David Mes

VC world can be cruel and unforgiving. With LPs more and more pushing for distribution and liquidity, fund managers in the mid-tenure of their fund with zero DPI and TVPI around 1.0 would have much more difficulty to raise new fund. The ability to fundraise is one of the crucial indications and validation of the job for VCs. Key highlights from the article below: Thirteen percent of venture General Partners (GPs) no longer plan to raise another fund due to LP pullback. This rate has doubled since H1 2023 when only 6% of GPs had no plans for another fund. Nearly 44% of venture firms surveyed in mid-2023 had previously postponed their fundraising plans due to concerns about overexposure to the asset class. Many emerging managers entered venture capital in 2019 or 2020 when the LP market supported more funds. However, slow exits in the first half of 2024 have led to challenges in raising second funds without significant cash distributions to LPs. Some venture GPs are now actively participating in the secondaries market to demonstrate returns. Despite the challenges, GPs who secured fresh capital remain optimistic. They expect the 2023 and 2024 vintages to be the strongest return years since 2019. 🚀📈 #VC #VentureCapital #Fundraising #LPs #EmergingManagers #TechInvestment #MarketTrends #CountdownCapital #IndustryInsights #JetVentures #JetInvestment‍‍‍‍‍‍

23

The Silver Tsunami is upon us, and it's reshaping the mergers and acquisitions landscape like never before. With an estimated $10 trillion in assets set to change hands over the next decade, driven by baby boomers retiring, the opportunity for savvy investors and entrepreneurs is immense. Currently, around 30,000 businesses sell annually, but with more than 8 million baby boomer-owned businesses expected to transition, the volume of transactions could increase tenfold. This is a monumental shift that smart buyers are already preparing for. You don't need to be a Wall Street titan to benefit from this trend; many of these businesses will transition to local entrepreneurs and small business owners. Are you ready to seize a piece of this $10 trillion wealth transfer? Position yourself strategically to take advantage of this unprecedented wave of opportunities. Engage with fellow professionals and explore how you can be part of this transformation. Not sure how? Let's talk about it! #SilverTsunami #MergersAndAcquisitions #BusinessOpportunities

7

#Private_equity Private equity’s $2 trillion pile of cash is set to fuel M&A opportunities in 2025. Private equity firms are sitting on an unprecedented war chest: roughly $2 trillion in uncalled capital. Often referred to as “dry powder,” this cash pile has been accumulating since the last big global mergers-and-acquisitions blowout, in 2021, when volume reached a whopping $5.9 trillion, according to Dealogic. The following year, activity plummeted 38.8%, and it’s been relatively quiet ever since. “We had a general slowdown in private equity exits in 2023 and 2024,” says Alain Dermarkar, US co-head of Private Equity at global law firm A&O Shearman. High interest rates were an issue; steep borrowing costs and lower returns created valuation mismatches, ultimately reducing the size, scope, and appeal of private equity deals. https://lnkd.in/dzxSUYkP

8

There's been a lot of discussion lately, & understandably so, on the lack of liquidity for LPs & what reckoning that may bring for fund managers (secondary fund anyone?!?). Many have characterized the IPO or M&A markets as "lukewarm" at best & before I saw this chart, I would have agreed. But this data surprised me. The number of M&A exits hasn't grown vs. the post-COVID mania of '21 & '22, but it's not declining either. The growth in exits in '23 & '24 is still ~2x or ~3x vs. '19 & '20! According to Peter Walker, of the ~42k startups currently on Carta only 288 were acquired in 2024, an exit rate of just 0.7% 😳. It's still just as difficult as ever out there, but there are reasons for optimism & a case to be made for resiliency if you look hard enough.

