Investment

Deals in the Last Quarter: Family-backed capital holds up despite a falling venture market

Family-backed capital, represented by family offices, family-backed venture groups, and principal investment offices, continues to flow into venture, albeit at a slowing deal rate, during the first quarter of 2020. 

These groups backed directly 173 ventures worth a total of $8.4 billion in the first three months of 2020. The number of deals backed by family-backed capital fell in February (49) and March (48) on the back of the growing coronavirus pandemic. But the value of total direct deals held up well in March, with family-backed capital committing to direct deals worth a total of $3.7 billion in the last month, more than the $3.6 billion in January.  

However, there were some weighty direct deals done in March, which pushed the total figure up, including $500 million into the food-tech group Impossible Foods and $200 million into a transport tech group called Via. 

Altogether, Family Capital surveyed 155 family offices, family-backed venture groups, and principal investment offices doing direct deals in the first quarter of 2020. 

See tables below for family-backed venture direct deals during the last three months. 

Family-backed capital might have so far held up relatively well during the first quarter of 2020, but the total number of deals (all venture backing investors) has fallen off sharply in the last month in a year-on-year comparison. In March 2019, the total number of businesses raising venture from seed to Series H, including Initial Coin Offerings and convertible notes, was 1,978, compared with 1,026 in March 2020. 

Also, the latest March figures aren’t conclusive of where venture and family-backed venture investing will go over the next few months as the coronavirus pandemic intensifies. Many of the deals in the last two months were probably agreed at least a month in advance – so commitments were in place before the crisis really got underway. Venture is traditionally a lagged indicator, compared with public markets. 

The next two months should provide some more useful figures in terms of the underlining trends, with an expected big fall off of commitments and the number of deals ahead.  

There are a number of considerations perhaps worth mentioning in terms of family-backed investors in venture going forward given the crisis, these include:

Investment professionals will be examining their portfolios in detail and be keen to preserve as much liquidy as possible as they de-risk portfolios. Cash is king in this crisis, not illiquid assets like venture. The merger & acquisition market is also drying up, which will make venture even more illiquid.  

See Family Capital’s interview with Pascal Levensohn, about venture capital, family offices, and the coronavirus pandemic

Defensive investments are likely to grow as investors will be keen to back ventures hit hard by the crisis, but are otherwise viable businesses and will come back strong when the recovery gathers pace. Given previous levels of commitments in a booming market, few investors will want to see these businesses go to the wall. 

All investors will move to quality and sectors likely to be particularly strong in the recovery phase will include biotech/healthcare – a traditional favourite of family offices – gaming, virtual reality, and other online services. In contrast, fintech might suffer as traditional financial services groups fair better than they did during and after the financial crisis of 2008. Travel-related venture might also take longer to recover and be less enticing. 

So far, there’s not much evidence that family office money is buying distressed assets – if they are it’s being kept very quiet. That said, the power play between investors and venture groups will swing massively in favour of investors during the crisis and for some time afterwards. For much of the last five and more years, it’s been the other way around. This will mean investors like family offices will be able to acquire bigger slices of venture businesses at cheaper prices, particularly those investment offices with liquidity to do so. 

The venture investment world tends to lag what’s happening in public markets. And the figures above show this trend. So expect a much bigger fall-off in activity over the next few months. The recovery will also be slower, as the sector found after the 2008 financial crisis. 

To access the Tables in full, please click on its content and scroll right or left with your mouse. Or scroll down to the end of the Table and use the right/left scroll bar there.

