Junior bankers are getting fussy about the private equity funds they'll join

It used to be the case that junior bankers were so desperate to work in private equity that the big funds could compel them to interview through the night. With private equity recruitment season around the corner, similar scenes may still occur at the biggest funds this year, but others are struggling to get bankers to interview even in daylight. 

"Candidates are suddenly being very fussy," says one senior private equity headhunter in London, speaking on condition of anonymity. "They know that the worst place to be right now is at a fund that can't raise money, and so they're looking very carefully at whether a fund has had a successful fundraising in the past year." READ MORE

Another sign of investor optimism: Dividend recaps are back

You know the market has officially shaken off its doldrums when dividend recaps are back.

Catch up fast: A dividend recapitalization is what it's called when companies issue debt and use some of the proceeds to pay shareholders a dividend. Sometimes public companies do this — more often, it's those owned by private equity firms.

Why it matters: These deals are peak financial engineering, a purely opportunistic — and potentially risky — use of the debt market. It's notable they're making a comeback even as interest rates remain pretty high. READ MORE

As college sports faces more change, is private equity money coming in?

There are high-stakes lawsuits and labor relations boards, congressional hearings and an NCAA president's controversial overhaul plan. There's an angry school taking its conference to court over a grant of rights, and that conference preemptively striking against the school.

There's the disruption of name, image and likeness, grumbling over essentially unlimited transfers and million-dollar portal acquisitions. There are Hall of Fame coaches in football and men's basketball sprinting to retirement. There's a yawning gap between the SEC and Big Ten and the rest of the leagues, with those Power 2 commissioners beginning to realize the power of leveraging their ascension above the fray. READ MORE

Private Equity Is Starting to Share With Workers, Without Taking a Financial Hit

In 2018, Anna-Lisa Miller was working with agricultural cooperatives in Hawaii, helping them reinvest in their communities through shared ownership.

Ms. Miller, who had gone to law school and had planned to do civil rights litigation, loved the principle of workers partaking in the financial success of their employers, and the next year joined Project Equity, a nonprofit that helps small businesses transition to worker ownership. But it was slow going, with each transaction requiring customized assistance. READ MORE

VC Funding in 2024: High-Profile Departures, Layoffs and a Glut of Investors Struggling to Generate Returns

Last December, the outlook for venture capital felt grim. Compared to the flush days of 2021, startups were looking at a much drier funding landscape, as interest rate hikes came to present a sobering reality. 

The situation was spelled out by Wesley Chan, co-founder and managing partner at FPV Ventures, who told Inc last December that limited partners, such as pension funds and university endowments that invest in VC funds, were spooked by the macro conditions: "Most LPs are saying, 'Why would I put more money into venture when I can get risk-free returns by buying treasuries at almost five and a half percent?'" READ MORE

How to fire a VC

Venture firms are feeling bloated these days.

Years of ballooning assets prompted investment firms to grow their headcount, and many now want to slim down. This week, The Information reported that several Tiger Global employees who focused on raising capital have left the firm, and that startup accelerator Techstars shed 7% of its staff, primarily in support and operations roles. READ MORE

Another Sign That Venture Capital Is Slowly Improving

It’s hard to say that the future of venture capital is looking brighter. But maybe it’s turned a corner?

Rising interest rates and fear of a recession in the U.S. made 2022 and 2023 terrible years in venture capital, a period that included a five-quarter streak of negative performance. That streak broke in the second quarter last year, when VC funds returned 0.2 percent, according to a report by BlackRock’s eFront, which calculated the return using the cash flow information of 2,431 VC funds a (mix of early-stage, balanced, and late-stage) on a net-of-fee basis. But the second quarter’s positive momentum didn’t continue into the second half of 2023. READ MORE

3 VCs offer their investment outlook for 2024

For venture capital (VC) investors, the economic uncertainty of this sort-of-post-pandemic world has proven tricky. Add in things like a national anti-DEI backlash (complete with lawsuits) and a substantial drop in 2023 funding despite the launch of open-source generative AI, and you might call it fraught.

To better navigate this uncertainty, we connected with VCs based in Baltimore, DC and Milwaukee to see what trends they’re seeing for 2024. How cautious are they, and what kinds of companies are they interested in investing in?

Here’s what they told us: READ MORE

"There is currently a trillion dollars trapped in VC funds and investors are desperate for liquidity”

In the last decade, a staggering 1,200 venture capital funds emerged, marking one of the tech sector's most remarkable periods. This era witnessed an influx of hundreds of billions of dollars from both seasoned and novice investors, drawn by promises of dream returns as long as the unicorn factory kept galloping.