23

2 Comments

PE - Hedge Funds Hit by Lack of PE Exits (and one way that PE firms can boost exits) Financial Times: https://lnkd.in/edACss_X FYI - one way to get more PE exits is for the PE fund to have a domain expertise GTM and have deep knowledge on how to increase the Revenue Growth of portfolio companies which boosts cash, profits and margins. --- #pe #privateequity #business

24

4 Comments

HETI RIPORT #Neuberger_Berman Neuberger Berman, an employee-owned, private, independent investment manager, announced its NB Private Markets Access Fund LLC has reached a significant milestone, surpassing $1bn in net assets. Launched in January 2021, the NB Access Fund has grown consistently, highlighting both financial advisor and institutional investor demand for a differentiated, registered, evergreen private equity fund focused on direct private equity investments managed by an experienced and dedicated private equity team. The NB Access Fund provides a broader universe of investors access to Neuberger Berman’s private equity co-investments and GP-led secondary private equity solutions. The Fund invests in institutional-quality direct investments alongside leading private equity managers. As of April 30, 2024, the portfolio includes 68 private equity investments alongside 55 unique, lead private equity sponsors. https://lnkd.in/debswmz6

5

Family offices are increasingly investing in alternative assets like private equity and venture capital, but this growth has heightened liquidity challenges. As traditional banks fall short, niche lenders and specialized platforms like LiquidLP are stepping in to offer creative liquidity solutions. By borrowing against alternative portfolios, investors can maintain ownership while unlocking cash without selling assets. Tailored approaches are critical for family offices looking to navigate illiquidity and seize new opportunities. Read More Here: https://lnkd.in/ewyrZNVc Forbes #AlternativeInvestments #FamilyOffices #LiquiditySolutions #PrivateEquity #VentureCapital #InvestmentStrategies Gregory Pool Patrick Dwyer Mike Roffler Alex S. David Rubinstein Barbara Novick David Schwimmer Branded Hospitality Ventures Hospitality Headline Newsletter

8

1 Comment

Markets talk. We listen. We've from heard from capital allocators (#VC, #PrivateEquity, #FamilyOffices....even #VentureStudios, #Incubators and #Accelerators) that due diligence is a bottleneck to deal flow. It's time-consuming, expensive and often, subjective. We've launched #VentureIQ by the 9point8 Collective to directly address this problem. VentureIQ is an AI-enabled diligence solution that provides rapid scale diligence reports with exceptional fidelity and demonstrable cost efficiency - all within a single business day. We're in our soft launch, now. So, if you want to gain back valuable time and expose the long tail of deal flow diligence, shoot me a DM or visit VentureIQ.ai.

23

1 Comment

Since 2006, Neri Capital Partners has been an investment bank for small businesses. It is the honor of a lifetime to be a part of Neri Capital, which differentiates itself by offering value-added services to assist business owners in DETERMINING, BUILDING, and then REALIZING the value they have created by monetizing their life's work. Neri Capital's clients are business owners who generate revenue from $5 to $100 million annually. Investigate Neri Capital and its Advisors by visiting https://nericap.com. Neri Capital's Services include - Comprehensive Business Valuations, Sell-side Advisory, Buy-side Advisory, Strategic Advisory, Specifications based Business Searches, and Project Financing. https://lnkd.in/g4g_WMiA Always consultations are free and no obligations. (800) 216- 4819 x0 #buildvalue #businessvaluations #sellsideadvisory #CPAfirms

