General News
Global Venture Capital Investment Fell by 30% to $73B in Q3 2023 -Report
Venture capital investment fell sharply in the third quarter of 2023, with global deal value down 30% year-on-year to $73 billion, according to market researcher, PitchBook.
This is the lowest level of quarterly VC investment since the second quarter of 2020 when the COVID-19 pandemic first hit.
The decline in VC investment is being driven by several factors, including rising interest rates, inflation, and the ongoing war in Ukraine.
These factors are making investors more cautious about investing in risky assets like startups.
According to a report from the Financial Times, Venture capitalists have dramatically scaled back activity this year, investing just $73 billion in the third quarter across the world. That is down from $106 billion during the same period last year, according to market researcher PitchBook.
At the same time, the number of venture-backed start-ups that sell to private equity groups has grown to 24% of total exits over the past couple of years, tripling the proportion of such deals from 2006 to 2010, according to data from the European tech corporate finance advisory Clipperton.
However, even as pressure mounts on start-ups to sell, deals are stalling as VCs squabble over whether to cash out, according to Scott Driggs, who covers private equity at Jefferies.
“Once the door closes and you crystallize those losses there’s no going back,” he said Driggs.
The expectation of investors: Investors expect that the demand for such buyouts will rise as the slowdown persists and more companies face a potential cash crunch.
“In 2024 we will see a lot more demand for our capital because, on the one hand, entrepreneurs are going to be faced with an option; Should I sell this company for scrap, or should I shut down?” Resurge’s Malinger said. “Or can we provide an alternative option for this company?”
The report said that in the years running up to 2022, VCs took minority stakes in new businesses with growth potential even if they lacked a quick path to profitability.
Steep rises in interest rates over the past year have changed that, hammering private valuations, forcing VCs to pull back, and leaving a swath of start-ups at risk of collapse.
New investment groups are raising tens of millions of dollars in funding to acquire majority ownership and operational control of start-ups to turn the businesses around.
While still in an early phase, the trend is a further sign of the difficulty many companies face as traditional venture investment chills.
In one example, investors Oren Peleg and Eyal Malinger started UK-based Resurge Growth Partners this year to raise €120 million to buy start-ups.
The veteran investors, who have previously worked at companies including Howard Marks’s Oaktree Capital Management and VC firm Beringea, say they have spotted a gap in the market and plan to make average investments ranging from €10 million to €30 million.
Resurge Growth will acquire start-ups to provide a turnaround, either because a previous valuation was too high and did not reflect the new market reality, or because operational changes are required.
“There’s a real opportunity here to play a very important role, which is to help companies transition from venture ownership to private equity ownership,” Peleg said. “No one is willing to send the hard message of saying this needs a reset, and that will be the role that we play.”
Other investors, such as Matthew Bradley, are also leaving venture capital to pursue start-up takeovers. Bradley, formerly chief investment officer at London-listed VC firm Forward Partners, launched Tiktok Capital last year to buy up start-ups.
Another firm, San Francisco-based Arising Ventures, has been looking to buy up start-ups with viable business models but slowing growth since its founding in 2020. Chief executive Kjerstin Erickson said that in the past year, the number of potential deals has grown fivefold.
Opportunities came up when “the company has raised more money than they are worth in the market”, she said. “We’ll do the deal if we think there’s a real business underneath.”
This year the group which is structured as a holding company rather than a fund took out a billboard in the heart of San Francisco with the slogan: “We invest in second chances.”
Ugo Nwokolo, Nollywood actor, has shared a controversial opinion on internet fraud, saying it has been keeping the nation’s economy afloat amid a tougher economic climate.
Ugo Nwokolo, Nollywood Actor
Nwokolo made the assertion in a video interview currently circulating on social media.
According to the actor, the cost of living and soaring house rent have made life unbearable for legitimate income earners.
He said high rent in major cities like Lagos and Abuja has edged out those earning N50,000 and N90,000 monthly.
Nwokolo said, “Personally, I think Yahoo has helped keep the economy afloat. Do you expect a civil servant to afford house rent of N3 million or N5 million in Abuja?”
