Erik Bruckner

Private Equity (PE) and Venture Capital (VC) Are two major subsets of a larger part of the financial landscape known as the private markets. PE and VC firms both raise pools of capital from accredited investors known as limited partners (LPs), and they both do so in order to invest in privately owned companies. Their goals are the same: to increase the value of the businesses they invest in and then sell them for a profit. How are they different: 👍 Give this post a thumbs up 💬 Repost to share this with your network ➕ Follow me for more Tips Credit: Chris Tottman, Pitchbook, Investopedia #venturecapital, #privateequity, #venturefunding #investing

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Great question by Jason Long on a previous thread ( link in comments below): """ I'd be curious to understand the SECs rationale for making sub-$1B valuation IPOs so difficult. The US public market might be losing its agility by effectively barring small-caps from having a fighting chance. As you mentioned, plenty of great companies IPO'd below the $1B range. """ Here's the 3 U.S. Securities and Exchange Commission mandates with roughly # of employees devoted to each. 1. Investor protection -- Think securities police -- 2,500 2. Maintaining efficient markets -- think regulators -- 2,500 3. Capital formation -- think helping businesses raise capital -- 2 Why? The SEC has an impossible task of policing a $100 Trillion stock and bond market with 2,500 cops. So, they focus on the big banner cases that are most likely to get the rest of the market to pay attention and change behavior. Congress isn't going to ask the SEC commissioners to testify as to why small businesses struggle to IPO. But they do ask them to testify when stock markets collapse or we have derivatives crisis like 2008-09. And, so they work very hard to make sure investors don't get screwed, and that we have efficient public markets. But as a result, compliance to be a public company costs between $2-5 million a year. This is why there's half as many public companies as there were 20 years ago. Crowd-funding is a thing, but only a couple hundred companies take advantage of that every year, because if a crowd-funding investor buys stock in a small business, where can they resell the stock and take a profit? There's no stock exchange available to do that. So, small business capital formation is left to the venture capital community. VC's funds are structured so they and their investors can only make money on their fund when they invest in future unicorns.

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Interesting post, Frank Rotman . I'd argue that rather than try to use your markups as traction for raising funds 2, 3 and 4 , emerging managers should consider helping their startups get earlier liquidity via suggesting listing on growth exchanges like the Toronto Stock Exchange, the LSEG (London Stock Exchange Group) or the ASX . DPI > IRR or TVPI when it comes to LPs. A VC that returns >2x in 7 years to LPs is going to have a much easier time raising the next fund than a fund with an IRR or TVPI of whatever. The entire vc industry has drank the kool aid that companies should be doing >$300m in ARR before listing. The LP community needs / wants liquidity before the 12 to 14 years its currently taking to IPO in the US, however. Startups can list on the above exchanges doing $20m in revenue with 30% YoY growth, they don't have to deal with Sarb Ox compliance and follow on raises are orders of magnitude easier for a listed company. Why? There's so many more public market investors than private market investors. The only other option for Emerging managers to stand out is by getting DPI via selling secondaries to a fund like Practical Venture Capital Chris Mayo, CFA Neil Shah Delilah Panio Amit Verma Dave McClure Aman Verjee, CFA Karin Tenenboim

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📈🏢 Aby Rosen's RFR Holding is facing a staggering $2.5B debt bill as defaults pile up! 💥 🔎 According to a recent Bisnow article, RFR Holding, a prominent NYC real estate firm, is grappling with mounting debt and defaults. The company, led by billionaire Aby Rosen, has a portfolio of high-profile properties, including the iconic Seagram Building and Lever House. 🏢🏦 📊 The firm's debt load has surged to a whopping $2.5B, with $1.1B in loans maturing this year alone. 💸 The pandemic has hit the commercial real estate market hard, causing defaults to skyrocket. RFR Holding is no exception, with defaults on several properties, including the $200M mortgage on the Seagram Building. 📉 🗣️ "The pandemic has created a perfect storm for commercial real estate," said one industry expert. "Companies like RFR Holding are facing unprecedented challenges as they navigate this difficult time." 🌪️ 🔜 So, what's next for RFR Holding? The company is reportedly exploring options to refinance its debt and avoid further defaults. 💡 With the commercial real estate market showing signs of recovery, there's hope that RFR Holding can weather this storm. 🌞 Stay tuned for more updates on this developing story! 📰🔔 #RFRHolding #CommercialRealEstate #Debt #Defaults #NYCRealEstate

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Main take-away for fellow searchers AND sellers: “EtA and search funds can outmaneuver PE funds, family offices and strategics.” Selling to a searcher gives you certainty on who will run (not just own) your company. If we are competitive in valuation what would hold you back vs PE who will select a CEO you have never met with a shorter term mandate? 

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