“As Sun Sets On Investment Cycle, Some Wonder What To Do Next” by Arleen Jacobius of Pensions & Investments featuring Eric Zoller
The newly rekindled investor love affair with venture capital could wane in 2016, industry executives said.
“VC is a private equity asset class to keep an eye on heading into 2016,” said Eric Zoller, co-founder and partner at Sixpoint Partners LLC., a New York investment bank working with middle-market private equity firms. Between 2014 and 2015, venture capital delivered the best returns of any private equity strategy, and investor appetite has reached new highs because of that, he said.
Venture capital firms raised $30.8 billion in all of 2014, the most since 2006, according to the National Venture Capital Association and Thomson Reuters’ third-quarter venture capital fundraising report. In the first three quarters of 2015, venture capital firms raised $22.8 billion, the report noted.
“The growth in investor appetite for venture capital should temper in 2016 with concerns over valuation and the (initial public offering) market impact on exits, Mr. Zoller said.
“Investors are becoming wary of increasingly high valuations for rounds being raised by top brand-name companies (such as Uber Technologies Inc. and Square Inc.) and are selecting the funds they invest in carefully,” Mr. Zoller said. “The recent volatility in the public markets has investors concerned about how this may affect the most volatile alternative asset class of all (venture capital).”
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