New Report from PitchBook Shows How Private Equity is Driving American Innovation
WASHINGTON, D.C. — In celebration of Innovation Day, the American Investment Council (AIC), the National Association of Investment Companies (NAIC), and PitchBook released a new report today on private equity’s role in financing American innovation – from scaling promising startups to helping large companies stay competitive in a fast-changing world.
The new report, “Financing American Innovation: Private Equity’s Role in the Innovation Economy,” offers examples of recent private equity investments in innovation. Key findings include:
- While venture capital helps startups get off the ground, private equity is increasingly taking those companies to their next phase of growth. Last year, private equity acquired a record 265 VC-backed technology startups. In these cases, private equity firms acquire innovative startups and fuse them with their existing portfolio companies. By providing industry expertise and capital, private equity helps startups reach more end users and expand to new markets. It was previously uncommon for private equity firms to acquire startups – just five years ago, only 70 of these transactions closed – but private equity is increasingly helping tech startups grow.
- In 2021, PitchBook data tracked over $140 billion in software-related deals involving more than 800 software companies. The range of software companies is broad and impacts dozens of sectors in the American economy, including business & productivity, financial software platforms, among many others.
- Private equity is strengthening the cybersecurity industry by helping providers innovate and broaden their offerings as companies face an alarming increase in attacks. Over the past two years, private equity has invested in over 200 cybersecurity providers to help government organizations, financial firms, healthcare providers, retail companies, and more. Last year, private equity invested nearly $40 billion in cybersecurity providers.
- Over the past decade, PitchBook’s data shows that the private equity industry has invested almost $300 billion in IT service providers. This includes almost $70 billion over the past two years to help companies adapt to remote work during the COVID-19 pandemic.
“Private equity is providing capital and industry expertise to thousands of companies that are at the forefront of innovation and are addressing some of our most pressing societal challenges,” said Drew Maloney, President & CEO of the AIC. “We’re proud to be a major player investing in entrepreneurs and companies of all stages and sizes. Private equity will continue to support their growth, help America maintain its international edge, and create more good jobs across the country.”
“Members of the NAIC and the AIC are some of the leading investors in innovation in the U.S. and are playing a critical role in helping reinvigorate and grow companies nationwide,” said Robert L. Greene, President & CEO of NAIC, the largest network of diverse- and women-owned private equity firms and hedge funds. “Our new report details how private equity sponsors like Vista Equity, Clearlake Capital, and Silver Lake have a proven track record of transforming companies to meet the challenges of today. The industry is proud to invest in American innovation, communities, and workers.”
The full report with additional data and case studies can be found here and below.