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What PE Can Learn From Online Dating ZURICH, April 9, 2013 – A few years ago society viewed people who used online dating sites to find a spouse or fiancé as desperate cases. Today online dating is accepted, its benefits are understood, and it is a lot more common to hear someone say which dating site they used to meet their new partners. There’s a similar stigma for pioneering companies and startups using online platform and crowdfunding platforms for funding opportunities. It’s a wrong impression. As more financing opportunities move to the Internet, it is becoming more common to establish contacts and relationships online, and some companies purposely choose crowdfunding sources over traditional private equity and venture capital channels. But it goes without saying that just as in our private lives it is true with professional funding sites, the motto "Look before you leap for the long term". Online platforms help to find investors and investments, but also to structure the entire investment process better, to compare offers more easily, and enable access to necessary information, such as required for due diligence all at significantly more attractive costs and transparent pricing mechanisms. These important breakthroughs in transparency and costs are enabled by online platforms such as DealMarket, Angel List, Preqin, axial markets and. Changing macroeconomic conditions and market developments will accelerate the trend. The banking crisis, as well as the Eurozone problem, has resulted in volatile and uncertain markets. The ongoing economic recession and low interest rates are driving a new range of investors to private equity. Increasingly, institutional investors, investment funds and family offices are seeking to invest in private equity. At the same time, the investment universe of private equity has become much more global. The growing wealth of emerging economies means there are private equity investors looking for opportunities in the old world, while European and American investors are increasingly investing in private company in the emerging markets and in Asia. The result is that investors and capital seekers are often operating in geographically remote regions, under different regulatory, legal, and cultural frameworks, which means that an even more precise and thorough examination of business opportunities before making an investment is required by private equity market participants. Another challenge in recent years is that returns on private equity investments have fallen from their traditional higher return rates. All of these factors increase the requirements for an indepth due diligence and professional assessment of the risks. For small and mediumsized organization access to capital, as well as access to the kind of information that is required for due diligence, and monitoring of deal flow (portfolio management) is often more difficult than for larger private equity funds. And yet, smaller funds as well as other smaller private equity players are measured on the same scale as large funds. This particularly applies to the expectations regarding the internal rate of return (IRR). In order to make their investment decisions with a high degree of professionalism and to minimize the risk of loss, it is therefore particularly important for small and mediumsized private equity players to make use of efficiencyenhancing tool and to exploit costeffective ways of obtaining information.

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Page 1: What PE Can Learn From Online Dating

 

 

What PE Can Learn From Online Dating  

 

ZURICH, April 9, 2013 – A few years ago society viewed people who used online dating sites to find a 

spouse or fiancé as desperate cases. Today online dating is accepted, its benefits are understood, 

and it is a lot more common to hear someone say which dating site they used to meet their new 

partners. There’s a similar stigma for pioneering companies and startups using online platform and 

crowdfunding platforms for funding opportunities. It’s a wrong impression.  

As more financing opportunities move to the Internet, it is becoming more common to establish 

contacts and relationships online, and some companies purposely choose crowdfunding sources 

over traditional private equity and venture capital channels. But it goes without saying that just as in 

our private lives it is true with professional funding sites, the motto "Look before you leap for the 

long term".   Online platforms help to find investors and investments, but also to structure the entire 

investment process better, to compare offers more easily, and enable access to necessary 

information, such as required for due diligence ‐ all at significantly more attractive costs and 

transparent pricing mechanisms. 

These important breakthroughs in transparency and costs are enabled by online platforms such as 

DealMarket, Angel List, Preqin, axial markets and. Changing macroeconomic conditions and market 

developments will accelerate the trend. The banking crisis, as well as the Euro‐zone problem, has 

resulted in volatile and uncertain markets. The ongoing economic recession and low interest rates 

are driving a new range of investors to private equity. Increasingly, institutional investors, 

investment funds and family offices are seeking to invest in private equity. 

 

At the same time, the investment universe of private equity has become much more global. The 

growing wealth of emerging economies means there are private equity investors looking for 

opportunities in the old world, while European and American investors are increasingly investing in 

private company in the emerging markets and in Asia. The result is that investors and capital seekers 

are often operating in geographically remote regions, under different regulatory, legal, and cultural 

frameworks, which means that an even more precise and thorough examination of business 

opportunities before making an investment is required by private equity market participants. 

