Pace of Private Equity, Venture Deals to Rebound, Panel Says

Technology disruptions across all sectors were just a temporary time out, create new opportunities, according to experts at an EisnerAmper conference.

Investors may have slowed the pace of private equity deals early on in the pandemic, but many expect it will pick up again as technology disruptions across all sectors create new opportunities, according to panelists at an EisnerAmper conference.

In the second quarter, when limited partners (LPs) were still jittery from the market downturn, the total deal value of transactions dropped to $326.7 billion, down 20% from $404.7 billion in transactions made during the same quarter last year, according to Pitchbook data.

The webinar brought together Susan Cates, partner at private equity firm Leeds Equity Partners; John Frankel, founding partner at seed-stage firm ff Venture Capital; and Arthur Peponis, head of private equity at alternative investment firm Angelo Gordon.

Since the second period, deal-making has ticked up from recent lows and panelists are optimistic that activity will rebound. “We found that the economy actually was more resilient than we thought,” Peponis said.

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Frankel said his seed-stage firm ff raised the same amount of money year-to-date as what it garnered by the same time last year. Revenue growth for portfolios at ff also jumped by 30% in the second quarter, which was a relief for leaders who were expecting single-digit returns.

“This was not a natural recession,” Frankel said. “This was a strong economy interrupted and that’s why I think we’re seeing a strong rebound.”

In venture capital (VC), Frankel said he expects opportunities to expand within early-stage funding, when new businesses are first signed up by VC firms. “Historically, whenever you have a big disruption, and the recession that comes out of that, you have really great companies formed,” Frankel said. “We expect the vintage years of 2020 to 2022 to be particularly rich.”

He especially expects opportunities in applied artificial intelligence (AI), particularly in drones and robotics, to see great advances. But strong tech adoption during the pandemic across all sectors will continue to create value opportunities for investors.

Leeds’ Cates said the fund focuses on education sector investments and led a $113 million Series D funding round into educational tech startup Eruditus, which offers certification through professional education programs.