The actor maintained that only the rich, including fraudsters, could meet up with the rising cost of living.
“If you go to Lagos now, the least you’ll see for a two-bedroom apartment is about N7 million or N8 million. Who is supposed to afford it? The civil servants? Of course, it’s the fraudsters,” he stressed.
However, he argued that he was not justifying crime but merely stating fact.
“I’m not justifying crime, but yes, Yahoo is helping the economy. How do you expect people to live in this kind of economy?” he said.
Aliko Dangote, Africa’s richest man, plans to dedicate one-third of his wealth to charity as part of his succession plan, Halima Dangote, his daughter, has revealed.
Aliko Dangote
Halima, a trustee of the Aliko Dangote Foundation, disclosed this in an interview with Bloomberg published on Tuesday, saying the billionaire had secured the support of his family to commit 33 per cent of his estate to philanthropy.
According to the Bloomberg Billionaires Index, Dangote’s net worth is estimated at $35.1 billion, meaning one-third of his current wealth would be worth about $11.7 billion if his fortune remains at that level.
Halima explained that her father views philanthropy as a key part of his legacy and has incorporated it into the family’s long-term succession plans.
She said Dangote had structured his estate to ensure that charitable giving continues across generations, particularly in areas such as healthcare and education.
“He sort of put all the structure in place whereby we focus a lot on health and education. He actually donated 25 per cent to the foundation. If you look at it, it is what we call in Sharia Code in Islam; it means he has donated 33 per cent of his whole inheritance to his foundation,” she said.
Halima added that Dangote believes giving back is central to the success of his businesses and the family’s values.
She said the billionaire asked her, her two sisters, and his mother to sign the agreement allowing 33 per cent of his inheritance to be dedicated to humanitarian causes.
The planned donation builds on Dangote’s longstanding philanthropic activities through the Aliko Dangote Foundation, which was established in 1994.
According to Halima, the foundation received an endowment of $1.25 billion about a decade ago and has since received an additional $700 million in funding.
She said about 70 per cent of the foundation’s spending goes to programmes in Nigeria, while 20 per cent supports projects across Africa, with the remaining funds directed to initiatives in other parts of the world.
The foundation’s interventions focus on healthcare, education, nutrition, and humanitarian support, including partnerships that contributed to the eradication of wild poliovirus in Africa.
Dangote’s planned charitable commitment adds to increasing global attention on billionaire philanthropy.
Although the proposed 33 per cent allocation is below the 50 per cent commitment associated with the Giving Pledge, it would rank among the largest philanthropic commitments announced by an African billionaire.
Earlier this year, Dangote was named among the world’s most influential philanthropists by TIME magazine’s inaugural TIME100 Philanthropy list, recognising the impact of the Aliko Dangote Foundation, which reportedly spends more than ₦50 billion annually on programmes across Africa.
Nigeria Atomic Energy Commission (NAEC), has said that there are plans for Nigeria to begin to generate electricity from nuclear sources.
Mr Anthony Godwin Ekedegwa, chief executive, NAEC stated this when he recently visited Mr Umar Yusuf Girei, acting managing director, National Inland Waterways Authority (NIWA),in Abuja.
He was at NIWA’s office to solicit the support of NIWA in achieving the numerous advantages of using nuclear energy technology in the country.
According to him, the partnership of critical stakeholders in Nigeria will position the country well in developing and maintaining its nuclear power plant.
The NAEC chief said Nigeria intends to begin the generation of electricity from nuclear sources instead of fossil-based power plants and hydro-based power plants, stressing that for Nigeria to develop, there is a need for the country to diversify its energy needs.
In his remarks, Mr Girei assured NAEC of his agency’s readiness to collaborate on the advancement of a nuclear power plant in Nigeria.
He promised the full support of NAEC for the success of a nuclear power plant in the country, saying that as the organisation saddled with the responsibility of regulating and developing Nigeria Inland Waterways, his entity is strategically positioned to play a critical role in the federal government’s quest for sustainable energy through the new technology.
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