Editor’s Letter

Dave bliDe Publisher The Spring 2018 issue of The Journal of Private Equity confirms a pattern of continuing expansion in funding power and investor confidence in seeking new opportunities in venture capital and private equity markets (refer to Market Snapshot, p.82). This persisting trend is due to several factors. Research suggests that the growing wealth of the top 5% of the global population is supporting an expanding investment appetite for higher risks. These investments are in some cases direct investments, but more often they are channeled through institutional investors such as investment banks, investment funds, wealth managers, pension funds, insurance companies, prime brokers, trusts, and family offices. Also, advanced countries’ financial markets remain relatively liquid from central bank measures to end the great recession and restore economic growth and full employment. However, government inaction (infrastructure) and disruptive actions (threatening tariffs on imports) have reduced the attractiveness of public domestic markets and shifted attention to higher-risk private equity markets in other developed and emerging economies markets. The enhanced search for higher “alpha” is emphasizing the increasing importance of private equity in the emerging countries—as illustrated by the expanding number of articles from emerging markets appearing in The Journal of Private Equity. The f lat-lining of public stock markets in the United States and other developed countries so far in 2018 substantiates this shift. The growing supply of liquidity seeking opportunities will eventually exhaust the better investments, and then raise the vulnerability to financial problems with higher-risk investment ventures. New analytical techniques will be necessary to find higher investment returns and avoid these potential future risks. As private equity managers and general partners come under increasing pressure to find more alpha opportunities faster, innovative new approaches to private equity and venture capital investments may be required. The decision-making process of locating attractive investment possibilities in developed countries, and especially in emerging markets, will expand data needs and also increase uncertainties that must be analyzed carefully to avoid performance problems. The requirement is to analyze big data rapidly, to continuously collect and add new information, and to re-analyze in order to monitor and control company performance in line with private equity objectives.