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PE & VC News

The private equity world has been through some rough times in the past few years.  Judging by the recent revenue and enterprise value trends, those rough times are now gone.

Revenue Trends

Depending upon the industry, interested investors, and the state of the economy, revenue is a critical component in deal evaluations. Given the importance of revenue, here’s what has happened recently. The following two figures look at revenue change in the 12 months prior to a deal and anticipated revenue change 12 months following a deal.

Actual Revenue 12 Months Prior to a Deal

Interestingly, in the second quarter, deals with companies that have seen their revenue grow by more than 10% during the year in which the acquisition is taking place declined significantly, dropping from almost 60% of all deals to around 30%. In its stead, firms that had seen revenue growth of less than 10% saw a marked increase in the second quarter, increasing from around 20% in the first quarter to about 50%.

The shifts between deals with businesses with more than 10% in revenue growth and firms with less than 10% growth (but greater than zero) accounts for a large portion of the change throughout the past year.

1 Source: Pitchbook

Anticipated Revenue 12 Months After a Deal

The next chart looks at anticipated revenue for the 12 months following a deal. As is no surprise given the numbers in the previous chart, the two main categories are “Increase more than 10%” and “Increase less than 10%”. Interestingly, as just mentioned, the second quarter of 2014 saw a shift away from high expectations of 10% or more to less than 10% anticipated revenue.

Surely, some of the shifting stems from the strength in the first quarter, while other explanations include the state of the economy in the first quarter compared to the second quarter and the makeup of the industries included in the deals.

2 Source: Pitchbook


Enterprise Values

The next two graphics look at the recent trends in median enterprise value per earnings before income taxes and depreciation allowance (EBITDA) and enterprise value per EBITDA by multiples.

Median Enterprise Value per EBITDA

As shown, recently there’s been a marked shift in value of large firms (revenue greater than $250 million). The shift is not present for smaller firms, which are staying fairly close to where they’ve been over the past two years. The range for medium size firms ($25 million to $250 million in revenue) has been from a low of about 4.5x to a high of a little less than 8x. The range for small size firms (less than $25 million in revenue)  has been from a low of about 3.8x to a high of about 5.5x.

3 Source: Pitchbook

Enterprise Multiple Breakdown

The next graphic looks at the percentage of enterprise values by multiple (EV/EBITDA). Perhaps unsurprisingly, there do not appear to be any strong trends across time. Enterprises with multiples of less than 0x have ranged from 2% of all deals to a high of 9%. Ranging from 16% to 28% of all deals are the enterprises with multiples of 0x to 2.5x.  Following those are enterprises with multiples of 2.5x to 5.0x and 5.0s to 7.5x which have ranged from 7% to 20% and 18% to 32%, respectively, of all deals. Lastly enterprises with multiples greater than 7.5x have ranged from 22% to 42%.

4 Source: Pitchbook

Overall, recent trends in revenue and enterprise value provide some interesting insight into what investors are thinking about the future of the economy.


It’s been a year since Italian policymakers loosened bureaucratic control over the start-up world.  How have things gone during the first year of Italy’s crowdfunding?

Background of Italy’s Crowdfunding

As some history, Italian politicians are the first in the world to allow retail equity crowdfunding, with “no” limits on investment options.  The “no” limits statement has, unsurprisingly, caveats.

So-called “big” investments require some paternalistic oversight.  The thresholds for “big” investments are 500 euro per investment and 1,000 euro per year, for individuals and ten times these amounts for corporations.  Once investments exceed these thresholds, investments are compulsorily reviewed by broker-dealers under the MiFID procedure.

Another requirement is that only “innovative” start-ups are allowed into the crowdfunding sphere.  This requirement identifies over 3,000 companies as innovative.  Additionally, any start-up in Europe may take part in the crowdfunding arena as long as it has a place of business in Italy, regardless of shareholders’ or directors’ nationalities.

The uniqueness of the Italian crowdfunding situation also has some tax implications.  For instance, any individual investing in a start-up with a “social impact” may write-off 27 percent of their investment from their taxes.

The Numbers

Overall, the number of successful projects has now passed the first 1 million euro, with three platforms being the largest beneficiaries of the new business.  In total, although three platforms have garnered the lion’s share of the business, nine platforms have received regulatory approval, with many others in the pipeline.

Based on investor volume, the initial leader of the new start-up platforms is StarsUp! As of writing, StarsUp! has helped Cantiere Savova raise 380,000 euro.  The breakdown of the 380,000 euro is mostly small investors (31 of the 44).  Only two of the investors are large investors (more than 50,000 euros) and four entities have invested between 15,000 and 50,000 euros.

In second place among the platforms is Unicaseed. To date, Unicaseed has raised 147,000 euro for Diaman Tech.  Interestingly, 85 percent of the investors in the software for financial operators were clients before Unicaseed started business.

Rounding out the top three is Assiteca Crowd.  In total, Assiteca Crowd is the leader in euro volume, reaching 520,000 euro as of writing.  The main firm – Paulownia Social Project – received 9,000 euro per day and about 40,000 euro per investor.  Paulownia was the first crowdfund start-up under the new regulations.

Perhaps surprisingly, most of the crowdfunding projects needed long time horizons (Paulownia was the exception at eight weeks).  Apparently, word has not gotten out to as many people as originally thought.

Coming this fall are two new platforms started by universities, with some new platforms taking a more focused approach (such as focusing on energy or social consciousness).

As a note, most of the Italian operators have joined the European Equity Crowdfunding Association (EECA).  EECA’s main goal is as a trade organization, uniting platforms and service providers.  As of writing, EECA has about 50 members from 15 countries.


