| | | More than 1,600 private equity firms have been active in the US so far this year, according to PitchBook data. A mere 7% were either founded or co-founded by women. Just like a recent plunge in quarterly venture funding raised by female founders, it's a sign of the challenges many women face in establishing a foothold in the still-patriarchal world of the private markets.
Suzanne Yoon knows those challenges all too well. The managing partner at Kinzie Capital Partners, a Chicago-based investor active in the lower middle market, Yoon is one of the several dozen women in the US leading her own firm. And in the process, she's working to prove the importance of diversity and inclusion in building a successful business—"not for the sake of being diverse and inclusive," she says, "but for the sake of commerce."
Welcome to The Weekend Pitch. I'm Kevin Dowd, and you can reach me at weekend@pitchbook.com. I recently caught up with Yoon—over Zoom, of course—to discuss her career, her firm, and her ideas about the power of diversity. That's one of 11 things you need to know from the past week: | | | | | |  | | "I think it's not a bad thing to be underestimated," said Suzanne Yoon, co-founder and managing partner at Kinzie Capital Partners. (Courtesy of Kinzie) | | | 1. Dealmaking diversity
While she was coming up the ranks in stops at Versa Capital Management, CIT Group and other firms, Yoon had a case of déjà vu. On multiple occasions, she would enter a room for a meeting. And she would be ignored.
"I might have even been the most senior person in the room, and they would talk immediately to my male colleague who was maybe junior to me," she said. "People either assumed I was the secretary or the junior investment professional."
But as she's done repeatedly in her ascent through the industry, Yoon tried to turn an obstacle into an opportunity. The way she figures it, if others wanted to underestimate her, it would be all the more impressive when she proved them wrong.
"You can only go up from there," she said with a laugh. "So I really try to think about, even in scenarios like that, what's the opportunity to change someone's mind? To make them think twice, right? Sometimes, that scenario has given me the upper hand."
After nearly two decades in the industry, Yoon decided in 2017 to branch out and form Kinzie alongside co-founder David Namkung—a move she described as "the scariest thing I've ever done." Yoon saw an opportunity for an investment thesis centered on bringing operational expertise to lower-middle-market companies, particularly those undergoing generational shifts. Another motivation was the chance to build a team where diversity is a core value.
A perfect test case for her ideas emerged last November, when Kinzie made its first acquisition: Colony Display, a manufacturer of custom fixtures and displays. When Kinzie bought Colony, Yoon said that 70% of the company's employees were Latinx, and 52% were female. But there were no women or people of color in its executive management team. To help shrink that gap, Kinzie promptly brought on new recruiters and Spanish-speaking HR managers and set out to reshape the company's leadership.
"We have now two women, one of color, in the executive management team, and then we also have a Latino executive as well," Yoon said. "And we're already seeing stellar performance out of the company: They doubled EBITDA within the last 12 months. The numbers don't lie."
The way Yoon sees things, it's simply common sense. Neither companies nor investors are doing themselves any favors with leadership teams where everyone looks and thinks the same. She sees creativity and new ideas as a natural result of bringing together smart people from different backgrounds.
"When you have groupthink, it's very hard to think outside the box of investing," she said. "The United States and the world [are] diverse. The consumer is diverse. And everything at the end of the day is driven by the consumer and the labor market. So if you have a diverse labor force and you have a diverse consumer base, then you need to have diverse investors."
Yoon also knows the stakes are high—too high to base investment decisions on anything besides what she thinks will produce the best results. As Kinzie has expanded its portfolio (the firm made its second acquisition in September, snapping up Chelsea Lighting), the cutthroat world of private equity will put her ideas to the ultimate test: What will LPs think?
"Whether you're a man, a woman, you're Caucasian, you're a minority, it doesn't matter. It's really hard," Yoon said. "It's incredibly competitive, and if you want to be in the game, you've got to show up every day, 100%. I think about that all the time. If you don't treat your investors' dollars like they're your last dollars every time, someone else will."
For Yoon, the days of being ignored in the board room may be over. But she said she's cognizant that women are still overlooked in much of the industry. For those making up 50% of the population, 7% of all private equity firms is an awfully low rate.
"Now that I've been in this role, and the questions that I get, and the young women that approach me and are inspired—it certainly has elevated the feeling of responsibility that I have to women and minorities in the industry to do well," Yoon said. "I've never wanted to lose to a boy, my whole life. I think I felt that with my cousins when I was five.
