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One of the interesting trends that I think we’ll see more of over the coming years is the intersection of traditional private equity and disruptive technology companies. In many ways - it’s the “financialization” of the tech industry.
We’re seeing this play out most often with fragmented, legacy services businesses where companies are rolling up smaller fragmented players (at low multiples), raising equity (at high multiples) and building better software to operate more efficiently...
This is partially being driven by traditional finance (PE / Hedgefund / Asset Management) doing more tech investing. But also more individuals who were historically attracted to finance jobs - leveraging their backgrounds to start tech companies).
This “financialization” will be expressed in many different ways - more balance sheet heavy strategies, early M&A, debt financing, etc. Likewise, many venture firms will continue to evolve to look more like PE platforms (with multiple asset classes / larger funds).
The cynical view is that this is all financial engineering / arbitrage. I am optimistic that it will help accelerate technology’s disruption of larger / legacy industries as these investors / entrepreneurs will be less fearful of pursuing more financially complex opportunities
