Primary and Secondary Valuation Differences Destroy Investor Returns

Primary and Secondary Valuation Differences Destroy Investor Returns

All investors seek a return on capital. This return on capital can come from selling shares through M&A, secondary public transactions, or receiving dividends. When primary and secondary valuations grow far apart, it can destroy investor returns. This destruction is manifested in three distinct problems: companies fail to raise more money, shareholders cannot exit through M&A, and investors must wait extended periods of time to receive a return on their investment. 

Companies face problems when the primary valuation at which money is raised deviates from the valuation of M&A or secondary transaction comparables. This is referred to as “the bid-ask spread.” The bid is the price the buyer is willing to transact at; the ask is the price the seller is willing to transact at. This terminology is commonly used in public equity market analysis. This article focuses on companies that generate returns through M&A or secondary public transactions. 

Primary and Secondary Transactions

Primary transactions refer to direct investments an external investor makes into a company in exchange for newly issued shares. This investor is the first owner of the shares, hence the term “primary.” This also applies to the initial sale of financial securities such as stocks or bonds through an initial public offering (IPO). In both cases, the proceeds from the sale go directly to the issuing entity. Most companies that seek primary investments are growing and may not yet be profitable. Dividends are uncommon in this sort of company as any profits are generally reinvested back into the growth of the company in the early stages, making it unlikely that primary investors are seeking a return through dividends.

Secondary transactions refer to the buying and selling of existing shares between investors or shareholders. These buyers acquire previously owned shares and are the second or third owners, hence the term, “secondary.” In a secondary transaction, the proceeds from the sale go to the previous shareholder directly, and not to the company.

Motivations for Buyers and Sellers in Primary Transactions

In a primary transaction, the buyers or investors seek returns through capital appreciation. Capital appreciation happens when the company performs well and its value increases, thus, the value of the shares also increases. The investor can then sell these shares for more than they paid, creating a return. Dividends are payments made by a company to its shareholders to distribute profit depending on the number of shares they own. Both payments are in the form of ROI (return on investment) to the shareholder. Capital appreciation is the most common ROI vehicle for high-growth companies.

The sellers, or the companies selling the shares, are motivated to engage in primary transactions to raise money to spend on functions such as: research and development, expanding operations, acquisitions, sales and marketing, global expansion, or paying off debt. Sellers assume these activities will increase corporate value, creating a return through capital appreciation.

Motivations for Buyers and Sellers in Secondary Transactions

Secondary buyer motivations are similar to primary buyer motivations. Buyers believe the monetary gain through appreciation or dividends will be greater than the money paid for the shares. The use of funds between primary and secondary transactions differs greatly. Sellers in secondary transactions are motivated to receive the proceeds through liquidity. When existing shareholders sell their shares, they can obtain cash for other personal or investment purposes. Early investors, founders, or employees who hold equity in a company may seek an exit strategy to monetize their investment or realize gains.

Market conditions and a company’s performance also play a vital role in this analysis, which influences investors’ decision to sell some or all their shares. It is very important to note that all shareholders must engage in a secondary transaction to receive an ROI. Primary transactions do not provide ROIs in the form of dividends or appreciation to shareholders.

Problems When Primary Valuations Eclipse Secondary Valuations

Problem 1: The Company Fails to Raise More Primary Capital

It is important to note that primary investments assume a secondary transaction will happen eventually. In the absence of a secondary transaction that pays the investor more money than the investor originally paid, the only way for the primary investor to get their money back is through dividends.

There is a point where the size of the bid-ask spread becomes insurmountable for any reasonable investor to buy shares. How large of a bid-ask spread is insurmountable? It is not always clear.

A range of 200%, or two times the price paid in a primary round and the current market rate for a secondary round, can be too large to achieve a transaction. Primary round investors seek a price per share higher than they paid, which informs the expectations for future investors and can even widen the bid-ask spread. The investors’ role in the bid or the ask changes between rounds. A buyer, or bidder, in round one becomes the potential seller, or asker, in round two.

The most challenging part about this moment, when the bid-ask chasm becomes too high, is that the company’s position in capital markets becomes frozen. The company can no longer raise equity to grow. These once high-growth, exciting companies begin to turn into slow-growth companies, which can impact their secondary valuation even more (slow-growth companies are valued at lower multiples than high-growth companies).

Again, the company itself may not have any meaningful problems. It is simply stuck, locked out of capital markets because the most recent share price cannot be rationalized based on current secondary market comps. And, as discussed, all companies need a secondary exit eventually; without it, investors will not receive a return on capital.

Problems When Primary Valuations Eclipse Secondary Valuations

Problem 2: Shareholders Cannot Exit through M&A

When the primary valuation (the ask) is considerably higher than the secondary valuation (the bid), investors might have overvalued the company based on optimistic assumptions about its growth potential and future performance.

Once these investors try to sell their shares at the price reflecting the primary valuation, they may encounter difficulties, finding buyers unwilling to meet their price expectations. This creates a situation where investors’ capital becomes trapped.

If an investor from a primary transaction pays $1 per share for a company based on its strategy and product market fit, will it sell those shares for less than $1? This rhetorical question points to the bid-ask divide that can eliminate M&A or secondary transactions as an exit option for shareholders. If the investor engages in this transaction, they will lose money. 

When confronted with this anecdotal example, investors must consider the benefits of holding onto the shares, hoping the bids from other buyers rise above $1 (the original price paid by the investor), or cutting their losses and selling the shares for less than they paid. An investor’s decision between these paths is complex and out of the scope of this report. 

