Chronograph

How can GPs use technology to help portfolio companies reach higher benchmarks in subsequent fundraises? Looking at the Seed market, increased capital inflows have driven historically high valuations, creating heightened expectations when companies re-enter the market for capital. Higher valuations entail much more ambitious targets around ARR, customer growth, gross margins, etc. Further, this only snowballs with exit prospects in a slump – companies must achieve more to go public or become attractive acquisition targets. As a result, investors are only backing companies they believe can achieve substantial exits, raising the stakes even higher. As these Seed companies navigate more demanding terrain to Series A, providing value across GTM, talent acquisition, and more to help companies achieve critical KPIs and milestones will become increasingly paramount. Technology can play a crucial role for VCs regardless of if they have platform teams: a sound value creation plan starts with understanding where to prioritize. A centralized, single source of truth provides the portfolio-level view necessary to assess whether companies are on track to meet more demanding benchmarks. Learn how we’ve helped investors accomplish this here. ➡️ https://lnkd.in/gtdm9vEy

Running to get Q3 valuations and reporting wrapped? Learn how Peterson Partners tripled their quarterly reporting productivity using Chronograph. ⬇️ As Peterson’s rapid portfolio growth reached an inflection point, leadership recognized the need to upgrade Excel-based workflows. Enter Chronograph. Since implementing Chronograph GP in 2019, Peterson has driven efficiencies across the firm from boosting data integrity, automating quarterly reporting, and streamlining the LP experience, ultimately enabling the team to spend more time collaborating on its most important priorities — making great investments and creating value across its portfolio. To learn more about how Peterson leveraged Chronograph to yield a 3x efficiency gain across valuations and reporting, see the full case study here. ➡️ https://lnkd.in/eTPdyqEF Many thanks to Jordan Christensen, CPA and the broader Peterson team for their collaboration and continued partnership.

❄️ Series A winter is here. Should LPs adjust their early-stage venture strategies? 💣 ‘Power law’ returns are most pronounced in Seed/Pre-Seed venture, which boasts the highest mean return across the asset class at 50%. However, accessing this return comes down to securing exposure to the handful of outliers in any given vintage— with just a 3% Seed-to-Unicorn success rate, that's no easy feat. 📍Getting to Series A represents a pivotal step on that journey. Pre-ZIRP, roughly 30% of Seed companies made it to Series A. However, this graduation rate meaningfully increases in other stages — 60% of Series A companies made it to Series B, and the same goes for Series B to C and C to D. 🎓 Today, the Seed-to-Series A graduation rate is under pressure and shows no sign of easing. Series A investors are holding out for goldilocks companies that balance growth and profitability, and a bloated post-ZIRP pool of companies means there are plenty of options. 🏗️ For LPs navigating the high-risk, high-reward ecosystem of Seed venture, a tougher bar for Series A sparks questions about the right approach to portfolio construction in this landscape. 🥅 High-volume seed investing theoretically mitigates some risk by giving fund managers more ‘shots on goal,’ increasing the probability of hitting outliers and achieving a consistently attractive return profile. 🤝 However, a colder Series A environment may favor a more concentrated approach to investing in which investors can take on a more operator-adjacent role in proactively helping their companies progress. This strategy comes with its own risks, requiring a higher success rate from fewer investments.

We are pleased to announce the launch of our new benchmark integration with Cambridge Associates. Over the past several years, a more challenging macro environment has raised the bar for fund performance in private markets. As the return disparity between top and bottom performing managers widens, LPs need seamless tools to understand underlying return drivers across their portfolios. With Cambridge Associates Private Investment Benchmarks now available on Chronograph for Limited Partners, mutual clients can easily contextualize their private capital performance alongside an array of industry-leading benchmarks within a centralized, dynamic platform. Learn more about the integration here. ➡️ https://lnkd.in/eRghTsQE

How are PE firms getting AI-ready? Chronograph Co-Founder and CEO Charlie Tafoya recently met with Private Equity International to discuss what firms are thinking about as they lay the foundation for AI enabled workflows. ⬇️ While AI’s potential to transform the front, middle, and back offices of private equity firms is massive, one thing is clear: use cases are only as powerful as the data behind them. To succeed with AI, private equity firms need high-quality, accurate data management processes paired with equally powerful information security protocols. At Chronograph, we’re excited to be building this foundational infrastructure. Explore more insights on AI’s evolving role in private equity operations and value creation in PEI’s article here. ➡️https://lnkd.in/euYQ2acv Thanks for the conversation Rob Kotecki.