1

Best Investors & "The Art of Execution" Book & Study by Lee Freeman-Shor: https://buff.ly/3wRjMXU A study of 1,866 investments made by 45 of the world’s top investors over 7 years - with key Insights translated for PE Execution over ideas: - In PE, the success of an investment is heavily reliant on execution, not just the quality of the initial investment thesis - it is key to focus on operational improvements and capital-efficient commercial growth to drive value Adaptability: Be prepared to adapt strategies based on the performance of portfolio companies and market conditions - flexibility can lead to better outcomes when initial assumptions do not always hold true Operational & GTM Excellence: - In PE, operational & GTM improvements and strong management practices can significantly enhance the value of portfolio companies Active Management: Take an active (& collaborative) role as a partner to your portfolio companies and support your management teams in implementing best practices, providing strategic direction (e.g. GTM), all key to driving value Leveraging Expertise Effectively: - Utilize the expertise and experience not just of the investment team but also the PE operating partners to support portfolio Long-Term Focus: Maintain a long-term perspective on value creation - while short-term monthly or quarterly performance is important, the ultimate goal is to build sustainable, long-term value (which takes patience) in portfolio companies Performance Monitoring (using the right metrics): Monitor the performance of portfolio companies against the right benchmarks (for example, some of the elusive GTM benchmarks) - this allows for the right adjustments to strategies Risk Management: - Manage risks proactively by identifying potential issues early and developing mitigation strategies. This includes both financial risks and operational & GTM risks within portfolio companies Money Management: - Effective allocation of capital and management of portfolio companies are crucial Exit Strategies: - Plan and execute exit strategies meticulously to maximize returns. This includes preparing portfolio companies for sale or public offering and timing exits to optimize value realization --------- #pe #privateequity #business

14

1 Comment

Market inefficiencies across the small business acquisition process have a dual impact on the search ecosystem. On one hand, an overly inefficient market can hamper transaction volume, as the challenges and costs related to sourcing and closing a transaction may outweigh the expected benefits. On the flip side, a market that is too efficient can erode the competitive advantages searchers have over institutionally backed financial sponsors. To unpack this a bit further, part of the reason the Stanford Search Study continues to report 30%+ IRRs across traditional search is due to traditional searchers’ ability to capitalize on the inefficiencies that fortify searchers from competition by larger, better capitalized acquirers. One example of this dynamic is the robust, and often focused, deal sourcing processes traditional searchers conduct in order to find ONE business to acquire. Based on my pulse, self-funded searchers are also investing more in deal sourcing and we’re seeing a greater number of self-funded acquisitions sourced through a proprietary process. Market inefficiencies create an environment where searchers can acquire small businesses at lower multiples if they put in the effort. However, if the inefficiencies are too extreme, entrepreneurial acquisitions can be too challenging and costly, ultimately deterring many searchers that might perform well under other market conditions.

16

1 Comment

In 2024, family offices played a significant role in startup investments, with the top 10 family offices collectively making over 150 investments, focusing on sectors like biotech, energy, crypto, and artificial intelligence. CNBC, in partnership with FINTRX, analyzed these offices, revealing Maelstrom (Arthur Hayes' family office) as the most active, with 22 investments primarily in blockchain. Other top players include Motier Ventures, led by Guillaume Houzé, and Thiel Capital, led by Peter Thiel. AI emerged as a dominant investment theme, with 78% of family offices planning to invest in AI within the next 2-3 years. Read More: https://lnkd.in/eKSaYP88 Branded Hospitality Ventures #AI #Biotech #Crypto #Investing Hospitality Headline Newsletter Guillaume Houzé Peter Thiel Laurene Powell Jobs Trust Bernard Arnault Robert Frank Nico Mizrahi