"So no, I don't want to lose. But I think more so now, it's so important. There are very few women and minorities [in private equity], so the success of Kinzie I think is hopefully going to inspire people to go out on their own and take some risk."
2. Hello, Neumann
Adam Neumann is back, baby, and he's investing in a company that might be named after a character from "Batman"? Bloomberg reported that the WeWork co-founder invested $30 million in Alfred, a butler-esque platform that provides concierge services and manages maintenance requests for apartments. The same day, Neumann's former company made a move that brings an end to an unforgettable chapter in VC history: The We Company has officially changed its name back to WeWork.
3. SoftBank's SPAC
SoftBank, the investor that became most associated with the sordid saga of WeWork, was also in the news this week thanks to its plans to join in on this year's biggest investment fad. Rajeev Misra, the head of SoftBank's Vision Fund, reportedly told the Milken Virtual Conference that SoftBank is planning a special-purpose acquisition company, a vehicle that will surely be closely watched even on the currently crowded SPAC landscape.
4. Tycoon trouble
The New York Times published an account this week that Apollo Global Management co-founder Leon Black wired at least $50 million and perhaps up to $75 million to Jeffrey Epstein, payments that came well after the disgraced financier had pled guilty to soliciting prostitution from a minor. Black said the payments were for providing financial and philanthropic services, and emphasized that Apollo itself had no business ties to Epstein. The Wall Street Journal, meanwhile, reported that Vista Equity Partners founder Robert Smith reached a $140 million settlement with federal prosecutors after a four-year investigation into Smith's taxes.
5. BlackRock, Blackstone
BlackRock made an $118 million investment in Arrival, a UK-based developer of electric vehicles. The firm is also reportedly in talks alongside Brookfield Asset Management on a potential $10 billion-plus investment in oil pipeline assets owned by Saudi Aramco. A similarly named Wall Street titan has also been busy: Blackstone lined up a $1.9 billion SPAC merger this week for portfolio company Finance of America, a consumer lending specialist, and is also considering a $14.6 billion sale of BioMed Realty Trust, according to the Wall Street Journal. | |  | It was a busy week for BlackRock and Laurence Fink.
(Michael Cohen/Getty Images) | | | 6. Mind over matter
Last year, mental health startup Calm got a valuation that put it in the unicorn club. Now, the company is in talks to raise $150 million in new funding at a $2.2 billion valuation, according to a Bloomberg report that emerged this week. As my colleague James Thorne writes, the deal would be the latest in an ongoing boom in venture funding for mental health products and services, with investments in the sector more than quadrupling since 2015.
7. PE's IPOs
After pricing a PE-backed IPO in late September, Polish ecommerce company Allegro saw its stock soar during its first day of trading, taking its market cap to some $19 billion. In the US, Array Technologies, a solar energy specialist, raised more than $1 billion in an IPO backed by Oaktree Capital Management. Two other prominent PE-backed names have listings in the works: McAfee set an initial range for an IPO that could result in a valuation of around $9 billion, and Datto set a range for a possible $4 billion listing.
8. Around the world
Canada, India and Thailand might not be thought of as traditional venture hotspots. But startups from all three countries raised significant new rounds this week. Up north, Canadian financial adviser Wealthsimple became a unicorn in a funding round led by TCV. In India, another finance-focused company, Razorpay, also became a unicorn with a $100 million Series D. That leaves Thailand, where delivery startup Flash Express secured $200 million in new VC.
9. Around the neighborhood
One transit startup, Proterra, raised $200 million to fund its growing network of electric buses and research into electric vehicle technology. Getaround—another business concerned with, well, getting around—pulled in a $140 million Series E round for its rental car-sharing platform.
10. Eyes on exits
Different stages of the exit process were on display from a trio of highly valued companies. VC-backed customer data specialist Segment locked in a $3.2 billion sale to Twilio. Game development company Roblox made an early step in its walk toward Wall Street, filing confidentially for an IPO this week after reaching a $4 billion valuation in February, according to PitchBook data. And DoubleVerify, a customer engagement business owned by Providence Equity Partners, is preparing an IPO for 2021 that could come with a $5 billion valuation, Bloomberg reported.
11. Going vertical
Vertical farming startup Plenty secured $140 million in a round led by SoftBank, with participation from berry grower Driscoll's—a vote of confidence from an established industry giant. Two other startups concerned with altitude were also in the news: Richard Branson's Virgin Orbit is reportedly seeking between $150 million and $200 million in new funding ahead of a December launch demo, and Astroscale, which aims to remove orbital debris and provide other services to satellites, raised $51 million in new capital.
