Henrik Cronqvist

Great Article – Key points: (1) Interest-Rate Cut Impact: PE deal activity, is still facing challenges such as political uncertainties, weakened corporate performance, and a slow fundraising climate. (2) Already Priced In: Dealmakers indicated that the rate cut had already been factored into transactions over the past several months., (3) Value Creation Over the last two years, many PE firms have improved portfolio company performance by reducing costs and streamlining operations, which could result in higher valuations. (4) Deal Volume Growth: Projections suggest that PE deal volume will pick up in Q4 2024, with an estimated 9% year-over-year increase. This momentum is expected to continue into 2025. (5) Stagnant PE Exits: Despite an increase in US PE deal value (up 12% year-over-year in H1 2024 to $325.2 billion), PE exits remained stagnant, a critical issue as exits are essential for capital formation in the industry.

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As venture capital faces mounting challenges and fewer exits, family offices are increasingly stepping up to fill the gap in startup funding. These private wealth management firms, representing some of the world's richest families, have seen their numbers and influence surge over recent years. Family offices accounted for nearly a third of startup capital in 2022 and are particularly well-suited for long-term, high-risk investments in emerging fields like climate tech, biotech, and longevity research. Unlike traditional venture capital, which often seeks quicker returns, family offices can afford to be patient, investing with an eye toward impacts that might unfold over decades. This longer-term perspective makes them attractive partners for startups tackling complex, high-stakes challenges. #VC #FamilyOffice #Startup

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