Most private market investors expect to make more money in 2022—but they’re getting less optimistic

Happy Monday, Term Sheeters!

Last week the Nasdaq took another sour turn—closing at a little over 13,791 points, or 3% below what it was trading at Friday open. The index is down more than 13% from the beginning of this year: an indication that tech stocks aren’t doing too great. (If we’re getting specific, the NASDAQ-100 Technology Sector Index, weighted for tech stocks in particular, is down more than 13% year-to-date, too)

Investors tend to clash on the influence the public markets hold over the private sector. But that in combination with soaring valuations, rising interest rates, and labor shortages, evidently has investors a little skeptical.

Private market investors have slowly become less optimistic about their short-term earnings on investments over the last five years, according to Semaphore’s 2022 annual confidence survey, which polled more than 500 private equity, venture capital, and hedge fund investors; limited partners; operating executives; investment bankers; and third-party vendors or advisers. Here’s a look:

Sixty-five percent of respondents expect to make more this year than they did in 2021—down from 76% in 2017, though it’s worth noting there wasn’t some major swing in sentiment this year from last. Even so, investors are becoming less and less optimistic than they have been in years prior.

Here’s a sampling of what respondents are saying, many of whom were Term Sheet readers:

– What goes up must come down
– Valuations are too high – that will cool down
– This is 1999/2007 all over [again]. Multiples are out of the stratosphere from excess equity/cheap debt. Buyers are solving for lower returns (even if they don’t say it…or even know it). Dying for a correction
– Too much capital chasing too few good deals; future returns will suffer from expensive entry multiples.
– Be careful of the great bubble
– Remember in March/April of 2020 we thought every fund portfolio would crash? The joke is on others not smart enough to be in our biz – not even a global pandemic can kill us. [Note from me: For whatever reason, this brings to mind something once allegedly said in the early 1900s: ‘Not even God himself could sink this ship.’]

You can’t help but wonder how that evolving sentiment will play out. At the end of the day, private markets, prices, and valuations are negotiated and set by the very people who say they are less certain things will stay on the up-and-up. 

Back to Holmes… Out of sheer curiosity, I asked Semaphore to include a question about Theranos in this year’s survey. Was the Theranos-Holmes saga an outlier? Respondents were nearly split down the middle on their answers, with 52% saying yes, and 48% saying no. Here’s what they said:

– Theranos is the tip of the iceberg – there are hundreds of VC funded startups that are illegitimate fake hacks 
– There’s a lot of exaggeration and selective use of facts and data in the industry, but there aren’t many outright liars and fabricators. Holmes purposely and knowingly lied repeatedly, which I believe to be “outlier” behavior and certainly not the norm. 
– Too much misleading in general, too normalized 
– To that scale? Yes. In general? No. 
– I think this happens all the time 
– she got caught, I’ve worked in Silicon Valley since 1982, lots of undetected fraud through the years 
– My industry is based on personal integrity. 
– That she is a woman prosecuted is outlier. That platitude and lies lead business plans? No. Most investors do not [do] due diligence before putting their money in. It is all based on who is running the deal and management and lead investors are often too close for objective truth. 
– Hubris is always in fashion

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Whether you are a long-time reader, or this is your first time getting Term Sheet in your inbox, thanks for reading this newsletter. I appreciate you.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews


- Papier, a London-based personalized stationery company, raised $50 million in Series C funding led by Singular and was joined by investors including dmg ventures, Lansdowne Partners, Kathaka, Felix Capital, and Beringea.

- Bramble Energy, a London-based fuel cell company, raised £35 million ($47.3 million) in funding led by HydrogenOne Capital Growth and was joined by investors including BGF, IP Group, Parkwalk Advisors, and the UCL Technology Fund.

- Gaia, a London-based fertility insurance provider, raised $20 million in Series A funding led by Atomico and was joined by investors including Kindred Capital, Seedcamp, and Clocktower Technology Ventures

- Salad Ventures, a blockchain think tank for the play-to-earn economy, raised $13.5 million in a private sale from investors including Alameda Research, BH Digital, C2 Ventures, Foundation Capital, Gemini Frontier Fund, Winklevoss Capital, Crossbeam Venture Partners, and Polygon Studios.