16

3 Comments

After raising nearly $1B in capital in recent months, some acquisitions are especially fulfilling - this one being the case. But, first, a thanks and brief recap. In a stage in life I’ve come to learn as 'post-achievement,' my good friend Damien Rocchi told me recently: “Jeff, you may not feel the need to share what’s been going on in your world, but there are probably many people who would like to know because they care about you.” Thank you, Damien, for the wisdom and kindness. Now, for the recap. Hard to believe, but this year marks a decade since I signed the contracts governing the sale of my former company to Baker Tilly. The years following the merger brought great experiences, scale and phenomenal people into my life - both professionally and personally. Lots of good decisions (and some mistakes) that led to a tremendous journey which included: * The privilege to work and create value across 100+ countries * Effecting large-scale, positive impact spanning multiple industry sectors, companies and the teams within them * The invitation to consider the global CEO role for a $4B organization If someone told me in 2014 that this is what would be ahead, I may not have believed it. The years since the merger were indeed great - and the people even better. My hope during the time we worked together is that I brought each of them some small measure of the significant enrichment they brought me. As in life, one’s career has seasons. In 2020 it was time for a new one to begin in mine - even if such change would not be immediate. In long being a 'free agent' post-close in the sale of my company, the pandemic marked a point of observation, reflection and clarity: it was time for a change. Specifically, it was time to return to industry as CEO through acquisition, with a focus on sectors aligned with my experience. The aim: find a company that does good work but facing an evolutionary hurdle - whether in leadership succession gap, growth, recapitalization or otherwise. Once identified, acquire it, lead it and honor the legacy of those who founded it by generating outsized market value and positive impact post-close. And to such work I took, starting in earnest in mid-2022 and joining forces with a small but mighty group of great people. Together, we raised nearly $1B of capital in support of single asset fund deals where we could lend our experience in turning good companies to into great ones. While there have been many deals in recent months, one where I can combine my love for healthy company cultures with my passion for value-creation and all things tech, mobility, space and the conquest of flight, this is an especially fun one share. Heartfelt thanks to those of you who have been part of the journey thus far, and who continue to be part of it going forward. Means a great deal. Excel always and in all ways - and keep in touch. https://lnkd.in/dsGiYnD2

179

39 Comments

#Bain_Capital BOSTON – November 18, 2024 – Bain Capital today announced it completed fundraising for its latest Global Special Situations Fund, bringing the total amount raised for its second vintage of funds to $9 billion. This capital base includes Global Special Situations Fund II, which received $5.7 billion in total commitments, inclusive of co-investments and separately managed accounts, and $3.3 billion from the firm’s previously closed Special Situations Asia and Europe regional funds. The successful fundraise positions Bain Capital as one of the largest special situations investors in the world. Bain Capital’s Special Situations strategy combines bespoke capital solutions with strategic partnership to meet the diverse needs of companies, entrepreneurs, and asset owners across all market cycles. The team brings together credit and equity expertise, as well as corporate and real asset capabilities, to provide solutions that cannot be met by traditional providers. With more than $20 billion total assets under management, the strategy brings a differentiated ability to provide both capital as well as operating value-add. https://lnkd.in/dr32itat

7

Is Now the Best Time to Raise a Private Equity Fund? According to industry leaders, it just might be. "I’m much more optimistic at this point in the cycle in 2024 than I was in 2023 and 2022," says Andy Lund, global co-head of Houlihan Lokey's Private Funds Group. Despite expectations of a slowdown, the first half of 2024 has been unexpectedly successful for PE managers raising capital. U.S.-based funds closed on $155 billion by the end of June, slightly ahead of the first half of 2023 (PitchBook Q2 2024 US PE Breakdown). Alex Russ, head of North America for Evercore's Private Funds Group, sees this as an ideal moment for GPs with open funds. "We saw fewer new fundraise launches in 2024 than in 2022 and 2023, leading to a slight easing, which we expect to continue into the second half of this year," he notes. However, challenges remain. LP capital is still largely locked until M&A and exit activities resume. Evercore anticipates flat PE fundraising figures for 2024 compared to 2023. Moreover, other asset classes are vying for already limited institutional capital, with private credit showing particularly strong growth. In this context, Maria Konnikova’s "The Biggest Bluff" offers an insightful analogy. Inspired by "Theory of Games and Economic Behavior" by John von Neumann and Oskar Morgenstern, the book explores von Neumann's belief that poker epitomizes the delicate balance between skill and chance that governs life. Doing well at poker isn’t just about playing well; it’s about playing well relative to everyone else. And even with the best strategies, luck plays a critical role. As Nobel-winning economist Daniel Kahneman notes, "The successful funds in any given year are mostly lucky; they have a good roll of the dice. There is general agreement among researchers that nearly all stock pickers, whether they know it or not—and few of them do—are playing a game of chance." The last two years were like drawing a bad hand in poker for those raising funds. The book also emphasizes the importance of thinking like a Strategist—something I’ve honed throughout my career. Each move requires reassessment based on new information. You need a plan that evolves with feedback and supports long-term, good decision-making. If you’ve lost your chips, was it due to an unlucky situation—or because your strategy was flawed? A recurring mantra of Poker Hall of Famer Erik Seidel is "less certainty, more inquiry." If that becomes your guiding principle, not only will you actively listen, but you will also adapt and grow. For GPs, strengthening relationships with existing LPs is more crucial than ever. Now is the time to leverage your learnings and craft compelling narratives that showcase your commitment to value creation and strategic growth. By highlighting your firm's ability to navigate complex market dynamics, you can strengthen LP alignment and foster the partnerships needed for long-term success.

