The U.S. private market environment has become increasingly dynamic over the past couple of years. VC-backed companies have been able to continuously close funding rounds at heightened valuations, causing many to question just how feasible and realistic those values really are. On the PE side, firms certainly have the capital needed to invest, but similar price discrepancies between PE buyers and sellers have caused deals to slow a bit. And while investors typically specialize in a certain asset class, they may look to venture away from their investment mandates when returns accompanied with their historical strategies begin thinning, or require an uncomfortable amount of risk to generate.
We've seen this notion play out in recent years with regard to PE investors participating in VC financings. According to the PitchBook Platform, 477 venture rounds attracted PE investment in 2014, a 21% increase from 2013 and a 52% jump from 2010. Furthermore, the value of VC deals with PE involvement nearly doubled from $7 billion in 2013 to $13.3 billion in 2014.
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