“It’s like speed dating but more extreme.” Large asset managers are changing how tech startups raise money.
The world’s largest investment funds are descending on Silicon Valley with unprecedented financial force, roiling the once-niche business of technology startup funding and crowding out traditional venture capitalists.
Hedge funds, mutual funds, pensions, sovereign-wealth groups and other financial institutions known ashave become the powertrain behind record-setting funding rounds and valuations. They were more active in the second quarter than in any previous period, participating in 42% of startup financing deals, and those deals accounted for more than three-quarters of all the invested capital, according to research firm PitchBook Data Inc.. Investment in U.S.
The large asset firms have massive pools of capital, move quickly and are less likely to ask for board seats or involvement in company decisions, often making them more appealing to founders, according to interviews with investors and startup executives. The result has been a dizzying pace of deal making.
“It’s like speed dating but more extreme,” said Peter Fishman, a longtime Silicon Valley tech professional who last year co-founded data-automation startup Mozart Data Inc.
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