The new year always brings new prospects, and it’s the same for the world of private equity. Venture capital firms, in particular, are poised to achieve remarkable levels of growth this year, according to industry pundits.
These prospects are based on trends for the past couple of years, which were marked by tremendous developments especially in the field of science and technology. The startup culture continues to grow in markets across the globe, most notably in the United States. This culture is marked by the emergence of young, brilliant, and passionate entrepreneurs who are filled with new ideas that hold great potential for business. The highest-potential startups, dubbed “unicorns” by the industry, can fetch more than $1 billion when they go public.
For 2017, many top venture capitalists remain highly optimistic about increased funding, even as 2016 saw remarkably less financing activity than in 2015 (A New York Times report, citing data from PitchBook, notes that start-up funding last year was down by 15% from the year prior). GV (formerly Google Ventures) General Partner M.G. Siegler, in an interview published by VentureBeat, shares that two domains that will likely be the area of significant activity are artificial intelligence and machine learning, and he predicts that this year will be an exciting time for these.
Many other investors agree: AI-powered technologies will continue to be a big hit, especially because they will serve as the backbone of other developments that will be able to draw more funding – and not just in the field of computing technology, too. After all, AI can be used in healthcare, automotive industry, and construction, among other sectors.
Whether the financing trends would actually lead to an IPO or raise a good amount of capital for the startups in question, is quite another story, however. For example, only 39 VC-backed companies went public last year, down from 2015’s 72. IPOs are typically the major source of windfall for the venture capital investors, so a failure to go public is a bane for the domain’s bottomline.
As they navigate today’s challenging business climate, complementing the capabilities of today’s venture capital firms are asset servicing companies. These third party service providers offer support in the form of middle and back office outsourcing and fund administration. Asset servicing firms lend their topnotch talent, the latest portfolio management software, and years of solid experience to their clients, allowing the asset management companies to focus on strategic functions: growing their funds and relating to their investors.
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