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Investing in Innovation

Private Equity: Investing in Innovation for a Better Future

Despite the economic uncertainty caused by COVID-19, private equity continues to make long-term commitments to businesses and workers in all industries across the country. During the first two-quarters of the pandemic, private equity committed $252 billion to 1,847 companies in the United States. 718 of these were small businesses with fewer than 500 employees.

Private equity-backed businesses have also stepped up to help medical professionals, patients, teachers, and students. By donating much-needed supplies, facilitating access to new technology, and providing essential products and services to combat the spread of the virus, private equity-backed companies are supporting the American recovery.

PE investments have saved jobs and helped companies weather the economic crisis caused by COVID-19. PE has supported major brands such as the following:

Supporting Small Businesses

Private equity remains a reliable source of investment and long-term partner for growth to companies of all shapes and sizes. Almost half of the deals – 718 to be exact – completed in the first six months of 2020 were made in small business, which is defined as those with less than 500 people. Small businesses are the backbone of the American economy. Private equity helps provide the capital and investment dollars needed to help small businesses across America grow and become more valuable.

Helping Teachers, Parents, and Students

Private equity-backed businesses are helping make school safer and more accessible for students, parents, and teachers. All across the country, businesses owned by private equity firms are providing free access to online learning platforms, making digital textbooks and virtual classroom software available to students and teachers, and working with school districts to develop health education, testing, and reopening plans. N2Y, for example, granted complimentary access to online learning materials and remote learning plans for students, teachers, and caregivers to facilitate the transition to online learning.

Supporting Renewable Energy Investments

Private equity firms recognize the importance of investing in sustainable energy projects. These investments are helping reorient the energy sector towards renewables and mitigate the undeniable effects of climate change. So far in 2020, private equity has invested more than $11 billion in wind, solar, and other renewable energy projects – nearly double the investments made in 2019 ($5. 7 billion). Private equity investment in sustainable energy has increased by nearly 250 percent over the past 5 years.

Strengthening Public Pensions

Private equity provides a more secure retirement future for teachers, firefighters, and more than 30 million public sector workers and retirees. In fact, private equity is consistently the best performing asset class for public pensions, delivering a median annualized return of 13. 7 percent over a 10-year period. Nearly 50 percent of the private equity investment dollars that make their way into American businesses come from public pension funds. As state and local governments face unprecedented financial challenges due to COVID-19, private equity’s consistent success provides a much-needed security blanket for public sector workers.

Committed to Diversity, Equality, and Inclusion

Private equity firms are also committed to deepening diversity and inclusion across their portfolio company boards. A recent partnership with Diligent’s Modern Leadership Initiative is helping to increase opportunities for people of color and women to improve board diversity at private equity-backed businesses.

From Big Cities to Small Towns

From urban to rural and everything in between, private equity is making an impact across America. Last year, private equity invested over $700 billion in diverse communities and industries across the country, helping to rescue, build, or grow 4,842 businesses. Private equity is committed to fueling jobs and economic growth in communities of every size. In 2019, the top 20 districts for private equity investment were spread out across 15 different states including Wisconsin, Missouri, North Carolina, and Texas. Private equity continues to create opportunities and support local jobs across the country.