OpenAI closed on $6.6 billion of funding last week. Here’s just how big that is. ⬇️ With the race for AI heating up, companies are raising steep valuations to build the war chests needed to speed up development and dominate market share. However, Open AI's $6.6 billion fundraise at a $157 billion post-money valuation is stunning – a massive raise resulting in less than 5% dilution. Against other venture fundraises this deal size is larger than the accumulation of the last: - 1,185 Seed rounds - 351 Series A rounds - 171 Series B rounds What's more, OpenAI set a $250 million minimum check size for investors, instantly excluding most venture fund managers. For example, in 2023, over 88% of new funds closed with less than $250 million in commitments. Perhaps most interesting is that OpenAI's leadership is also pushing to transition to a public-benefit corporation, following the model Anthropic, xAI, and Claude AI have deployed. While the shift offers more fundraising and business flexibility, critics say the untested governance structure could allow company leadership too much control and protection. Explore trends in VC corporate governance along with OpenAI and Anthropic's prior non-profit structures at the link in the comments.

As the dust settled in NYC after Climate Week, founders, policymakers, and investors all left eager to see how regulatory changes will impact the momentum behind renewable energy and climate technology investment. Specifically, one item under the microscope is the fate of the Inflation Reduction Act (IRA). The IRA has been a significant tailwind for private investment in clean energy, contributing to the growth of its share of the private markets from 1% of all investments in 2018 to almost 6% in the first half of 2024. With the IRA set to provide tax credits, grants, and other incentives through 2032, its endurance across political administrations is important for maintaining private investment growth in this sector. While President Trump has proposed repealing the IRA, achieving this would require alignment across the House and Senate, making it an unlikely scenario for investors. Moreover, given many IRA benefits have flowed to conservative-leaning states, an intact IRA is useful to the interests of many GOP officials. Learn more about how critical policy proposals in the 2024 election could impact private equity investors in our election deep dive. 🔗 Link in the comments.

💵 Want a preview into where private equity is voting this November? Look at their political donations. With many policies impacting private equity at stake in the upcoming US election, it raises the question of how leading investment managers are planning to vote. One leading indicator of this is where political donations are flowing. Open Secrets tracks contributions made by employees — not the investment funds themselves — providing a window into how the industry views U.S. presidential candidates. Interestingly, the data for a selection of top US firms suggests no clear consensus on a party. While donations inevitably will reflect more than career-related policy alignment alone, the diversity of viewpoints within this industry is notable. Additionally, it should be noted that these political donations can often be significantly skewed by outlier individual donors. For example, if Sequoia were included in the featured chart, it would lean 96% conservative — a figure heavily weighted by major contributions from partners such as Shaun Maguire and Doug Leone. Ultimately, both political parties present potential headwinds and tailwinds for private capital markets, leaving no one-size-fits-all path for investment professionals at the polls.

🗳️ The tax tug-of-war: what’s at stake for private equity in the 2024 US election? Tax policy is a major wild card in the upcoming election. Both candidates have proposed sharply different tax policies, and with many of the 2017 tax cuts expiring next year, potential overhauls on the horizon have surfaced uncertainty for investors and their portfolio companies. Harris’s tax proposals — including bumping the corporate tax rate to 28% and increasing long-term capital gains taxes — have raised eyebrows among economists and the private sector who argue that: 🔹Higher tax burdens could strain balance sheets, especially for privately-backed companies grappling with tighter cash flows from higher interest rates. 🔹These pressures could stifle growth investments and increase consumer prices as businesses pass on the costs. 🔹If enacted, the tax hikes would also hit returns, reshaping how investors evaluate and pursue opportunities. Conversely, while Trump has floated further lowering the corporate tax rate, his policy objectives also include steep tariffs that hold notable repercussions for PE, including: 🔹Higher import costs for sectors that rely on intermediate inputs, such as retail, manufacturing, and industrials. 🔹As companies respond, they might pass these costs onto consumers, fueling inflation. 🔹In turn, this could lift CPI, disrupting the Fed’s rate cuts or even prompting new rate hikes. Explore how the 2024 election could impact various aspects of private equity, including the M&A landscape, private fund regulation, IRA tax credits, and more in our election deep dive. 🔗 Link in the comments.

After a productive week at SuperReturn Berlin this summer, we’re excited to reconvene with private market LPs and GPs at SuperReturn CFO/COO in Amsterdam. As technology partners to private equity leaders globally, we’re excited to engage in person and hear more about how finance and operations teams are integrating technology to streamline data and workflows, enhance value creation, and build trust into decision-making processes. If you are attending and would like to connect, please reach out to Chronograph Director of Client Development Andy King!