PitchBook Report Provides Insights on Private Fund Strategies Through H1 2021 Sponsored by Altvia

Investment industry stakeholders are always eager to get data about recent past periods so that they can use it to inform their decisions going forward. That’s especially true given what the industry (and the world in general) went through in 2020. And no organization is better positioned to provide that data than PitchBook. Recently, Altvia commissioned a PitchBook report—Private Fund Strategies Report Q2 2021 on the results of different private fund strategies for the first half (H1) of 2021. It provides analysis and performance results for:

  • Private equity
  • Venture capital
  • Real estate
  • Real assets
  • Private debt
  • Fund of funds
  • Secondaries

The report also includes excerpts from a Q&A session with Altvia SVP of Industry Solutions & Strategy Jeff Williams, plus lists of top funds of different types by size.

Below are some highlights from the report.

Industry Overview

Looking at the industry from a high level, PitchBook notes that “fundraising in H1 2021 was ahead of H1 2020, with $545.4 billion versus $531.9 billion, and even further ahead of H1 2019, which raised $436.8 billion.” And this is true even though fewer funds were raised in 2021 than in 2020 or 2019. So, we saw more money going to fewer but larger funds.

The report also provides a table of year-over-year changes by each of the private fund strategies. For example, private equity funds raised $479.6 billion which was a YoY decrease of 17.9% on a fund count of 598, which was a YoY decrease of 27.4%.

Fund “Step-Ups”

As PitchBook explains: “When a fund manager raises a follow-on fund—also known as a successor fund—it often believes that a target larger than the previous fund is merited due to increasing deal values, a shift upmarket in strategy, or even just the feeling that bigger is always better and a downsized fund would be a poor signal to send the marketplace. Allocators may also hold the cynical perspective that it grows the basis on which management fees are charged. The difference in fund size between a fund and its successor is the step-up.”

The report includes a very visual representation of step-ups for different types of funds and how they’ve tracked from 2006 to 2021.

Private Fund Strategies: Overviews and Graphical Data

The core of the Private Fund Strategies Report Q2 2021 provides an overview of each fund type along with data in the form of graphs and charts. The visuals make it easy to see metrics both at a point in time and as trends.

It’s engaging information punctuated by several very interesting observations, like:

  • Globally, venture funds raised a staggering $88.6 billion through H1 2021, bringing the 12-month rolling average to an all-time high. At its current pace, we anticipate 2021 global VC fundraising to eclipse the record $136.6 billion set in 2018.
  • Perhaps it is the pandemic, but real estate appears to be in a funk lately, at least as it pertains to fundraising.
  • Private debt fundraising kept a steady course in the first half of 2021. Low interest rates, subdued default rates, and the longer-term pivot toward alternative strategies aided allocators in committing $62.1 billion across 66 vehicles.
  • H1 2021 is off 2020’s record-setting pace for secondaries, but the $32.8 billion closed through June is still more than any prior calendar year, aside from 2020 and 2017.

Top Funds by Size

The Private Fund Strategies Report Q2 2021 concludes with lists of top funds by type and size. It’s fascinating to see how many of the most well-known funds are doing—EQT IX, Copenhagen Infrastructure IV, Ares Capital Europe V, and many others. Get your copy of this in-depth and informative report!

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like Salesforce.com have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that Salesforce.com has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that Salesforce.com — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

private fund strategies