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DealMarket Thoughtleadership Article
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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 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.
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.
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]