Private financiers are the new venture capitalists

Eight years ago, Aileen Lee, a venture capitalist at Cowboy Ventures, coined the term 'unicorns' to describe start-ups that reached the rarefied club of a billion-dollar valuation. According to Lee's data at the time, 39 newly founded companies achieved billion-dollar valuations through private or public investors since 2003, or about 0.07 percent of all companies that received venture capital backing.

– Takeaway: it is really hard and very unlikely to build or invest in a company worth a billion dollars – Lee wrote in a TechCrunch article.

How times have changed

Just in the second quarter of this year, investors allocated billions of dollars to a record 136 newly founded companies globally, according to CB Insights data. That total was at the top for the entire last year, said Miles Kruppa from DD.

DD believes that the term 'unicorn' has outlived its purpose, as more than two such companies emerge every working day.

A new group of investors has privileged access to Sand Hill Road, the main street of Silicon Valley, which is home to many of the most well-known venture capital firms. They are giving increasingly higher valuations to start-ups and allowing them to remain private for longer periods.

As Richard Waters from the FT writes, a new private financial system has emerged from the old VC model, and a new and more diverse group of financiers has dominance over what has become an important driver for the future of business.

The New York-based investment firm Tiger Global Management, with humble beginnings, has made room for a private technology investment business that now attracts far more attention, creating the highest initial investments in the second quarter.

Tiger Global, which is trying to raise funds for a $10 billion fund, recently informed investors that they have sought to remain disciplined, passing on opportunities they deemed good in favor of large executions, according to a letter reviewed by DD.

Only time will tell if Tiger Global and related firms will publish reports to justify the strategy.

The drama around the merger of two insurance brokers

Aon and Willis Towers Watson are getting closer to approval for a major merger by regulators in Brussels, but celebrations are likely to be muted as other events unfold in Europe.  

It is only a matter of days or weeks before EU antitrust authorities give the green light for the $30 billion deal that the two insurance brokers reached last year.

To increase their chances of European approval, the companies agreed in May to sell $3.6 billion worth of assets to competitor Gallagher.

However, despite EU officials and legal advisors telling DD that they are ready to let this merger proceed, the deal has encountered problems in another major market, the U.S. 

Even the brokers' offer to divest some of their U.S. assets was not enough to prevent the Justice Department from attempting to derail the deal. They filed a lawsuit last month to block the acquisition, stating that the move would reduce competition and likely lead to higher prices and less innovation, harming U.S. companies and their clients, employees, and retirees.

The merger, announced in March 2020, is now expected to exceed its already delayed completion target in the third quarter of this year.

In a court hearing earlier this week, the two insurance brokers advocated for a September start to antitrust litigation, while the government pushed for January to give it more time to prepare.

According to the hearing transcript, Aon's advisor stated that he was being asked to 'pay the price' for the department's delay in filing the lawsuit. A government representative said it took some time to consider the proposed legal remedies.

Ultimately, they agreed on a start date of November 18, but the judge added that criminal proceedings related to the January 6 attack on the U.S. Capitol could further delay its availability.

Willis would have to legally agree to an extension after September and has the option to take a $1 billion break fee if the deal fails.

There are still some options left, such as proposing further divestitures. However, winning in court may not be straightforward, and each delay brings increasing uncertainty.

Shifting jobs

Gina Haspel, former CIA director, has joined King & Spalding as a senior advisor in its national security team, based in Washington.

Apoorva Mehta will step down as CEO of the grocery app Instacart and become executive chair. She will be replaced by Facebook executive Fidji Simo, who joined Instacart's board in January.

Hakluyt, a London-based strategic advisory firm, has appointed nine new partners.

RBC Capital Markets has appointed Ayesha Patel as chief operating officer for its European division based in London. She has been with the bank since 2009.

Justin Overdorff has joined Lightspeed Venture Partners as a partner focused on fintech investments. He was previously the executive director of business development at Stripe.

GitHub's chief technology officer Jason Warner has joined venture capital firm Redpoint as a partner in its fourth fund, according to Forbes.

White & Case has hired Lawson Caisley as a partner in commercial litigation in London. He joins from Allen & Overy.

Teneo has hired Patricia Heiberger as a director in the company's Hong Kong office. She was previously the regional editor for Mergermarket and Dealreporter publications.

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