Atlanta: SCF discusses venture and private equity fundraising

ATLANTA'S VENTURE AND PRIVATE EQUITY COMMUNITIES met last Wednesday in Buckhead to hear Matt Petronzio and Jay Jarrett of Five Points Capital present their views on the current fundraising environment. From their base in Winston Salem, North Carolina, Five Points manages $1.2 billion, investing exclusively in the U. S. lower middle market.

What this translates into are direct control investments, direct mezzanine debt and equity placements and investing in funds that invest in small market buyout and growth strategy funds. They are currently raising $400 million for their mezzanine efforts and their fund of fund efforts. This gives them a fresh perspective on the current fundraising market.

The luncheon where they spoke was part of the Southern Capital Forum's regular meeting schedule. The organization, founded in 1984, serves both the venture and the private equity community in the Southeast and hosts the annual Southern Capital Forum each fall that brings fund managers and their limited partner investors together to discuss the business of investing and raising capital.

Matt and Jay noted that in 2015 more than 1,000 private equity funds raised $550 billion dollars with 139 funds raising more than $1 billion. In global venture capital during the same period, 341 funds raised $51 billion with 23 of those funds being first time funds. According to their data, more than 9,000 venture financings were closed in 2015 against slightly more than 1,000 exits.

They noted a significant overhang ($80 billion in venture capital alone) in unplaced funds, noting that the excess cash was contributing to high deal valuations that were slowing the pace of fund placements.

They also commented on the competitive landscape for raising funds, discussed where they saw the growth equity and buyout markets converging, and reflected on the fundraising barbell. The very large and small funds are having more success raising funds than those in the middle.

For more about Five Point Capital or the Southern Capital Forum, follow the links provided. To revisit our thoughts about Moby Dick and the influence of 19th century whaling on modern venture capital follow the preceding link.