59

4 Comments

"Small funds may have more incentive to produce higher returns The alignment of incentives between GP and LP varies drastically based on fund size. Managers of smaller funds who have invested substantial personal capital demonstrate an unwavering commitment to lucrative returns, while managers at the helm of colossal funds, buoyed by significant management fees, may exhibit a diminishing drive. This constitutes an almost incontrovertible structural benefit of managing a small VC fund. Furthermore, fund managers of established funds may, over time, raise larger subsequent funds and grow more risk averse. This can present a sub-optimal outcome for their LPs and, by virtue, manifests a bad omen for VC investing." https://lnkd.in/gHKgea4e

150

15 Comments

During our Annual Investor Day, we discussed a trend we’ve been observing in the VC market: Funds increasingly using “extra downside protection” to compensate for slow growth & inflated valuations of companies. We’re now starting to see some skeletons come out of the closet (and, ironically, they might be the driving force that will re-open the IPO window). First one out: ServiceTitan https://lnkd.in/eNMuPAe6 ps: despite the compounding IPO ratchet structure, I believe ServiceTitan is a solid company and, at the right price (factoring in all adjustments), it's a great deal!

25

As a GP in climate venture capital, I often meet high-net-worth individuals or family offices new to VC, wondering if they should invest as LPs. While LPs choose which VC funds to partner with, GPs also select which LPs to admit. VC is not a typical financial product—it's a relationship. LPs and GPs will work together in the same fund for the typical 10-year fund life. It's crucial for LPs to understand the firm's strategy before becoming fund LPs and be good partners with the other limited partners, potentially supporting the fund's best outcomes. Common Questions from New LPs 1. Can I take my money back in the middle of the fund? Typically, no. VC investments are long-term, and GPs expect LPs to stay for the full time horizon. Startups need time to mature and exit, requiring patience. However, you can trade your LP shares in the secondary market, though this may involve negotiation and a valuation cut. 2. Can I force the GP to invest or not invest in a startup? No. LPs cannot and should not influence GP investment decisions. GPs have a portfolio strategy and make decisions for specific reasons. Trust the GPs' expertise. If their financial returns align with the fund's goals, join the next fund. If not, look into the reasons but don't interfere. 3. Is VC more risky than growth capital? Many believe early-stage investments are riskier than later-stage ones, but VCs typically return 3x with longer time frame, whereas growth funds return 2x with shorter time frame. Growth investments need careful valuation. The 2022 SPAC wave's stock price drop did not end too well for many growth investors. 4. Does having brand-name co-investors demonstrate a good GP? No. Each fund or investor has its own strategy. Strategic investors might invest for synergies, not just financial returns. Focus on understanding GPs' rationale rather than buzzwords. 5. Should LPs have irrelevant requirements on how GPs should run a fund? LPs need to know the asset class and sectors they are investing in. If unfamiliar, GPs can provide background information. Imposing irrelevant requirements can hinder operations and make GPs reconsider the partnership. GPs prefer constructive input and have limits on the number of LPs and the size of checks accepted. By understanding these points, new LPs can better navigate the venture capital landscape and form productive partnerships with GPs. Fellow GPs, other points to add?

39

3 Comments