Silicon Valley Raises $75B in Venture Capital, Preqin Finds

Menlo Park, California’s Sequoia Capital and New Enterprise Associates topped the list of venture capital firms, with each raising more than $10 billion over the last decade.

Silicon Valley is still the capital of venture capital, thanks to the rising number of “unicorn firms” with valuations of $1 billion or more, according to Preqin.

And the money followed these technology startups that are predominantly based in California, the data found.

Menlo Park, California housed 88 private equity firms with venture capital as their core strategies and raised $75 billion over the last 10 years, far exceeding the $33.9 billion raised by 246 firms in New York City.

These 88 Menlo Park-based firms also raised more capital than the 443 firms in the Big Apple and San Francisco combined, Preqin found.

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Furthermore, the top two venture capital firms were headquartered in Menlo Park, the report said. Sequoia Capital raised $10.9 billion and New Enterprise Associates $10.7 billion, both of the last decade.

Boston also presented itself as a powerhouse for venture capital, with 76 firms having raised $13.6 billion in the same time period.

Outside of the US, China emerged as a growing force, also with the help of “unicorn firms” such as Xiaomi, the fourth largest smartphone maker.

According to Preqin’s data, Beijing and Shanghai ranked below Silicon Valley and New York, having raised a combined $40 billion in the last 10 years.

The two cities also boasted a total of 141 venture capital firms.

London had the third largest number of venture capital firms but only raised $13.3 billion, indicating “significant room for growth in the technology and startup markets.”

Preqin tracked more than 4,250 venture capital managers raising a total of $426 billion since 2005.

Silicon Valley Venture Capital

Apollo Global Management has been shortchanged by equities markets, according to Morningstar’s head of financial stock research.

The private equity and asset management firm’s stock opened Thursday at $19.43—less than two-thirds of its fair value, as Morningstar’s Stephen Ellis calculated it.

Much of the negative views on Apollo stem from increasing regulator oversight of—and expected action against—private equity fee practices. Add in concerns about changes to the carried interest tax, Ellis wrote, and Apollo finds itself “mired in a negative new flows cycle.”

“The industry is struggling to put money to work in a high-valuation environment, and mark-to-market losses in the energy and credit portfolios have hurt recent earnings results,” Ellis continued.

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But Apollo has advantages other competitors lack, he argued—advantages that aren’t reflected in its valuation.

Foremost: Its specialization in illiquid credit instruments.

Banks have been dropping risky and complex credit assets to shore up their capital ratios, Ellis pointed out. “We see this as a secular trend, particularly as regulatory rules force banks to shed risk, and Apollo’s relationships and deep expertise in the market position the firm to earn lucrative returns.”

He called credit Apollo’s number one opportunity, but also noted several more promising sectors.

The firm’s acquisition of annuity provider Athene several years ago differentiates it from global alternatives peers. The deal and subsequent growth added $60 billion to global assets under management, or nearly 40% of Apollo capital base. These assets are permanent, unlike private equity funds which eventually have to be returned to limited partners.

Still, these asset owners can be confident that their investments remain core to Apollo’s future success, according to Ellis. “While we see Apollo’s largest opportunity in credit in the coming years, its highly respected private equity business should still do well.”

Read Stephen Ellis’ entire analysis.

Apollo Global Management (APO): Five-Year Performance APO Source: Yahoo Finance