U.S. Credit Gets a Downgrade, Asian Family Offices Demand Top Talent and the SEC Prepares to Regulate PE Funds in this Week's Edition...
Take a Lap Around the Industry
NATO targets startups with €1 Billion VC Fund Launch (Axios)
Heat Drains Billions from U.S. Economy in Lost Productivity (NYT)
Fitch's Downgrade of U.S. Credit Sparks Backlash and Market Volatility (Bloomberg)
Foreign Investment in U.S. Real Estate Hits Record Low (WSJ)
RIA Monthly Metrics
Private Funding Pulse Check
Bloom Money, a financial services company creating a simpler way for migrant communities to save, has achieved a significant milestone by securing $1.3M in funding through its Pre-Seed round, with notable investors including Zinal Growth
With a recent injection of $18M in funding from a successful Series A round, HerMD, the leader in sexual health and menopause services, garnered an investment from the Bertarelli Family Office, B-FLEXION
Konscious Foods, a plant-based food distributor, has recently raised $26M in their Seed funding round, with the participation of Walter Financial
In a recent Seed funding round totaling $10M, the late Paul Allen's family office, Cercano Management, invested in Plerion, an all-in-one cloud security platform
Wealthy Asian Families Drive Demand for Top Finance Talent
The rise of family offices in Asia has created a fierce competition for skilled professionals, driving governments and educational institutions to establish programs that convert finance executives into the discreet and flexible workers sought by these offices. The demand for family office practitioners has outstripped the available talent pool, leading to a shortage of professionals experienced in this area. Soft skills are particularly crucial in this field, as they cannot be easily imported or outsourced, and employees must be trustworthy and adaptable to handle the diverse tasks required by ultra-wealthy families. Singapore's Wealth Management Institute and Switzerland's International Institute for Management Development are among the institutions offering courses aimed at producing certified family office practitioners. However, finding the right talent remains a challenge as the family office industry continues to grow exponentially across Asia and other regions. The successful recruitment and training of professionals will be essential in sustaining and expanding this rapidly evolving sector.
"The talent gap is growing and becoming a problem...Unlike many of the family offices in the US and Europe, Asian family offices are often managed by family members, but this approach has had some constraints and limitations."
Dixon Wong, Hong Kong University
Summer Home Buying Slowed by High Rates and Low Supply
In June, frustrated home shoppers encountered a challenging real estate landscape characterized by high mortgage rates and a scarcity of available properties. The root of the problem lies in the Federal Reserve's actions, which have led to elevated mortgage rates since early last year, dissuading potential buyers from entering the market and also discouraging homeowners from selling their properties. As a result, the housing market experienced declining sales but retained stubbornly high prices, leading to bidding wars in several regions. Existing home sales fell by 3.3% in June from the prior month, while prices, although slightly lower than the previous year's peaks, still remained historically high. The Fed's efforts to combat inflation by raising interest rates have cooled sales activity, but only had a marginal impact on lowering prices. Additionally, the limited inventory of existing homes has driven buyers towards newly built properties, resulting in a surge in home builders' sales. While the real estate conditions vary across the country, the overall sentiment is that it remains a tough market to be a buyer.
"It felt like it was a little more of a buyer’s market back in the winter, but now it’s completely flipped back to a seller’s market..."
Ryan Bush
Europe's Timid Growth Returns Amid Looming Headwinds
The Eurozone faces a potentially bleak economic winter due to rising borrowing costs and a decline in Chinese demand for European goods. These challenges, compounded by the ongoing war in Ukraine and persistent high inflation, are likely to keep the region underperforming compared to the U.S. Recent data and sentiment surveys indicate that the Eurozone's economy rebounded in the second quarter, growing at an annualized rate of 1.1%, but it may not reach pre-crisis growth rates. The European Central Bank (ECB) expressed concerns about weaker domestic demand, inflation, and tighter financing conditions affecting spending. While there are signs of recovery in some sectors, rising borrowing costs and reduced business confidence pose significant risks. The limited rebound in China has further dampened the outlook for Eurozone exports. With weak growth and falling inflation, the ECB may refrain from raising interest rates in its upcoming meeting, but some economists criticize its past tightening measures. Amid uncertainties, the Eurozone's economic prospects remain unpredictable, contingent on global events and policymakers' responses.
"The near-term economic outlook for the Euro area has deteriorated, owing largely to weaker domestic demand...High inflation and tighter financing conditions are dampening spending."
Christine Lagarde, ECB President
Private Equity and Hedge Funds Anticipate Sweeping SEC Overhaul
The SEC plans to introduce rules for the private-funds industry to enhance transparency and competition, aiming to reduce fees and expenses. Private equity, hedge funds, and venture capital representatives have fiercely opposed the rules, fearing increased liability and the loss of preferential terms for certain investors. The private-fund sector's rapid growth has raised concerns about financial stability and investor protection. The proposed regulations would require quarterly statements, annual audits, and prohibitions on preferential terms. As the industry prepares for potential litigation, the rules could significantly impact operations and returns for investors.
"This is probably the single largest and most impactful of all the things that the SEC is doing..."
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