From the category archives:

Private Equity Jobs

The financial industry’s success is intricately connected with the performance of the economy’s labor markets. 

In 2019, the labor market taught us many things, here are five.

#1 The Economy Can Boom During Trade Wars

Perhaps the most surprising result of the 2019 year is the economy and its labor market can continue to boom when trade wars are on the docket. 

When measuring the jobs market performance from peak to peak (meaning the number of months from the prior business cycle’s peak to the next peak), the current period, which peaked last in 2008, is now at 142 months.  At this time last year, there was a chorus of naysayers saying the U.S. economy was heading into a recession, largely due to the trade war.  Such views have continually failed to materialize.

Source: Econometric Studios, BLS

#2 Wages Can Be Slow When the Economy is Booming

Wages, what we all enjoy as take-home pay, has been moderately good, but not great.  This has surprised many experts who find it odd to have an economy with such low unemployment continue to see no “boom” in wages.  According to these experts, wages should be growing above 4% on a year-over-year basis.  Wages are far from this at 3.65% and slowing.  This likely signals that the economy can keep growing for many more years.

Source: Econometric Studios, BLS

#3 The Number of Unemployed Can Stay Low for a Long, Long Time

Another surprising finding of 2019 is that the number of individuals classified as unemployed can stay low for a long, long time.  In the prior expansion, the number of unemployed individuals bottomed at 6.7 million individuals.  In this expansion, the number of unemployed individuals has been below this 6.7 million since September 2017.  This is almost unbelievable to many observers.  May the economy live on forever!

Source: Econometric Studios, BLS

#4 Professional Services, Education, and Healthcare Still Dominate

The fourth finding is that the economy still likes professional services, education, and healthcare.  And, they like to travel and relax.  The top three growing industries in 2019 so far have been Education & Health Services (up 2.6%), Leisure and Hospitality (up 2.1%), and Professional and Business Services (up 1.8%).

Source: Econometric Studios, BLS

#5 The Older Generation Really Likes to Work

Perhaps one of the most reasonable explanations for why the economy continues to expand for such a long period is that the older generation continues to want to (or needs to) work.  The population aged 55 years and over continues to be largest age group in the labor force, and there’s no sign that the group plans on leaving the labor force anytime soon. 

Source: Econometric Studios, BLS

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Blockchain is all the rave in today’s early-stage investing world.  If you are in any way interested in the future of money or accounting or ledgers, it is impossible to avoid a discussion about blockchain.

Given the popularity of blockchain, can you guess which entities are the top 10 venture capital (VC) investors in blockchain?

Would you guess the list includes the big VC companies like Accel, Sequoia Capital, Kleiner Perkins Caufield & Byers, Benchmark, Greylock Partners, Andreessen Horowitz, or Bessemer Venture Partners?

Take your guess now because the top 10 list follows shortly.

The List

Source: Pitchbook

Interestingly, the top blockchain investor in the world is Digital Currency Group.  The VC firm has made an incredible 127 deals according to Pitchbook

In second place is Blockchain Capital at 57 deals.  Surprisingly, there’s a large difference between first and second place.

The other members of the top five include Pantera Capital at 56, Digital Horizon Capital at 38, and Fenbushi Capital at 36.

Places six through 10 belong to Plug and Play Tech Center (32 deals), 500 Startups (31 deals), Andreessen Horowitz (30 deals), NEO Global Capital (27 deals), and Boost VC (25 deals).

Are you surprised by the list?  Curiously, only one of the supposedly top VC firms shows up on the list – Andreessen Horowitz in eighth place.

What are the Biggest Blockchain VC Deals?

With the list established, let’s take a look at the biggest VC blockchain deals.

Can you guess which deals show up on top? 

As before, take your guess now because the list follows.

Source: Pitchbook

The largest blockchain deal ever, according to Pitchbook, is a $300 million investment in October 2018 in Coinbase.  The Series E investment gave the cryptocurrency company a massive $8 billion valuation.

In second place is Bakkt, a fellow cryptocurrency exchange.  A couple months after Coinbase’s $300 million funding round, Bakkt came in with a $183 million funding round. 

In third place is BlackTower, a hedge fund investing entirely in cryptocurrencies and digital assets.  The company announced in October 2018 that it had attracted a $140 million VC investment. 

Rounding out the top five are r3 at $122 million in May 2018 and Circle at $110 million in May 2018.

The other four companies on Pitchbook’s list include a previous investment in Coinbase in August 2017 at $108 million, a $103 million investment in Finova Financial in October 2017, a $101 million investment in Hedera Hashgraph in August 2018, and a $88 million investment in Forgerock in September 2017.

Conclusion

In an interesting review produced by Pitchbook, the top 10 investors in blockchain includes only one of the supposed top VC investing firms.  Overall, the top 10 investors have made a combined 459 deals. 

It’s a wonderful time to be interested in blockchain technology. 


