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Unit Economics

Hedge funds muscle in to Silicon Valley with private deals

Deal value smashes records while investment vehicles hunt for new ways to fire up drab returns

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Marcelino Pantoja founder-in-residence
over 2 years ago

Founder-in-Residence @ Platform Venture Studio

Another hockey stick chart:

Marcelino Pantoja founder-in-residence
over 2 years ago

Founder-in-Residence @ Platform Venture Studio

Late-stage private tech is full of public market players financed by public market capital.

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"Hedge funds are elbowing their way into Silicon Valley at an unprecedented rate with a record-smashing $153bn worth of investments in private companies in the first six months of 2021.

A report from Goldman Sachs has found that hedge funds have done 770 deals so far this year, already beating the record number set in the whole of 2020, when 753 deals reached a total of $96bn. Just under three-quarters of this year’s agreements were 'venture' bets on companies in their infancy.

The data from Goldman Sachs Prime Services highlight how hedge funds, typically known for investments in publicly traded assets, have been drawn to private markets in an effort to fire up largely lacklustre returns. It also shows how private equity and venture capital have shot into mainstream finance. The asset class has soared to more than $7tn in value and is expected to double again by 2025, while the number of US public companies has roughly halved since 1996."

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