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After years of raising over $100 billion annually, start-ups seeking funding from venture capital firms may have to prepare themselves for the worst thanks to increasingly challenging market conditions.
An EY analysis noted that in 2023, venture firms invested $140 billion in portfolio companies. In every year since 2018, venture-backed portfolio companies have raised more than $100 billion. READ MORE
2023 marked a challenging yet transformative year for the health tech and biotech industries. With VC investment in the sector down more than 50% from its peak in 2021, and underwhelming public market performance to boot, it’s hard not to feel caught in the “trough of disillusionment” that we referenced in our State of Health Tech Report a few months ago. READ MORE
Since the 2008 financial crisis, the SEC has made repeated encroachments into the private funds industry. Registered investment advisers (RIAs) have borne the heaviest regulatory burden: routine examinations, frequent rulemaking, and aggressive enforcement activity. The harshest government gaze has always been reserved for retail-facing firms, but RIAs advising sophisticated accredited investors (e.g., private equity fund advisers) have also received a lot of attention from the Securities and Exchange Commission (SEC) over the past 15 years. READ MORE
The worst M&A and IPO environment in over a decade is forcing many VC firms to consider selling their startup stakes to secondary buyers in order to return capital to LPs.
While VCs are exploring all flavors of secondary solutions, continuation funds are gaining more momentum than other transaction types, investors say. These vehicles allow existing LPs to sell aging assets to new buyers or roll those investments into the new fund. READ MORE
Barely two weeks into the year, the 2024 startup news machine is running at full clip. A quick scan of TechCrunch headlines reveals venture funds adding new capital, and startups that have either raised lots of money or are in the process of closing deals to raise lots of money.
We’ve gone over how venture capital investment fared across the world over the past few days, but today we wanted to provide a more comprehensive look at the numbers. READ MORE
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In the 1984 pilot episode of Miami Vice, Sonny Crockett and Rico Tubbs tear through neon-lit Miami in a Ferrari while Phil Collins sings “I can feel it coming in the air tonight.” There’s little dialogue in a tense four-minute scene, punctuated by the song’s terrific transitory drum solo. Crockett stops off at a phone booth to ask his estranged wife, “It was real, wasn’t it?”, while Tubbs loads a shotgun for a showdown with a drug trafficker. The air is thick with suspense and anticipation. Jump to today, and equity capital markets bankers can feel it coming in the air, but they’re not sure what “it” is. Banks have bulging pipelines of exciting IPOs, even after discounting the hype and hyperbole. But those same bankers know that after two years of deal doldrums, the higher-ups’ patience is wearing thin. The expected flow of IPOs last autumn dried up after a soggy after-market performance. The IPO boom of 2020-21 was real, wasn’t it? Or will 2024 be a reckoning? READ MORE
Carta, a fintech startup that rode its message of democratizing startup ownership to a $7.4 billion valuation, is facing mounting blowback after a client accused one of the company’s sales employees of trying to use confidential customer information to broker trades.
Carta has been celebrated by Fast Company and others for giving startup employees the tools to reap the benefits when their companies go public. It primarily makes software used by many early-stage ventures to track ownership. READ MORE
Many professionals in alternative investments are relieved that 2023 is behind us. Despite the challenging year, there are potential significant 2024 tailwinds that make investing in Private Equity (PE) and more specifically Venture Capital (VC) attractive again.
For instance, the U.S. VC fundraising environment is expected to rebound because the 2023 exit market was pretty much closed. In 2023, the rate at which capital has been distributed back to limited partners is at the lowest level since 2003. Lack of liquidity contributes to how much capital can be invested into new VC funds. Predicting the full reopening of the U.S. IPO market is very subjective but there are encouraging indicators. READ MORE
For agtech startups, 2023 was a tough year for fundraising. They secured $4.6 billion in funding during the first three quarters of 2023, but that number is down significantly from the $10.7 billion raised last year and $12.2 billion in 2021, according to Global Agtech Initiative. CropLife reports that even though the number of agtech startups raising venture capital has increased for three straight quarters, the average round size has fallen during the same time.
In other words, more agtechs are getting funding, but they’re receiving smaller amounts of money. As a result, they’ll need to find ways to do more with less or turn to more creative funding options. READ MORE
I had the pleasure of meeting Danai Musandu, Vice President of Investor Relations at HPE Growth, in person at the Superinvestor conference in Zurich. Our in-depth conversation provided profound insights into the transformative shifts occurring in the private equity (PE) industry, touching upon generational changes, decentralization trends, the influence of cultural icons, and the future metrics of success. READ MORE
Consumer startups have struggled to raise funds since the venture downturn began in 2022, and 2023 was a debacle.
As of November, VCs had only invested $130 million in direct-to-consumer companies for the year, down a startling 97% since the 2021 peak of $5 billion, with other consumer-facing sectors faring only a little better. With the implosion of SmileDirectClub and languishing stocks for public companies like Warby Parker and Allbirds, direct-to-consumer companies have been especially hard hit. READ MORE
For the past handful of years, the venture market has been on a wild ride. From the cheap money days of 2020 and 2021 to the market recalibration in 2022 to some rocky times in 2023, the private market has had its ups and downs.
However, venture capitalists view 2024 pretty optimistically — although with caveats — with funding likely already hitting its low, the exit markets coming back, and a coming to terms with the new normal of work. READ MORE
Special purpose acquisition companies (“SPACs”) have been in the litigation spotlight recently. As SPAC disputes play out in courts nationwide, one especially interesting field of play is in the Delaware Chancery courts where SPAC shareholders are pursuing breach of fiduciary duty cases against SPAC sponsors, officers, and directors. How did this litigation develop, and where does it stand now? READ MORE
When people give you advice about how to run your business or, let's be real here, how to run your life, you'll hear a lot about the importance of failure. And don't get me wrong, I understand how large a part failure plays in the poorly-written instruction manual for success.
The problem is that these folks almost always say the out-loud part too quietly, or not at all. That advice winds up sounding like a quote from one of my favorite obscure movies, a quote about how to succeed that I can take completely out of context, and it still works as intended READ MORE
The Securities and Exchange Commission’s private fund advisor rule, which went into effect in August, is driving a rift between the industry groups that represent private equity firms and those that speak on behalf of their clients.
Late in December, the Institutional Limited Partners Association, several industry groups, and 11 state pension plans, filed an amicus brief in support of the private fund advisor rule, which is being challenged by trade associations that represent private equity firms. The brief was filed in the United States Court of Appeals for the Fifth Circuit Court. READ MORE
For the first nine months of 2023, there were 39 private equity secondary funds that raised $68.1 billion, according to data compiled by PitchBook Data. The dollar figure eclipsed most annual totals since 2008, with 2020 as an exception. READ MORE
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
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
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
Prof. Ilya Strebulaev of Stanford University points out the contributions of VCs by noting that they were financiers of some giant VC-backed “startups” of the last 50 years.
But, in VC as in life, what you see may not always be what you get. READ MORE