March 2020

wdt_ID Family/Principal Investment Office* Owner Investment Sector Round Number of Investors Total Investment $m
1 Financiere Saint James Michael Benabou Colonies Property Tech Unspecified 4 34
2 F-Prime Capital Johnson B-One Manufacturing Tech Unspecified 3 14
3 Myriad Kjetil Myrlid Aasen Play Magnus Gaming Unspecified 3 13.5
4 Koc Holding Koç nanoGriptech Manufacturing Tech Unspecified 7 7
5 Declaration Capital David Rubenstein Vault Health Fitness Tech Unspecified 2 30
6 Dolik Ventures Dolik Vault Health Fitness Tech Unspecified 2 30
7 Kuenheim Familiars Fabian von Kuenheim High-Mobility Transport Tech Unspecified 3 unspecified
8 Lodha Ventures Mangal Prabhat Lodha MultiLiving Property Tech Unspecified 1 6
9 WestCap Laurence Tosi Addepar Fintech Unspecified 1 40
10 VMF Invest Vandeurzen miDiagnostics Biotech/Healthcare Unspecified 2 15.4
Family/Principal Investment Office* Owner Investment Sector Round Number of Investors Total Investment $m

February 2020

wdt_ID Family/Principal Investment Office* Owner Investment Sector Round Number of Investors Total Investment $m
1 GingerBread Capital Linnea & George Roberts HopSkipDrive Transport Tech unspecified 15 22
2 10100 Travis Kalanick Habitas Travel Tech unspecified 2 20
3 Kinnevik Stenbeck, Klingspor & von Horn MatHem e-commerce unspecified 4 51
4 IPGL Michael Spencer Youtility Fintech unspecified 3 5.5
5 Boundary Holding Rajat Khare CerbAir airspace surveillance unspecified 2 6
6 Kouros Alexandre Garèse NAWATechnologies Transport Tech unspecified 8 19
7 BNF Capital Perrodo Wishbox Travel Tech Seed 1 2.5
8 Evolem Start Bruno Rousset DataGalaxy Big Data Seed 2 1.8
9 YC Partners Tianqiao Chen Deepnote Big Data Seed 9 9.3
10 Cemag Invest Andre Ulmann Avicenna.ai Biotech/Healthcare Seed 1 2.9
Family/Principal Investment Office* Owner Investment Sector Round Number of Investors Total Investment $m

January 2020

wdt_ID Family/Principal Investment Office* Owner Investment Sector Round Number of Investors Total Investment $m
1 Spring Point Partners Berwind Edquity Fintech Seed 4 2.4
2 Omidyar Networks Omidyar Edquity Fintech Seed 4 2.4
3 Kharis Capital Safra Livspace Home Tech Unspecified 2 100
4 Blue Diamond Capital Bingham Avii Fintech Unspecified 1 Unspecified
5 Omidyar Network Omidyar Axio Biosolutions Biotech/Healthcare Unspecified 4 5.2
6 RNT Capital Ratan Tata Axio Biosolutions Fintech Unspecified 4 5.2
7 L Catterton Arnault FlashParking Transport Tech Unspecified 1 60
8 WJM Investments McGovern Invesdor Fintech Unspecified 4 2
9 WILD Family Office Hans-Peter Wild Tokamak Energy Energy tech Unspecified 1 82
10 Jeff Venik Family Office Jeff Venik Peerfit Fintech Unspecified 2 10
Family/Principal Investment Office* Owner Investment Sector Round Number of Investors Total Investment $m

 

* family offices, family-backed venture groups, and principal investment offices

Subscribe

You will need a Premium Plus Subscription to access this database.

Exclusive news, analysis and research on global family enterprise and private investment offices.

Access to the most comprehensive fully interactive database on global family offices, principal investment offices, and family enterprises.

Check Deal Data, Senior Staff, and New Analysis on more than 500 family/principal investment and holding groups

Already have an account? Login

Subscribe

You need at least a Premium Subscription to read this article.

The most comprehensive information service on the global family enterprise world, featuring exclusive news, analysis, research and data on global family enterprises, family offices, and private investment offices.

Premium

£ 299

Annually

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
Subscribe now

Premium Plus

£ 399

Annually

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

Subscribe Now

Already have an account? Login

Subscribe

Exclusive news, analysis and research on global family enterprise and private investment offices.

Membership

Free

  • Exclusive reports, analysis and commentary
Sign up

Premium

£ 299

Annually

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
Subscribe now

Premium Plus

£ 399

Annually

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

Subscribe Now

Already have an account? Login

Leave a Reply