July 18th

Greetings all,

It is the second half of the year already, and we at Konzortia Capital are in our hyperactive stage of building InvestHub and syncing the computing power of Paraforge into InvestHub's search engine. As per usual, here are some of the weekend's headlines in the VC/PE ecosystem:

More private-equity firms are attempting to raise more capital than ever before, resulting in intense competition for investor dollars during a rough time for markets and deal-sourcing.There are roughly 2,850 funds currently in the market, collectively aiming to raise over $1 trillion in capital, according to Preqin. Both figures represent increases of more than 60% over the onset of 2021. Among those seeking capital are at least nine private-equity funds aiming for $20 billion or more, including the latest vehicles from?Blackstone?Inc.,?Hellman & Friedman LLC and?Apollo Global Management?Inc.?In total, these nine mega-entities are responsible for more than $216 billion of the total being sought, the data suggests. Private-equity firms have historically created a new iteration of a fund every three or four years. Many are now returning for more in half that time, following?a chaotic cycle of leveraged-buyout activity?last year. The surge in requests for new cash commitments has over-extended the typically lean investment teams at institutions such as pension funds and endowments, advisers to funds and investors claim.

After a decade of stellar performance across the industry, many must now determine which managers will continue to perform well without the headwind of a bull market. Some have opted to invest segments of their 2023 budgets this year to secure a place in the more coveted funds. However, many are suspending commitments to all but their top managers to better ascertain the economic outlook and how private-company valuations, which are reported on a significant delay, have fared as stocks have collapsed this year. “Right now, it’s just taking longer to raise funds,” said Josh Zweig, co-head of U.S. private-equity research at advisory firm Cambridge Associates LLC. He stated that the factors that propelled robust fundraising over the past three years, including rising fund sizes and a proliferation of new vehicles and strategies, have started to pivot. Fundraising fell 43% year over year in the first half of 2022, according to Preqin, which only tracks funds that have finalised the process toward the total. Publicly-traded firms are expected to offer updates on their fundraising efforts when they report second-quarter earnings, beginning with Blackstone on Thursday.

Insight Partners, a software startup investor, has created an advisory group of approximately twelve prominent corporate IT executives, charged with assisting fledgling IT companies through uncertain market conditions. The move, which the firm is expected to announce Friday, includes CIO's and other IT leaders from?Boeing?Co.?,?Mercedes-Benz Group?AG?,?Schneider Electric SE,?Bayer?AG?,?Walgreens Boots Alliance?Inc.?and Zurich Insurance Group AG, among other global firms. The Insight Partners’ Enterprise Technology Exchange, as the group is being called, launched earlier this year and is already actively communicating with startups, the firm said. The goal is to have experienced public-sector tech chiefs provide real-world guidance for software startups as they scale up, said Insight Partners Executive Vice President Elizabeth van den Berg.

In other news, Venture-capital investors of Teneobio Inc. have parlayed their bet on the biotechnology startup into a stage of acquisition deals, illustrating the creativity some investors are adopting to derive profits from the sector. Typically, venture capitalists and entrepreneurs sell a biotech startup to a single buyer. In Teneobio’s case, they have sold parts of the business to three drugmakers, so far, in an effort to acquire maximum value from each of the10 compounds the company developed with its technology. Newark, Calif.-based Teneobio in June 2021 sold a potential multiple-myeloma drug to?AbbVie?Inc.,?and?Amgen?Inc.?purchased Teneobio itself later that same year. Teneobio included three compounds not included in the Amgen sale into new entities. Last week,?AstraZeneca?PLC claimed it would buy one of them, called TeneoTwo, which holds a potential lymphoma drug, agreeing to pay $100 million cash and nearly $1.17 billion in incentive-based payments. Two remaining drugs, an inflammatory-disease treatment and a possible hepatitis B cure, remain enclosed in two other entities, TeneoFour and TeneoTen. These could also be sold. If they are, they will generate further profits for Lightspeed Venture Partners and Sutter Hill Ventures, which invested in Teneobio’s only venture-capital round, a $30 million financing which ended in 2016. Teneobio’s unusual model may be especially appealing now that the public markets are largely inaccessible to startups, but it is complex and doesn’t work in all instances, investors and entrepreneurs claimed.

Lastly, I would like to draw attention to two new developments at Konzortia Capital: 1) Last Friday, I successfully drafted a user manual to Paraforge's search engine which is currently being merged with InvestHub's search engine. This user manual addresses the four strategic partnerships that Paraforge employed in their engine, and such partnerships are currently under further design in order to maximize the accuracy of InvestHub. 2) We are actively and aggressively pursuing all networking avenues in order to increase our visibility and exposure to potential investors, entrepreneurs, and professionals who would benefit greatly from our service. We are truly passionate about the deal-sourcing process and even more passionate about the relationship-building process so that we can partner with investors through their entire investing journey.

With gratitude,

Will Crawford