The fundraising market in 2015 was
aggressively competitive with 1,630 PE
funds on the road seeking $483 billion.
This sent multiples in PE markets sky-
rocketing to almost dangerous levels,
owing to increased volatility. In spite of
this, the global financial markets saw the
Private Equity and Venture Capital (PE/
VC) sector amass $4.2 trillion worth
of assets under management as of June
2015, a solid 10.5% increase on 2014’s fi-
gure of $3.8 trillion, according to Preqin’s
Global PE and VC Report.
The reported amount of total capital dis-
tributions in S1 2015 alone stands at a
whopping $189 billion, demonstrating
continuity with the record distributions
seen in 2014. According to Forbes, this
pattern is more than likely due to the fact
that for a given private equity strategy, a
lack of correlation to public markets in-
creases traction for investors.
On a precautionary note, the major ac-
tors in PE should not get complacent in
the wake of past successes, as a matu-
ring PE industry will have to deal with
the evils of generational change and
the rising risk of recession. Embracing
change to their proven models and lear-
ning from those new players which are
disrupting the industry, while challen-
ging, will help the PE industry prepare
for any major shifts that might come
along.Preqin’s Global PE and VC Report from
January 2016 revealed that the aggregate
value of venture capital deals increased
for the third successive year to $135.
billion, up 45.2% from 2014 and more
than double the level of 2013. The nu-
mber of deals, though, saw a slight de-
cline (9,202 deals) compared to the two
previous years (9,785 in 2013 and 9,
in 2014). In addition, 2016 marks the
fourth consecutive year in which private
capital fundraising surpassed the $
billion mark.In spite of this relatively solid perfor-
mance, geographical divergences conti-
nue to grow. Asia has seen a significant
rise in VC activity, as Greater China re-
corded 1,605 deals, surpassing Europe
(1,373) for the first time, while India
recorded 927 deals, almost twice the nu-
mber of 2014 (512). Across the Pacific
Ocean, although aggregate deal value in
North America increased, the number of
deals in the region fell 23%, from 5,
in 2014 to 4,307 in 2015. Similarly, Eu-
rope had its second annual decline from
a peak of 2,002 in 2013, and the lowest
number of deals in the region since 2010.On the financing level, 2015 saw 9,
VC financings worth a combined $135.
billion. This represents a 6% drop from
the 9,811 deals in 2014, but a 45% in-
crease on the $93.5 billion aggregate va-
lue recorded during the same period.However, overall VC exit activity de-
clined for the first time since the finan-
cial crisis in 2008. The number of exits
decreased from 1,138 in 2014 to 1,
in 2015, while the total exit value shrunk
by 41%, from $125.1 billion to $73.3 bil-
lion. More than two thirds of total global
exits, 739 to be precise, were achieved
through a trade sale, and the number of
IPOs and follow-ons dropped to 215 in
2015 from 248 of 2014.With the number of startup businesses
across the world increasing at a dizzying
rate, the requirement for innovative fi-
nance tools is not going to slow down
any time in the near future. But with new
forms of financing like equity crowdfun-
ding starting to gain momentum, inertia
towards adaptability could conceivably
spell doom for a company, no matter how
large or successful they may be.In the end, no matter where the markets are
headed, the smartest and most prepared
players will find innovative ways to deal with
their problems and earn the right to raise in-
creasingly more money to move forward.A Solid Year for PE/VC Market, a Cold Winter for Exits
$
BILLION
Total capital distributions in 2015 H
reflect continued growth from 2014$4.
TRILLION
Private capital assets under
management sees a new high $BILLION
Aggregate value of the 1,053 venture
capital exits in 2015*Source: Preqin Global Private Equity
and Venture Capital Report 2016