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2018 was lots of things to lots of people.  Some may remember the year as the year America gained back respect from China by addressing its unfair trade practices.  Others may focus on the terrible fires in California.  Others may wish to focus on the positive, such as the amazing PyeongChang Winter Olympics.  Still others may remember 2018 as the year stocks failed to deliver a Santa Claus rally. 

Lots of other things happened in 2018.  One them – a massive year for private equity buyouts – is addressed here. 

If you had to guess which year was the best year for buyouts ever, would you guess 2018 could be on top?  Perhaps 2000, just before the dot.com bust? 

Here’s a look at buyout activity since 2008.  On top is this year, 2018, with more than $700 billion in deal activity.  That places 2018 second all-time according to data from private equity data provider Pitchbook, surpassed only by the massive 2007. 

2018 was also the highest deal count ever, with an estimated 4,828 deal counts.  This expansion is certainly kicking on all cylinders (or at least most cylinders).

The Pitchbook report, available here, also has many other interesting tidbits of information.  Let’s see if you can guess how 2018 compares to the past 10 years on the following questions.

First question – How do the multiples experienced in 2018 compare to prior years?  Would you guess deal multiples are the highest they’ve been in the past decade?  Or perhaps you’d guess things have cooled somewhat compared to the recession and recovery years of 2008 to 2014? 

The look follows. 

Fascinatingly, 2018 was fairly good for Equity per EBITDA, debt per EBITDA, and EV per EBITDA, but not the highest since 2008. 

The winner for the highest debt per EBITDA is 2013 at a 7.1x multiple.  The winner for the highest equity per EBITDA is 2017 at 5.8x.  And the overall winner for the highest EV per EBITDA was 2014 with an EV per EBITDA at 12.4x.  Interesting, interesting.

Let’s take a look at one other measure and see how well you know 2018 compared to the past decade.

According to Pitchbook, what percentage of deals would you guess were done in 2018 that had multiples above 10x?  Would you guess 2018 had a higher percentage of deals above 10x than ever before?  Below is the look.

Captivatingly, more deals were priced above 10x in 2018 than ever before.  Incredibly, over 60% of deals in 2018 had valuations over 10x.  The next closest year?  2017 saw about 55% of deals with valuations at or above 10x.

 

Conclusion

In a fascinating look at private equity deal making and deal values in 2018, the year looks quite favorable to activity in the past decade.  It’s a good time to be employed or be involved in the private equity sector.

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A Look at Pitchbook’s 2018 Startup Graveyard

October 29, 2018

In an almost interesting fashion, Pitchbook, the private equity data provider, is out with a look at the 2018 startup graveyard.  The tally reviews companies that died in the year of 2018. Before looking at the list, which companies would you guess are on the list?  Does a certain blood-testing company come to mind?  Perhaps […]

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Where is Financial Employment Booming?

September 17, 2018

Every now and then we review how the financial sector is doing.  Before looking, which U.S. state would you guess is #1 for financial sector employment?  Would you guess New York – the home of Wall Street?  Perhaps Chicago (Illinois), with its heavy focus on insurance services?  What about California, with its heavy focus on […]

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Which Universities Produce the Most Venture Capital-Backed Companies?

September 3, 2018

Private equity data provider Pitchbook is out with their annual report on which universities produce the most venture capital (VC)-backed companies?  Before looking, which universities would you guess show up on the list? Would you guess Ivy League schools, with their highly ambitious, academically fresh graduates?  Perhaps you’d guess universities in places where the state […]

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Will VC Values Continue to Explode Through 2018?

May 28, 2018

Happy Memorial Day!  Is there any better way to celebrate the day than to postulate on where venture capital (VC) valuations are heading  for the remainder of 2018?  Well, yes there is, but for the moment let’s think about valuations. Where Valuations Have Been First, here’s a look at Pitchbook’s recently released first quarter valuation […]

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How Do the Bay Area’s Returns Vary By City?

April 3, 2018

Pitchbook, the private equity and venture capital data provider is out with a fascinating look at venture capital returns and venture investments by city within the Bay area (broader San Francisco area). Before looking at the map of amount of funds investment and the associated returns, take a guess at which cities you think would […]

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What are the Top 25 Private Equity Firms and How Much Did They Raise Recently?

February 19, 2018

Private Equity International is out with their annual PEI300 report, which details the top 300 private equity firms by amount raised.  Before looking, which companies would you guess would be on top? The Broader View Before taking a look at the list of the top 25 private equity firms, how much would you guess the […]

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Are Unicorns Frequently Overvalued?

February 6, 2018

A couple of professors out of Stanford University and the University of British Columbia are out with a new, fresh look at the intricacies of venture capital valuations (Squaring Venture Capital Valuations with Reality, National Bureau of Economic Research Paper #23895).  Their topic is unicorn valuations, and specifically whether so-called unicorn valuations are frequently overvalued.  […]

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