Hedge funds have closed 770 deals so far in 2021
Hedge funds made $153bn worth of investments into private companies in the first six months of 2021, highlighting the extent to which they are now investing in private companies.
Goldman Sachs issued a report that showed that hedge funds have closed 770 deals so far in 2021, already surpassing the amount through the whole of 2020.
Lat year, 753 deals were done at a combined total of $96bn.
The data shows that hedge funds, which are more usually known for buying shares in public companies, are now being attracted by private markets as they seek higher returns.
It also highlights how private equity and venture capital have come into the public eye.
Andrew J Scott, Founding Partner at 7percent Ventures, commented on the trend: “In the UK firms like Forward Partners and Seraphim have recently followed in the earlier footsteps of Draper Esprit and gone public. Meanwhile, PE has woken up to the enormous returns which can be made by betting on the right tech startup. Technology being the future of literally everything, it’s unsurprising big money is targeting a sector which used to be the preserve of traditional tech VC, until a company IPO’d.”
“What’s unclear yet is whether hedge fund investors and others will stomach the ups and downs of the startup world. VC investing is a power law game. Just like VC funds themselves, a few companies create the vast majority of investment returns. Even investing at a later stage, startups are still riskier than your traditional PE bet. The winning investors will be those who pay close attention to their portfolio construction and internalise the other cultural differences of the tech startup investing world.”