Overall, it appears things are going well in the world’s first equity crowdfunding arena of its type.  Although the deal volume and companies funded got off to a slow start, investors are warming to the idea that profitable investments may be available in the Italian start-up universe.


Pitchbook is out with their annual review of which universities are producing the most venture capital-backed entrepreneurs.  Where would you guess these entrepreneurs attended school?

On top of the 2014 list are entrepreneurs out of Stanford at $3.52 billion. In second place is Harvard at $3.24 billion.  Rounding out the top ten are the Indian Institute of Technology ($3.15 billion), MIT ($2.42 billion), UC Berkeley ($2.41 billion), University of Pennsylvania ($2.19 billion), Yale ($2.07 billion), Cornell ($1.97 billion), University of Illinois ($1.41 billion), and Brown ($1.31 billion).

Unsurprisingly, the list includes some world-renowned institutions, such as Harvard, UC Berkeley, and Stanford.  Yet perhaps more interesting, the list includes the Indian Institute of Technology in third place.

Some other international institutions with high performing alumni are Tel Aviv University ($1.25 billion), University of London ($1.07 billion), University of Waterloo in Canada ($1.01 billion), University of Toronto ($0.93 billion), Technion, headquartered in Israel ($0.80 billion), Hebrew University ($0.56 billion), McGill University out of Canada ($0.54 billion), and Queen’s University in Canada ($0.31 billion).

The list also includes some surprisingly high-ranking universities that are not typically known as hotbeds of venture capital activity.  Of the surprises are BYU ($1.16 billion), University of Colorado ($0.79 billion), Georgetown ($0.67 billion), and Washington University ($0.66 billion). One note to the study is that it excludes companies out of China, where entrepreneurial activity is nothing short of exhilarating according by many accounts.

1 Pic Switching now to entrepreneur count as opposed to the sum of dollar volume, the rankings change – some considerably.

Interesting, entrepreneurs out of Stanford top this list as well at 378.  In second place is UC Berkeley (336).  The remaining entries in the top 10 include MIT (300), Indian Institutes of Technology (264), Harvard (253), University of Pennsylvania (244), Cornell (212), University of Michigan (176), Tel Aviv University (169), and University of Texas (150).

2 pic

VC Investment Per Entrepreneur

The university getting for the most VC dollars per entrepreneur is not American.  That title goes to the University of London at $15.0 million. In second place is Yale at $13.9 million.

The remaining entries in the top 10 include University of Toronto ($13.1 million), Harvard ($12.8 million), Washington University ($12.4 million), Indian Institute of Technology ($11.9 million), BYU ($11.3 million), Duke ($10.9 million), University of Colorado ($10.8 million), and Georgetown ($10.6 million).

On the other end of this list are some surprises. Venture capital investment per entrepreneur is relatively low at MIT ($8.1 million) and UC Berkeley ($7.2 million), two of the top universities for venture capital investments.

3 pic

Overall, venture capital continues to be clustered in certain areas of the world, chief among them American hotbeds of entrepreneurial activity.  Interestingly, when looking at the data overall, just because there is a cluster of a high number of entrepreneurs receiving VC money out of a particular institution, it doesn’t necessarily mean that those entrepreneurs will get more of that money.


The Performance of the Economy by President

August 25, 2014

Private equity professionals spend a good part of their day looking at balance sheet figures.  Here’s a break from the traditional look at financial numbers and instead a focus on how the economy has performed over the past 60 years’ – by each U.S. president. The five measures are Gross Domestic Product (GDP), Employment, Inflation, […]

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Should PE Professionals be Nervous When Looking at the Pace in Mergers and Acquisitions Volume?

August 11, 2014

In the mergers and acquisitions world (M&A), 2014 is off to an incredible start.  We’ve seen Valeant’s $46 billion proposal for Allergan (April 22).  About a month later, May 18, we saw AT&T acquire DirectTV .  On June 15, Medtronic acquired Covidien in a deal worth about $43 billion.  Earlier in the year we digested Comcast’s […]

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How has Financial Employment Performed by President?

July 28, 2014

Pretty much everyone knows the western world is experiencing one of the worst recoveries on record.  This is quite evident when looking at the incredibly long time it took for employment to get back to where it was in 2008, by the tentative growth in GDP, by the weakness in wage inflation, by the stubbornly […]

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Venture Capital Through the Recent Recovery

July 14, 2014

Anyone who follows the private equity/venture capital world knows that political entities attempt to recruit business startups.  Over the past few years, leaders in various areas, including New York, Utah, and other traditionally less important areas, have promoted the growth of their startup scene – and their efforts are being rewarded. What Do the Numbers […]

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The End of American Economic Dominance. Will American Finance Follow Suit?

June 30, 2014

Just about everyone that follows politics and economics knows that businesses in the United States dominated the world economy in the 1980s and 1990s.  Really, American-based businesses have been king of the business world since World War II.  That dominance has loudly come to an end. Unsurprisingly, the end of American dominance of the world’s […]

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Why Are Venture Capitalists So Interested in Education?

June 16, 2014

Innovation in the education area may have a bright future after all, at least if one judges it by the exponential growth in venture capital interest. Overall, data out of Pitchbook indicate strong growth in deal activity and the total invested capital in U.S.-based education startups over the past ten years. Total invested capital has grown […]

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How Has Financial Employment Performed Over the Past 11 Business Cycles?

May 19, 2014

Most everyone has seen the following chart of employment change from peak to peak for the past 11 business cycles. (Some analysts choose to ignore the 1943 recession for shock reasons, essentially making 2008 look the least appealing of them all.) The label for each line represents the year in which the recession started; the vertical […]

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