The years 2021 and 2022 became industry milestones with record fundraising surpassing $300 billion, and even the Israeli venture capital market joined in the celebration. However, the winds shifted in 2023, leaving many disillusioned from their VC ventures as valuation levels plummeted, new fundraising rounds vanished, and exits disappeared from the horizon. READ MORE

M&A Dropped 31% For VC-Backed Startups In 2023

Dealmaking involving venture-backed startups hit an eight-year low last year, as strategic and private equity buyers decided to keep their cash, likely waiting to see how far startup valuations would drop.

It is not shocking that dealmaking hit a low ebb last year, but the dearth of VC-backed startups sold last year may offer a surprise. In 2023, only 1,738 venture-backed startups were acquired globally — the lowest amount since 2015, when 1,687 startups were bought — per Crunchbase data. READ MORE

Private equity faces pressures of growing old

Private equity firms that were once Wall Street’s disruptors have turned into its establishment, and are turning to a solution they know well: deal-making.

In the latest move, General Atlantic, known for taking stakes in fast-growing private companies, is buying Actis, which owns telecom towers in the Balkans and data centers in Chile. BlackRock, diving into alternative investments after years of false starts, is skipping right over pure-play private equity with its $12.5 billion acquisition of GIP, an infrastructure giant. That follows TPG’s deal last fall for credit and real-estate specialist Angelo Gordon. READ MORE

SEC kicks dead SPAC horse with new rules

The SPAC IPO market has faced a number of challenges recently, including SEC scrutiny, disappointing performance by SPAC-acquired firms, an uncertain economic outlook, and rising interest rates, according to financial and risk advisory firm Kroll.

Between 2021 and 2022, there was an over 85% reduction in the number of SPAC listings, according to law firm Paul Hastings. The downward trend continued in 2023, with such listings decreasing by nearly an additional two-thirds. READ MORE

2024: A Year Of Reckoning And Resilience For Startups And VCs

As we bid goodbye to a tumultuous 2023, marked by macroeconomic uncertainties and geopolitical tensions, the private markets stand at a crossroads in 2024.

Despite headwinds, the year concluded on a strong note, witnessing record highs in stock markets and a gradual easing of interest rates and market volatility. As a venture capitalist, I find myself contemplating the implications of these shifts on the private markets and predicting the year ahead. READ MORE

Lower Valuations, Higher Bar: What It’s Like To Raise A Seed Round In 2024

Seed funding to startups has grown into its own asset class over the past decade, with round sizes trending larger, and a bigger pool of investors backing these nascent startups. But in the aftermath of 2021’s venture funding heyday and subsequent pullback, investors say that while seed funding has held up better than other startup investment stages, these very young startups will see lower valuations and must now clear a much higher bar to get backing. READ MORE

US Seed Investment Actually Held Up Pretty Well For The Past 2 Years. Here’s What That Means For 2024

Despite a broad pullback in global startup investment over the past two years, investors say the U.S. seed funding environment was the most vibrant compared to other funding stages during the downturn.

In fact, U.S. seed funding in 2022 grew by close to 10% in terms of dollars invested, in contrast to a downturn at all other funding stages. In 2023, U.S. seed funding fell 31% — a significant proportion — but still less than other funding stages year over year, an analysis of Crunchbase data shows. (It’s also worth noting that those other stages had already experienced year-over-year declines in 2022.) READ MORE

Terminated private equity-backed deals rise as percentage of overall total

Global terminated M&A deals totaled $15.96 billion across 29 transactions in the fourth quarter of 2023, the lowest quarterly tally since 2020, according to data from S&P Global Market Intelligence.

However, deals backed by private equity or venture capital firms, either as seller or buyer, comprised 17.2% of the total volume, the highest quarterly proportion since at least the first quarter of 2020. READ MORE

Want to Raise Money? Ignore These 3 Sources of Conventional Wisdom

Raising venture capital is an infamously tricky task. Thousands of startups pitch VCs each year, hoping to receive the funding to help turn their dreams into reality. At the top firms, only 0.7% of companies receive the funding they seek.

With so much at stake and such long odds of success, founders constantly search for ways to improve their pitches. Unfortunately, this often leads them to learn and follow conventional wisdom, much of which is outdated and ineffective. READ MORE