Growth Equity Trends

News, insights and updates from the team at Bloom Equity Partners

Happy Friday Founders & Friends!

We are back with another week of The Weekly Bloom! We hope that you enjoyed last week’s Q1 deal recap.

As we mostly share insights on the traditional software buyout market, we wanted to switch things up this week and share some behind-the-scenes insights into the world of tech growth equity investing!

Over the past few years, growth equity investing has evolved into a fast-moving game with a different set of rules than traditional PE buyout investing.

Unlike buyouts, which are predicated on control and leveraged returns, these deals are typically agnostic about control and involve little or no debt. Founders and company owners become partners, and a shared vision is often what seals the deal with a capital provider.

(Source: Bain 2022 Private Equity Report)

Below are a few notable trends:

1. Growth and venture assets under management have expanded at about twice the rate of traditional buyout AUM over the past 10 years and in 2021 comprised a full 82% of the traditional buyout total. (source: preqin)

2. Growth equity and late-stage venture capital funding have grown at 1.5 times the pace of buyout funding and now represent 61% of the traditional buyout total. (source: pitchbook)

3. As deal sizes increase, growing companies can stay private longer, creating a structural shift in how businesses are financed. (source: pitchbook)

Growth funds are disrupting the buyout industry and are forcing legacy firms to make a jump into the space.

The sector’s promise has inspired a number of the industry’s top buyout firms, including Blackstone, Bain Capital, TPG, and KKR, to launch large growth funds. All have had to adjust their approach while adding capability and talent, to compete effectively in a very different market segment.

(Source: Bain 2022 Private Equity Report)

What We’re Reading and Listening To…

📚 The GP Perspective

📚 The Most Important Moats

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News from the Industry: deals, deals, and more deals 💰

After Anaplan, which SaaS company will private equity target next?

PE/VC investors rake in record $41.3 bn via exits in 2021

Accel-KKR Announces Closing of $1.765 Billion Accel-KKR Capital Partners CV IV Fund

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Favorites from the Ecosystem

Investors👇…..

Sandy Kory @sandykory

1/7 A potential buyer knocks on the door of your startup. Are they legit? How can you tell?

Jamin Ball @jaminball

Post GFC Venture Capital as an industry has massively "over earned." The data below shows pooled IRRs by vintage from Hamilton Lane. And this performance is despite the fact that private multiples have historically always been higher than public multiples

Bucco “Buyback” Capital @buccocapital

Going to be a very interesting next few years in startup land VC’s admitting/acknowledging that companies are worth 30-70% less but not marking them as such Many startups have already been a suckers bet for later stage employees. Even more so now https://t.co/3jplHMvcU9

Founders👇…..

Paul Yacoubian @PaulYacoubian

Love this simple set of questions to answer when building a startup per @friedberg

Operators👇….

Steve Ressler @steveressler

Part 2: My dad began his career knocking on doors and ended by managing 40k+ employees. Here's 8 more of my favorite of his "Ressler Rules" of Management (original thread at end). A quick 🧵

Gokul Rajaram @gokulr

Founders/CEOs of private companies: many of you are thinking about whether or not to raise a new round of financing, given market conditions. Some of you are even getting inbounds. Beyond the platitude of “never refuse an entree at a buffer”, here are 3 questions to ask yourself.

End Note 🔚

As always, if you're enjoying The Weekly Bloom, we'd love it if you shared it with a friend or two. We try to make it one of the best emails you get each week, and I hope you're enjoying it.

And should you come across anything interesting this week, send it our way! We love finding new things to read through members of this newsletter.

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About Bloom Equity Partners

Bloom Equity Partners is a lower mid-market software-focused private equity firm, leveraging deep operational and commercial experience to create enduring market value for the benefit of our investors, founders, and their companies.