Let us assume for a minute that performance persistence in private equity and venture capital is real. This begs the question: how do I measure performance and how do I pick winners?
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Venture Capital is an asset class characterized by a longer time horizon as startups are nurtured from idea to business model to successful (and maybe even profitable!) business. While buyout funds typically look to exit a company in three to five years, venture funds tend to take a little longer for their portfolios to develop.
With this in mind, it is a little curious to see the National Venture Capital Association (“NVCA”) joyously announce that VC returns saw a dramatic increase in Q4 2013. Heck, they even outperformed the public markets! The VC returns were largely driven by early stage funds who saw 14% quarterly returns in Q4 2013. Bison believes the VC funds below are the primary contributors to these strong returns.
Last week, PEHub had an article highlighting NY State’s fiscal year-end private equity returns. Whereas PEHub is unable to attribute the performance to any specific funds, Bison’s Investor Insights tool allows users to see where investors are putting money to work and how they are performing.
Big data is coming to the private markets. New datasets covering management, web traffic, media signal, fundraising, and returns are quickly being aggregated together. One startup that has recently made headlines is Mattermark. They use soft signals to quantify Momentum Scores for startups. In a recent blog post, they used this score to create synthetic portfolios for investment firms to see which firm had the strongest portfolio. This investor ranking caught our attention here at Bison since it allowed us to create a comparison with our Performance Score, which ranks firms based on historic fund performance.
Coming off a strong year of fundraising in 2013, the private equity and venture capital industry is prepared to continue this hot streak into 2014. Bison estimates that close to 300 funds will hit the market this year seeking to raise at least $250 billion. These projections are based on a new proprietary algorithm you will only find on Bison.
Super Bowl, Olympics, World Series, World Cup, et cetera, et cetera. These events allow the cream of the crop to show off their skills during a prime time event. For private equity, the event of the year is the annual SuperReturn International conference held in Berlin, Germany. Through our partnership with ICBI, Bison was able to attend and in case you weren’t able to hop over to the techno capital of the world, here are some of the big themes from the conference:
Last week on the Bison Blog, we provided an overview of the fundraising market for North American buyout funds. Now we will take a look at a snapshot of some of the best performing firms that are currently raising a fund between $1 billion and $4 billion. We narrowed down the field using the Bison Performance Score, which is based on a firm’s prior fund performance. The chart below lists five funds currently in market (sorted by fund size) with strong performance scores.
The SuperInvestor US conference took place last week in San Francisco. What was one of the key takeaways? Three simple words: MIDDLE MARKET BUYOUTS. Not surprisingly this category of funds remains in high demand by investors in the US and abroad, according to Probitas’ year-end investor survey.
There has been a lot of ooh-ing and ahh-ing in the press recently about Apollo’s ability to raise $18.5 billion for their most recent buyout fund, Apollo VIII. This blew past their $12 billion target and reported initial hard cap of $15 billion. This is also notable because it is the largest buyout fund since Blackstone V. While the amount is surprising, the fact that Apollo had no problems in the market this time around is not. Here are three reasons why.