- Mindstate Design Labs, a Pittsburgh-based biotech company whose lead drug program produces the entactogenic (“ecstasy”) state of MDMA with a superior side effect profile, raised $11.5 million in seed funding led by Initialized Capital and was joined by investors including Metaplanet Holdings, Negev Capital, Day One Ventures, K50 Ventures, Page One Venture, Max Hodak, Naval Ravikant, Fred Ehrsam, Apoorva Mehta, Andres Bilbao, and Justin Kan

- Return Entertainment, a Helsinki, Finland-based cloud-native games developer, raised €5.3 million ($6 million) in funding led by BITKRAFT Ventures and was joined by investors including Sisu Game Ventures, Vgames, 1Up Ventures, and SMOK Ventures

- Highline Technologies, a Dallas, Tex.-based payroll-linked bill payment method provider, raised $4.5 million in seed funding. Foundation Capital and Costanoa Ventures led the round. 


- Blackstone Group agreed to acquire Crown Resorts, a Southbank, Australia-based casino-hotel company, for approximately $6.4 billion.

- Soros Fund Management acquired an approximately $2 billion stake in Rivian Automotive, an Irvine, Calif.-based electric vehicle company, per Reuters.

- The Canada Pension Plan Investment Board and Motive Partners invested $1.4 billion in FNZ, a London-based wealth management platform. Financial terms were not disclosed.

- Hercules Capital invested $15 million in Esme Learning Solutions, a Newton, Mass.-based AI-enabled workforce learning technology company.

- Anexinet, a Mill Point Capital portfolio company, will merge with Veristor Systems, a Duluth, Ga.-based business technology services provider. Financial terms were not disclosed.

- Apax Partners agreed to acquire a majority stake in Ole Smoky Distillery, a Gatlinburg, Tenn.-based moonshine and whiskey distillery. Financial terms were not disclosed.

- H.I.G. Capital recapitalized Titan Storage Solutions, a London-based self-storage operator. Financial terms were not disclosed. 

 - Peak Rock Capital acquired Ziyad Brothers, a Chicago-based Middle Eastern and Mediterranean branded foods company. Financial terms were not disclosed.


- Ullico agreed to acquire Hope Gas, Dominion Energy’s West Virginia natural gas business, for $690 million, from Dominion Energy.

- Apax Partners agreed to acquire Alcumus, a Cardiff, U.K.-based supply chain risk management and compliance solutions company, from Inflexion. Financial terms were not disclosed. 


- Lockheed Martin withdrew plans to acquire Aerojet Rocketdyne Holdings, an El Segundo, Calif.-based aerospace and defense product manufacturer, for $4.4 billion after a lawsuit from the Federal Trade Commission.


- Life Insurance Corp., a state-backed life insurance company in India, filed to raise around $8 billion in an IPO in the country, per Reuters. The offering will be India’s largest IPO.

- Al Dawaa Medical Services, a Saudi Arabian pharmaceutical retail company, plans to raise approximately $500 million from an IPO in the country, per Bloomberg.


- Essentium, a Pflugerville, Tex.-based industrial 3D printing company, terminated plans to go public via a merger with Atlantic Coastal Acquisition Corp., a SPAC. 

- Maritime Launch Services, a Canadian commercial rocket spaceport company, is weighing a public offering via a merger with Ceres Acquisition Corp., a SPAC, according to Bloomberg


- Flourish, a Redwood City, Calif.-based venture capital firm, hired Su Fen Goh as an investment associate, Pranav Mittal as a senior investment analyst, Diana Narváez as an investment associate, and Dapo Ogunfeitimi as a senior investment analyst. Previously, they were with HVF Labs, Bain & Company, Picap, and EY, respectively.

- Lux Capital, a Menlo Park, Calif.-based venture capital firm, hired Grace Isford as a principal. Formerly, she was with Canvas Ventures.

- Norwest Venture Partners, a Palo Alto, Calif.-based venture capital firm, promoted Scott Mitchell to principal of growth equity and Laura Boyd to principal and head of M&A and corporate development.

- Percheron Capital, a San Francisco-based private equity firm focused on essential services businesses, hired Priya Saraswati as head of business development. Formerly, she was with Vista Equity Partners.

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