PitchBook News - Is VC ready for Gen Z?

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The Weekend Pitch

March 17, 2024

Presented by Masterworks

(Jenna O'Malley/PitchBook News)

The family office landscape is undergoing a profound transformation fueled by the imminent transfer of generational wealth. Over the next 25 years, an estimated $100 trillion will be handed down to younger generations, with much of that capital flowing through family offices as millennials and Generation Z take the reins.

As the torch passes between generations, it is not only the heirs that are poised to see an influx of capital, but also the venture capital world.

Family offices have historically accounted for a small share of overall VC commitments. However, their participation in the asset class has grown significantly over the past decade as they sought more portfolio diversification. VCs, meanwhile, have been keen to tap new sources of capital amid a competitive fundraising environment.

According to a 2022 report by Campden Wealth, family offices accounted for 14.4% of global VC investment that year compared to just 6% in 2012—although family offices have slowed their investment pace with the VC downturn.

A large number of family offices are preparing to go further with their allocations to VC, with a Campden Wealth survey finding that 33% of European and 32% of North American family offices intend to increase their exposure.

It is clear that appetite for VC already exists among family offices, but this transfer of wealth is expected to fuel even more growth in such investments.

This is The Weekend Pitch, and I'm Leah Hodgson. You can reach me at leah.hodgson@pitchbook.com or on X @LeahFHodgson.

Trivia

(Metamorworks/Getty Images)

Enterprise SaaS startups have been rebounding, driven by a generative AI frenzy determined to integrate the new technology with traditional offerings. According to our Q4 2023 Enterprise SaaS Report, deal value was up 11.9% over the last quarter. How much deal value did the vertical generate in Q4?

A) $11.4 billion
B) $14 billion
C) $978 million
D) $21.6 billion

Find your answer at the bottom of The Weekend Pitch.

Cash flow: What LPs need to know

(LockieCurrie/Getty Images)

Fund cash flows are imperative information for investors. For LPs, capital call activity and net cash flows of funds are just as important to allocation planning and portfolio maintenance as is the well-documented distribution dearth.

Our new analyst note, Surfing Turbulent Cash Flow Waves, digs into key data across thousands of funds, offering a fuller picture of the LP perspective on the changing exit and dealmaking environment.

Middle market overcomes PE dealmaking fatigue

(Tippapatt/Getty Images)

Dealmakers in the middle market may finally find some relief after seeing Q4's deal activity rebound from a tepid Q3. But it may be too early to tell whether this increase is the start of any formal recovery.

Exit activity in the middle market also revived in Q4, supported by a series of continuation fund transactions. Given the ample dry powder raised by secondary buyers, this trend could persist, according to our 2023 Annual US PE Middle Market Report.

MENA's private markets tell two different stories

(Nancy Pauwels/Getty Images)

MENA's private equity and venture markets couldn't have been more different last year, with the former seeing a boost in dealmaking while VC deals slumped. PE exit value and volume also increased in the Middle East and North Africa region, while exit activity for VC-backed companies stayed quiet throughout the year, according to our H2 2023 MENA Private Capital Breakdown.

The only point of convergence was fundraising. PE and VC saw significant declines in both the number of fund closes and capital raised.

Quote/Unquote

(Noah Berger/Getty Images)

"It used to be that lenders would ask founders, 'Who's backing you?' If they'd raised millions from VCs like Sequoia, Andreessen and Founders Fund, that was often good enough. It no longer is. The bar is now much higher."

—Zack Ellison, co-founder of private credit firm Applied Real Intelligence, which offers venture debt to startups, speaking to PitchBook about startups struggling to raise venture debt rounds.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

Q4 2023 Foodtech Report
H2 2023 Global Real Estate Report
2023 Annual Global Private Debt Report
Q4 2023 Mobility Tech Report

Trivia

Answer: B)

Enterprise SaaS generated $14 billion in deal value across 597 deals. You can read more about those deals, the trends behind them and the key players in our report.

This edition of The Weekend Pitch was written by Leah Hodgson, Jessica Hamlin, Madeline Shi and Jacob Robbins. It was edited by Andrew Woodman and Ron Prichard.

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PitchBook News - Is VC ready for Gen Z?

Trivia

Cash flow: What LPs need to know

Middle market overcomes PE dealmaking fatigue

MENA's private markets tell two different stories

Quote/Unquote

Stay tuned

Trivia

Older messages

Enabling the future of healthcare

Venture debt market thaws—for some

Prestigious VCs aren't a venture debt guarantee

Sizing up Southeast Asia's markets

Going with the cash flow

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