Private capital fundraising had a bombshell year in 2019.
A whopping $888 billion was raised across 1,064 private equity, venture capital, infrastructure, and real estate funds. This is the most private capital ever raised on an annual basis, according to a new PitchBook report. On average, institutional investors increased their allocations to private markets yet again by lowering their allocation to hedge funds and/or public equities.
Here are three intriguing takeaways from the report:
— Globally, private equity firms raised more money than they have in any prior year, closing on nearly half a trillion dollars. Blackstone’s $26 billion flagship vehicle that closed in 2019 marked the largest buyout fund ever raised. (Here’s what Blackstone CEO Steve Schwarzman told me about fundraising last year: “It’s harder when you get bigger, but it still is an out-of-body experience for me.”)
— Venture capital firms also had a big year, albeit fundraising figures fell slightly from 2018. U.S.-based funds in 2019 had a monster year for investment realizations and saw exit value more than double year-over-year, which will eventually turn into distributions to limited partners. And once those investors receive their cash, they will likely recycle it into new venture funds.
— Dry powder continues to accumulate. More than $100 billion in capital remains unspent in funds that are six years or older. As The New York Times noted, funds typically have five years to deploy what they get from their limited partners, or they lose the ability to spend it. They have agreed on alternative arrangements with their investors, which is a huge headache and creates more capital overhang.
Fundraising should remain robust in 2020, according to PitchBook. However, it’s not out of the question that fears of a looming recession could finally put a meaningful dent in the fundraising totals.
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- IntelyCare, a Quincy, Mass.-based workforce management solution for post-acute facilities, raised $45 million in Series B funding and debt. Endeavour Vision led the round, and was joined by investors Kaiser Permanente Ventures and Generator Ventures.
- At-Bay, a Mountain View, Calif.-based cyber insurance company for the digital age, raised $34 million in Series B funding., Acrew Capital and Munich Re Ventures co-led the round, and was joined by investors including Khosla Ventures, Lightspeed Venture Partners, and Shlomo Kramer.
- Leanplum, a San Francisco-based customer engagement platform, raised $27 million in extension to its Series D round. Norwest Venture Partners and Shasta Ventures co-led the round, and were joined by investors including Kleiner Perkins, Canaan and Launchub.
- DSP Concepts, a Santa Clara, Calif.-based audio processing company, raised $14.5 million in Series B funding. Taiwania Capital led the round, and was joined by investors including BMW i Ventures, Sony Innovation Fund by Innovation Growth Ventures, MediaTek Ventures, Porsche Ventures and the ARM IoT Fund.
- Brace, a Santa Monica, Calif.-based digital mortgage-servicing platform, raised $10 million in Series A funding. Point72 Ventures led the round, and was joined by investors including Crosslink Capital.
- OnSiteIQ, a New York-based visual documentation and risk assessment platform provider for construction projects, raised $4.5 million in Series A funding. Bullpen Capital led the round, and was joined by investors including Anthemis Group and MetaProp.
HEALTH & LIFE SCIENCES DEALS
- Q Bio, a San Francisco-based quantitative, clinically-relevant assessment of personal human health, raised $40 million in Series B funding. Andreessen Horowitz led the round.
PRIVATE EQUITY DEALS
- Battery Ventures acquired GRAS Sound & Vibration, a Denmark-based manufacturer of acoustic-measurement microphones. Financial terms weren't disclosed.
- Battery Ventures made a significant investment in Tech Soft 3D, a Berkeley, Calif.-based provider of software-development toolkits for companies that develop software for manufacturing and architecture, engineering and construction. Financial terms weren't disclosed.
- Great Hill Partners recapitalized One Inc, a Folsom, Calif.-based digital payments platform provider for the insurance industry. Financial terms weren't disclosed.
- Kronos, a Lowell, Mass.-based provider of cloud-based workforce management, and Ultimate Software, a Weston, Fla.-based provider of human capital management solutions, will merge to create a company valued at $22 billion.
- EnVen Energy, a Houston-based energy company, withdrew plans for its IPO. Bain Capital Partners, Adage Capital Partners, and EIG Global Energy Partners back the firm. Citi, J.P. Morgan, Stifel and BMO Capital Markets are underwriters. It plans to list on the NYSE as “ENVN.”
FIRMS + FUNDS
- M33 Growth, a Boston-based venture and growth stage investment firm, raised $260 million for its second fund.