootstrap or not to bootstrap? While the allure of venture capital may seem irresistible, there’s something to be said about the grit and determination that comes with building your empire from the ground up. Nowadays, venture capital is overhyped, with entrepreneurs jumping at the idea of selling equity in their business for quick cash. READ MORE

2024 Private Equity Compensation Report Shows Compensation Increases, Slowed Hiring, and Concerns About Job Security

The 2024 Private Equity and Venture Capital Compensation Report marks the tenth straight year of compensation gains in the private equity and venture capital industry. But the market is changing.

The Private Equity Compensation Report reveals that 2023 brought increases across the board. Regardless of job title, all respondents reported an increase in total compensation. READ MORE

5 Top Trends In Tech And Startups We’re Watching In 2024, From AI To IPOs

Between the rapid ascendance of AI and the often dramatic downfall of startups large and small, 2023 was an action-packed year for tech and venture.

In many ways, we expect 2024 to be the year when things settle down a bit. The buzz around AI will likely wane, but so, hopefully, will layoffs. The IPO markets may make a tepid comeback and we expect that after nearly two years of falling funding, venture investment will level off. READ MORE

As IPO Market Ends 2023 With A Whimper Not A Bang, What Does 2024 Hold?

The September public debuts of Arm, Klaviyo and Instacart signaled the public markets could be opening up again. After all, these were the largest tech IPOs in more than 18 months.

However, since these debuts, zero venture-backed companies in the U.S. markets have listed above a billion dollars. And Klaviyo and Instacart are down from their IPO price by 22% and 33%, respectively, as of Dec. 31, 2023, around three months since going public. READ MORE

Investors Who Amassed The Most Unicorns Stepped Way Back In 2023

So perhaps it’s no surprise that investments by leading investors in unicorn companies have dropped precipitously in 2023.

For this analysis, we look at the nine most active venture and growth investors globally who have racked up the most investments in unicorn companies since 2018.

We found that investments are mostly in the single digits this year for the most active investors in this asset class. READ MORE

Private equity and ESG: five trends and predictions for 2024

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

VCs Are Optimistic About 2024 Fundraising. Exits Are a Different Story.

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

Annual SEC Section 13 Filing Requirements for Venture, Private Equity Funds

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

Where Have All the Venture Capital Firms Gone?

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

These Startups Saw Their Valuations Hiked — And Spiked — In 2023

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

Rise of continuation funds and longer hold periods forecast for private equity in 2024

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