Another challenge in recent years is that returns on private equity investments have fallen from their 

traditional higher return rates. All of these factors increase the requirements for an in‐depth due 

diligence and professional assessment of the risks. 

 

For small and medium‐sized organization access to capital, as well as access to the kind of 

information that is required for due diligence, and monitoring of deal flow (portfolio management) is 

often more difficult than for larger private equity funds. And yet, smaller funds as well as other 

smaller private equity players are measured on the same scale as large funds. This particularly 

applies to the expectations regarding the internal rate of return (IRR). In order to make their 

investment decisions with a high degree of professionalism and to minimize the risk of loss, it is 

therefore particularly important for small and medium‐sized private equity players to make use of 

efficiency‐enhancing tool and to exploit cost‐effective ways of obtaining information. 

 

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International online platforms for private equity and corporate finance can do just that for smaller 

and medium sized players. They provide transparent and efficient access to important information 

and a global expansion of their network: 

 

‐ Increased transparency of the global and regional marketplace; 

‐ Efficient Matchmaking (Contact creation) between investors and capital seekers; 

‐ Reduction of investment risks through improved search and select the right partners, such as co‐   

  investors or service providers; 

‐ Easier and cheaper access to information and services for professional Due Diligence: Different      

  platforms offer here an "à la carte" access to services, which due to the high cost of access     

  (subscription) otherwise able to afford only the very big player in the industry, For example, M & A   

  databases, credit checks, background checks of companies and individuals, and so on; 

‐ Cloud software that allows the actors to manage deal flow and contacts efficiently and sharing    

   within the network. 

 

The desire for security and reliability are the main reasons that the financial services industry has 

been slow to adopt new online technologies. But times change and so do attitudes inevitably, even 

in the finance industry. It would have been hard to imagine a few years ago that individuals would 

be lending money directly without the involvement of banks. To‐date more than one billion U.S. 

dollars in loans have been mediated by so‐called "peer‐to‐peer" sites on the Internet, such as Zopa 

and Funding Circle. And who would have thought that more 100,000 businesses would trust their 

company accounts and all payments to a small Danish web 2.0 technology startup called Tradeshift? 

 

Increasing cost pressure and the desire to quickly and efficiently access data, were the driving forces 

that have allowed these platforms to break through. The same conditions also influence the private 

equity business. Although sufficient information is usually available, it is often difficult or requires 

expensive subscriptions. Global online platforms for private equity address these issues and have 

therefore established themselves as an alternative to traditional channels. By using online resource, 

as in all other industries, the private equity industry is moving towards a more transparent and 

efficient future. 

 About DealMarket 

DealMarket  launched  in 2011  and  is  growing  fast.  Just one  year  after  launch, DealMarket  counts more  than 60,000  recurring users  from 154 countries, and over 3,000 deals and  service providers promoted or listed on the platform. DealMarket is an online platform enabling private equity buyers, sellers and advisors to maximize opportunities around the world – a one‐stop shop for Private Equity professionals. 

DealMarket’s offering includes: 

DealMarketPLACE, an unfiltered view of  the global deal and advice marketplace, where  searching  is free and postings are the price of a cappuccino a day (with no commission). 

DealMarketSTORE offers affordable access to  industry‐leading third‐party information and services on demand; and 

DealMarketOFFICE is a state‐of‐the‐art deal flow management tool, helping Private Equity investors to capture, store, manage and share their deal flow more efficiently. 

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Headquartered  in  Zurich,  Switzerland,  DealMarket  was  voted  the  “Best  Global  Private  Equity Platform  for 2012 and 2013” by Corporate  Livewire. For more  information about DealMarket and today’s  news,  please  visit  us  online  at  www.DealMarket.com,  comment  on  our  blog  at http://dealmarketblog.com/, Tweet us at @dealmarket_com, and connect with us on LinkedIn. 

 

 

Media Contacts 

DealMarket AG Alexander Groschup Phone: +41 43 888 75 33 [email protected]