Illustration: Aïda Amer/Axios
In today's deal doldrums, investors are learning the art of patience, sources tell Axios at Nashville's ViVE health care conference.
Why it matters: This has been the slowest first quarter for global M&A since 2013, according to preliminary data from Refinitiv.
What's happening: With dry powder available but few new deals to deploy it to, firms are using their capital to invest in their own portfolios, one managing director at a bulge-bracket PE firm says.
- "This way they capture more ownership and also lengthen the runway on their hold of the business," the MD says.
- "With this current investment environment, there are going to be down rounds," one general partner at an early-stage VC firm comments. "Series B could be the trickiest going forward."
- Coining it the "Series B blind spot," the VC partner says investing at that level means taking a risk on a company without a long track record.
Yes, but: Activity hasn't halted entirely, and in the private equity world, dealmakers are starting to pick up their pencils.
- "Things are starting to thaw a bit," says a principal at a middle market PE firm. "There are good businesses that still need funding."
- "We are working proprietary deals that we sourced, as those are more economical than going through the auction process," he says.
Zoom in: "Value-based care outcomes continue to be very investable," says one health tech investment banker. "There is no cap to growth despite some headwinds; profit pools are shifting to better and more efficient business models."
The bottom line: "The absence of capital does not mean absence of innovation," says another VC partner.
- "We have to remember, especially in times like today, that it's not just about the next round of funding, it's building a successful company for the long haul," he says.