View the full list online | | | | | | | | | | A message from Launch With GS | | | | Diverse teams drive strong returns | | | Through Launch With GS—an investment strategy grounded in the belief that diverse teams drive strong returns—Goldman Sachs continues to focus on increasing access to capital and facilitating connections for women, Black, Latinx, and other diverse entrepreneurs and investors. Learn more | | | | | | | | |  | Silicon Valley has hardly slowed down during the pandemic.
(Charles Harker/Getty Images) | | | | Some firms and startups have been hit much harder than others. But on the whole, the US venture industry was surprisingly resilient in the first six months of the pandemic. The year is on pace to see more venture mega-deals than any other on record. And in Q3, VCs reached the second-highest quarterly exit value total on record.
All those enormous transactions are just the tip of the iceberg. Fresh off the virtual presses, the Q3 2020 PitchBook-NVCA Venture Monitor, sponsored by Silicon Valley Bank and Certent, offers a definitive look at everything you need to know about the current state of US VC.
This quarter's edition features the usual breadth of data—but there are some changes in the way all that data has been tabulated. In an accompanying note, our analysts lay out the details of their new methods for estimating VC deal and exit counts. | | | | | |  | | What goes up, must come down. (Richard Drury/Getty Images) | | | | Long before the onset of the pandemic, private equity-backed retailers across the industry were struggling to stay afloat. For many, the store closures and consumer woes brought about by the crisis have exacerbated those problems even more. But as Adam Lewis writes, that isn't preventing some PE investors from pursuing new retail opportunities.
While it may have devastated some retailers, our current global health crisis has led to a spike in investor appetite for life sciences deals. In a new note, three of our analysts examine how this increased interest in biotech and pharmaceuticals is also shaking up the real estate sector. | | | | | |  | PE fundraisers in Europe are in the midst of a banner year.
(Sergey Alimov/Getty Images) | | | | COVID-19 case counts are once again rising throughout Europe. France this week instituted a nightly curfew, and Germany is introducing new travel restrictions. After several months of gradually opening back up, economies across the region are finding that the dangers of the pandemic persist.
During the third quarter, though, private equity investors across Europe got back down to business after a plunge in activity, with deal count shooting up nearly 33% from Q2. PitchBook's Q3 2020 European PE Breakdown takes a close look at how it all unfolded. | | | | | |  | | (Jorg Greuel/Getty Images) | | | | The soggy season is approaching (or already here) for much of the Northern Hemisphere. But a startup called Urban Umbrella isn't worried about raindrops falling from the sky—instead, its concern is buildings scraping it.
The New York-based business raised $9 million in combined debt and equity this week to fund its development of high-end scaffolding, a more aesthetically pleasing alternative to the temporary towers of wood and steel that typically cling to the sides of a building under construction. Co-founder Benjamin Krall said Urban Umbrella will use the new capital to bet big on a post-pandemic resurgence in its hometown: "This capital is to triple down on New York City," he told The Real Deal. | | | | | | Recommended reads A Silicon Valley CEO is at the heart of an unusual dispute that could have major implications for the future of Mount Everest. [Outside]
There's very little about Yeti that suggests the luxury cooler maker was poised to thrive during a pandemic. But thankfully for the company and its private equity backer, appearances can be deceiving. [Marker]
The events of Sept. 11, 2001 had a transformative effect on how airlines operate. Will the pandemic be a similar inflection point for the industry? [Recode]
Workers at Google are usually encouraged to speak their minds. But there is one topic—indeed, one word—that should be avoided at all costs. [The New York Times]
A dark, revealing journey into the secret horrors of Jeffrey Epstein's little black book. [Mother Jones]
How does Rihanna compare to Marissa Mayer in terms of net worth? Forbes' new list of the 100 richest self-made women in America has the answer. [Forbes]
Diversification among many asset classes is the modus operandi for most limited partners. What if it's all wrong? [Institutional Investor]
Some day, the pandemic will end. What will New York City's real estate market look like when it does? [Curbed] | | | | | | Quote of the week "In my view, when uncertainty is high, asset prices should be low, creating high prospective returns that are compensatory. But because the Fed has set rates so low, returns are just the opposite. Thus the odds aren't on the investor's side, and the market is vulnerable to negative surprises. This is how I described the prior years, and I'm back to saying it again."
—Howard Marks, co-founder of Oaktree Capital Management, in a new note on how the Federal Reserve's monetary policy is influencing the current market | | | | | | The Weekend Pitch is produced by editor Kevin Dowd.
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