IVCA Feature: First Quarter 2022 Venture Capital & Private Equity in Two Headlines

May 11, 2022

In the last issue of the IVCA newsletter, a variety of financial articles analyzed the First Quarter of 2022. Within that analysis, one headline each from Venture Capital and Private Equity emerged as the main stories. So to expand a continuation of the Q1 analysis, the following collection of articles will breakdown those two headlines, defining elements for the VC and PE industries.
 
VENTURE CAPITAL HEADLINE: VC Fundraising Seeks to Sustain 2021’s Momentum
 
BizJournals.com, ‘Chicago startups raised $1.4B in Q1
 
Venture funding continues to flow into Chicago, albeit at a somewhat slower pace than the record amount of VC dollars the city raised in 2021. Startups in the Chicago metro area raised $1.4 billion in the first quarter of 2022.
READ MORE (Sign in to read for free): https://www.bizjournals.com/chicago/inno/stories/news/2022/04/14/chicago-vc-funding-q1.html 
 
Crunchbase.com, ‘European Venture Investment Bucks Trend, Maintains Momentum In First Quarter’
 
Venture investment into European startups reached $29.8 billion in the first quarter of 2022—the second-highest quarter on record for the continent’s startups. First-quarter venture funding to Europe last quarter was up 21 percent year over year, and up 4 percent quarter over quarter, bucking the trend globally and in North America.
READ MORE: https://news.crunchbase.com/news/europe-vc-funding-q1-2022-monthly-recap/ 
 
QZ.com, ‘Where Will Venture Capitalists look next?’
 
In the first quarter of 2022, US VCs raised more money for new funds than in the entirety of 2019 … But those new funds didn’t translate into more investments into startups. Instead, global VC investment fell sharply in the first quarter, down from record highs the year before.
 
READ MORE: https://qz.com/2161172/where-venture-capitalists-are-investing-in-2022/ 
 
YouTube.com, ‘A Conversation on Venture Capital in 2022’
 
Axios technology & business reporter Kia Kokalitcheva and business editor Dan Primack examine the trends shaping venture capital in 2022, featuring Elemental Excelerator CEO & Earthshot Ventures founding partner Dawn Lippert and FTX head of ventures & gaming Amy Wu.
 
WATCH HERE (30 MINUTES): https://youtu.be/S4XhN_fUEGg 
 
PRIVATE EQUITY HEADLINE: Inflation Effects on PE Industry
 
Bain.com, ‘Private Equity’s Inflation Challenge’’
 
While most fund managers have never had to deal with inflation, they have certainly benefited from its absence. Now it poses the dual threat of rising costs for portfolio companies and muted multiple expansion during ownership. Firms can do a lot to mitigate inflation’s impact, but the time to start is well before it begins affecting performance.
 
READ MORE: https://www.bain.com/insights/inflation-global-private-equity-report-2022/ 
 
MarketWatch.com, ‘Inflation and War Disruption Will Challenge Private Equity in 2022 After a Record-Breaking Year’
 
Spikes in food and energy prices after the Russian invasion of Ukraine and steeper capital costs will challenge private equity as an asset class in 2022 after a record-setting 2021 … Private equity dealmakers that were helped by higher prices for companies in recent years now face the risk of flatter valuations, while inflationary cost pressures pose a threat to nearly all portfolio companies.
 
READ MORE: https://www.marketwatch.com/story/inflation-and-war-disruption-will-challenge-private-equity-in-2022-after-a-record-breaking-year-11646758019 
 
MiddleMarketGrowth.org, ‘Inflation Leads Private Equity Execs, Lenders to Confront a New Reality’
 
Inflation is defining the market for the first time in more than 30 years. The consumer price index increased by roughly 7% in 2021, the largest jump since 1982. Faced with higher input costs, middle-market businesses and their private equity sponsors are having to adjust their expectations for growth and profitability, and in some cases, rethink their approach to M&A.
 
READ MORE: https://middlemarketgrowth.org/dealmaker-inflation-private-equity-lender-reality/ 
 
BDO.com, Private Equity Perspectives Podcast: ’Inflation, ESG & Deal Makers' Secret Sauce’
 
[Topics include] how PE firms can attract companies, the role banks play in guiding companies to a PE firm, the expected impacts of recently announced SEC regulations on PE firms, and what’s ahead for M&A amid an increase in interest rates.
 
LISTEN HERE (28 Minutes): https://www.bdo.com/private-equity-perspective-podcast?wchannelid=ua5d6g25oa&wmediaid=u4mpyut3nr 
 
The in-person IVCA Annual Spring Luncheon returns next Wednesday, May 18th, 2022, sponsored by Baker Tilly. Click here for more information and to register.