Private Equity and VC Managers ‘Amazed at How Damn Easy It is to Make Money’

Private market participants expressed a lot of confidence — and many strong opinions — in a survey of private equity and venture capital professionals.

Illustration by II

Illustration by II

Private equity and venture capital professionals have loads of confidence in themselves — less so in their peers, bosses, and political leaders.

Ninety-five percent of investment professionals, advisors, and vendors reported self-confidence in a new survey from Semaphore, an advisory firm hired by limited partners to take over troubled private equity, venture capital, and hedge funds.

Only about half, however, had confidence in their immediate boss, CEO, or managing partner.

Respondents felt more charitably toward the CEOs and managing partners of their competitors, with 69 percent expressing confidence in their abilities. Overall, they felt good about their own businesses and the industry at large, with 75 percent at least somewhat confident in their firms and 68 percent feeling similarly about the broader industry.

“I’ve never been more bullish on this industry,” one respondent wrote. “I continue to be amazed at how damn easy it is to make money,” another respondent said.

Other respondents expressed concerns about high valuations and mounting dry powder in the private markets. One commented that there’s “too much money driving unrealistic valuation and [creating] opportunities for low-quality companies that will still eventually fail.” As another respondent put it: “Bubble, baby!”

Other commenters expressed concerns with the venture capital industry. “Most VCs have never had a real job,” one person asserted. Another suggested that “SoftBank needs to go away and investors need to start doing their homework on companies before they invest.”

These anonymous comments were solicited alongside the survey questions asking industry participants to rate their confidence in themselves, their bosses, their competitors, government officials, and the market at large. According to Mark DiSalvo, Semaphore’s president and CEO, 41 percent of respondents “were motivated to give us all a piece of your minds,” the highest proportion since he began conducting the survey 12 years ago.

“Commentary ranged from political prognostication… to a #MeToo confession,” he wrote in a blog post on the survey results.

[II Deep Dive: Private Capital Industry Admits It Has a ‘Me Too’ Problem]

For example, one respondent predicted that “the Democrats will choose a candidate based on ideological purity rather than electability — setting the stage for a Corbyn-style wipeout in the election.”

Another argued “everyone’s Dem friends telling you to ‘get out and vote’ in their holiday cards” would not counteract how much supporters of President Donald Trump have been motivated by the impeachment proceedings.

Overall, 62 percent of survey respondents said they believed Trump would be reelected in November. Although the majority continued to think poorly of the president — one commenter called him a “buffoon” — sentiment toward Trump improved year-over-year, with 69 percent expressing a lack of confidence in the president, down from 81 percent in 2019.

Other U.S. government officials fared similarly poorly: Almost three-quarters showed little or no confidence in Congress, while 36 percent expressed confidence in Nancy Pelosi, the Democratic Speaker of the House. Just 13 percent had confidence in the Senate’s majority leader, Republican senator Mitch McConnell.

As one commentator said, “the current political system is a total joke.”

Just under half of the survey’s 614 respondents worked at private equity, venture capital, or hedge fund firms; 9 percent were limited partners; 12 percent were operating executives; 11 percent were investment bankers; and 20 percent were third-party vendors or advisors such as lawyers or accountants.