Hedge fund firms and their venture capital arms continued to shun the private markets in the second quarter of 2023.
Several firms that until recently were very active in the private markets made no new investments in the June three-month period, while others continued to be involved in just a fraction of the deals they had previously been making, according to an analysis of data from Crunchbase. Most of these firms emphasize deals that involve tech, software, internet and consumer companies.
The dearth of this kind of activity in the private markets has tracked the precipitous slowdown in the VC market in general, as valuations have shrunk or been marked down, and the collapse of the IPO and SPAC markets has made it very difficult for investors to monetize or cash out of earlier deals.
Meanwhile, fundraising has become much more difficult.
In the first quarter, for example, VC firms raised just $11.7 billion across 99 funds, according to an earlier report from PitchBook-NVCA Venture Monitor. At this pace, the industry would record its lowest amount of capital raised since 2017. More specifically, Insight Partners recently reduced its latest VC fundraise from $20 billion to $15 billion, according to the Financial Times.
Among the firms best known for their hedge funds, Tiger Global Management was the most active participant in the private market.
Nevertheless, with just a few days remaining in the second quarter, the firm, which has a large VC business that is separate from its hedge fund business, has made just 13 new investments for the period. Just two were made in June, and Tiger Global led or co-led only four of the 13 deals, according to Crunchbase.
The firm made eight new investments in the first quarter of 2023 and 18 in the fourth quarter of 2022. As recently as the second quarter of 2022, the firm was making more than one new investment per day, on average. It made 359 new investments in 2021, according to the database.
Meanwhile, the firm recently reported that its Private Investment Partners Fund 16 raised a little more than $2 billion in its first close. According to Bloomberg, Tiger Global is reportedly seeking to raise as much as $6 billion by the time it eventually closes fundraising.
Earlier this year, Tiger Global was reportedly looking to sell stakes in scores of earlier investments, which is actually a regular practice at the firm. But Bloomberg reported on Wednesday that the firm has turned down hundreds of bids for its companies because it felt the offers were insufficient.
Elsewhere, Coatue Management, which had previously been the second most active private investor among firms best known for their hedge funds, has only made seven new investments in the second quarter, according to Crunchbase.
The firm made just eight in the first quarter, 11 in the fourth quarter of 2022, and nine in the third quarter of 2022. As recently as the first quarter of 2022 it had made 31 VC investments, and it made 165 in all of 2021.
Viking Global Investors made six new private investments in the second quarter, more than any other three-month period since the fourth quarter of 2021. The firm concentrates its private investments in biotech, healthcare, and other related industries.
Five other prominent hedge fund firms, however, made no new private investments for at least the second straight quarter, and in several cases for more than a year.
The most significant example is D1 Capital Partners, which hasn’t made a new private investment since the third quarter of 2022, when it made two new investments. Altogether it made 19 private investments last year, most of them coming in the first quarter, and 72 in 2021, according to Crunchbase.
Whale Rock Capital Management made no new private investments for the fourth straight quarter. It made 18 such investments in 2021.
Lone Pine Capital made no new investments for the second straight quarter, and the firm has only made three such investments in the past year and a half, after making 20 in 2021.
Meanwhile, Third Point Capital’s Third Point Ventures and Maverick Capital’s Maverick Ventures each made one new investment in the second quarter.
