Despite Increased Competition, VC Fund Managers Confident in Future Opportunities

Despite increasing competition, most Venture Capital (VC) fund managers don’t feel pressure in sourcing attractive investment opportunities in 2017, according to a survey by Preqin.

According to Preqin, 49% of the 56 VC fund managers surveyed in June reported increased levels of competition for transactions, while 47% reported no change. Only 4% reported a decrease in competition. Simultaneously, 32% of fund managers reported pricing for portfolio companies is higher than 12 months ago. Only 13% reported that pricing had gone down.

Compared to one year ago, 54% of fund managers are reviewing more investment opportunities. Of those surveyed, just 11% are reviewing fewer opportunities. Preqin speculated that the hunt for more opportunities is being done in response to the above.

Preqin also reported positive outlook for competitive deal-making, as 35% of fund managers viewed pricing for portfolio companies as a “major challenge facing the industry” in the next year.

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Of these fund managers, 65% expect to deploy more capital in the next year—including 44% that expect to deploy significantly more.

Oddly enough, very little has changed in terms of difficulty. The survey reports that 70% of fund managers see no change in difficulty finding attractive investing opportunities. In fact, 15% have equally found it more difficult or easier.

The main issue for fund managers in the coming year turned out to be the exit environment —with 52% of those surveyed citing concerns. Fundraising and performance were also highlighted issues at 37% and 35%, respectively.

“In keeping with trends we are seeing across the private capital industry, it is clear that strong fundraising is putting pressure on deal-making in the venture capital market. Large influxes of capital are causing dry powder to soar, and asset pricing is rising as a consequence, forcing fund managers to find increasingly innovative ways to source attractive deal opportunities,” said Preqin’s Felice Egidio, Head of Venture Capital Products, in a statement. “However, this does not seem to be the largest concern of fund managers. Although a significant proportion reported that it was harder to find attractive deals, an equal number felt it was easier. Venture capital has long been a fragmented industry, with many firms specializing in specific areas that may be less vulnerable to competition. This may explain why, although the effects of high levels of available capital are a key challenge for fund managers, they are more concerned with being able to exit their investments in favorable circumstances.”

Tags: Preqin, Survey, Venture Capital

Baby boomers in the UK are enjoying a far more prosperous retirement than previous generations, and they have pensions to thank for that, according to a new report from the UK’s Office for National Statistics (ONS).

According to the report, “What Has Happened to the Income of Retired Households in the UK Over the Past 40 Years?,” the majority of the income of retired households comes from state and private pensions, and more than half of the increase between 1977 and 2016 can be attributed to increased private pension income alone. Since 1977, private pension income has increased nearly sevenfold, from £1,800 to £12,400.

The report attributes the sharp rise in private pension income to an increase in the proportion of households receiving private pension income, and increases in the amount they receive. It also found that income from state pensions has increased, however at a slower rate than private pensions, rising from £5,600 in 1977 to £11,000 in 2016.

The ONS report also found that the percentage of retired households with an annual disposable income of more than £10,000 ($13,000) has soared from 21% in 1977 to 96% in 2016.

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“Since 1977, the income of retired households has grown considerably,” said the report. “Recent analysis has shown that between 1977 and financial year ending (FYE) 2016, the disposable income of retired households increased at an average annual rate of 2.8%.”

This compares to average annual growth in non-retired households of 2.1%.

However, the ONS said that despite the growth in the average disposable income of retired households, the inequality gap between retired households has widened in recent years. However, they remain small relative to increases in income inequality for retired households during the 1980s. For the fiscal year ending 2016, retired households with a private pension had disposable income that was 1.6 times higher than households that were not.

“We have seen a dramatic and necessary reduction in pensioner poverty since the 1970s,” said Anna Dixon, chief executive at the Centre for Ageing Better. “However, these averages mask inequalities. In particular, the growing disparity between those who have been able to save into a private pension and those who have not.”

The gap between the average amounts of household income for those with and without a private pension has been increasing since 1977, said the report. For the fiscal year ending 2016, those with a private pension had average original income 14 times higher than those who did not receive any private pension income, which is £19,000 compared with £1,300.

“Those without any form of private pension income are not having their incomes supplemented enough by these cash benefits amounts to reduce overall inequality in income,” said the report.

Tags: Baby Boomers, Office for National Statistics, Pension, UK

UK Baby Boomers Living Large Off Pensions