There may not be any problems with the company. The company may be growing, have satisfied customers, strong employee relationships, and a pathway toward profitability. 

The company simply has not reached the growth target that was the basis for a primary valuation. If this bid-ask spread is too great, it simply eliminates M&A as an exit option.

This is bad for shareholders and existing investors. It means new investors are less likely to be interested in the offering, as described in the next section.

Problems When Primary Valuations Eclipse Secondary Valuations

Problem 3: Investor Time to ROI Delayed Significantly

Companies have such disparate primary and secondary valuations because the reasons the investors paid the primary share price are not always part of the secondary buyer’s decision making. This is almost always due to financial KPIs, such as revenue, EBITDA, gross margin, customer retention, etc. 

Companies with large bid-ask spreads must wait months or years for the financial KPIs used in the secondary transactions to match the valuation paid by the primary investor. These long-time horizons are not ideal for most investors. Financial KPIs matter less in IP-heavy and easily IP-protected business models like biotech. This is the exception rather than the rule. 

Valuation increase is driven by a combination of tangible and intangible asset growth, financial performance, financial growth, financial ratios, gross margin improvements, operating efficiencies, scalability, growth potential, customer base retention, potential cash generation, competition, new technology, industry trends, and sentiment.

Valuing a business during a primary transaction is a delicate art, not an exact science. Decision makers need to be careful they do not buy into overly optimistic narratives and pay a price per share that reflects everything going 100% right, 100% of the time. At the same time, undervaluing a business can destroy existing shareholder value. It is Jahani and Associates’ experience that most companies suffer from overvaluing their business, raising millions or tens of millions of dollars, and then getting locked out of the capital markets. 


Semiconductor Transactions by ASEAN-Based Investors

Semiconductor Transactions by ASEAN-Based Investors

Investors based in ASEAN—Association of Southeast Asian Nations, an economic union of 10 nations in Southeast Asia—have invested $18.3 billion in the semiconductor industry between 2020 and Q2 2023. This report provides a comprehensive analysis of the investment activity trend, which decreased between 2020 and 2021, then increased in 2022.


The data set analyzed focuses on capital deployment, transaction types, and geographical distribution. By analyzing the data and trends from 2020 to Q2 2023, this report reviews the dynamic landscape of the sector.

Semiconductor Transactions by ASEAN-Based Investors

Semiconductors are specialized devices that provide the main architecture for electronic products. Some of the most important semiconductor applications include:

  • Consumer and industrial electronics: consumer electronics include televisions and mobile phones, whereas industrial devices span the length of manufacturing plants.
  • Wireless infrastructure: a collection of various communication devices, connectivity standards, and connectivity solutions that work together to provide wireless networks to users.
  • Servers, data centers, and storage: integrated systems that provide resources, data services, and telecommunication and storage systems.
  • Automotive: includes industries associated with the production, wholesaling, retailing, and maintenance of motor vehicles.
  • ASEAN-based investors invested $18.3 billion over 148 deals, with an average deal size of $124 million.
  • Capital deployment peaked in Q1 2021, with the highest average deal size of $550 million.
  • The most active year for deal flow was 2021, with approximately 51 deals with $8.61 billion accounting for the highest investments made, 24 of which were in Q3. This accounts for 35% of the deals between Q1 2020 and Q2 2023.
  • Mergers and acquisitions were the driver of the deal count, attributing 67% of the transactions recorded amounting to $12.2 billion of the total deal value. This may indicate that the highly competitive landscape is driving the large semiconductor players to enhance their capabilities, grow market share, and gain access to new technologies. It could also be a direct result of the decrease in technology stock valuations leading to a search for value through acquisition.
  • Approximately 15% of the transactions conducted were by private equity firms with $2.7 billion deployed. 
  • A significant amount of capital, $1.5 billion, was deployed into venture capital investment by Southeast Asian investors. Despite the smaller ticket sizes, these transactions contributed to 8% of the capital deployed in the sector.
  • ASEAN-based investors made 76% of the investments in foreign companies such as Germany ($5.3 billion), China ($4.4 billion), and Malaysia ($4.2 billion).
  • Investments in the USA ($3.1 billion) represent 17% of total investments.
  • The remaining 7% were into Mexico, Singapore, and others. 
In conclusion, M&A consolidation and appetite for foreign investments by ASEAN-based investors in the semiconductor industry is evident. Although there has been a decrease in investments in the first half of 2023, as confidence in the market grows, scale and consolidation are essential for companies to compete effectively. The industry, market growth, and high returns will attract more investments in the space.


Manufacturing Transactions by USA-Based Investors

Manufacturing Transactions by USA-Based Investors

The manufacturing industry has received $1.47 trillion in investment between Q1 2020 and Q3 2023 from USA-based investors, 71% of which was invested into domestic manufacturing companies. This surge in domestic investments is likely a result of the more recent heightened demand for domestic production driven by geopolitical concerns, trade conflicts, and concerns around the global supply chain. The US manufacturing sector continues to focus on innovation as a competitive advantage and has made significant investments in technology to drive growth.

Announced Manufacturing Investments by USA Investors (2020 Q1 – 2023 Q3)

  • The manufacturing industry has received over $1.47 trillion from USA-based investors, with nearly 22,000 transactions, each quarter accumulating an average of $98 billion since Q1 2020.
  • The third quarter of 2021 saw the highest capital deployed over the period and the following quarters continued to demonstrate a strong market, despite the supply chain disruption and labor shortages that continue to be a drag on the industry leading to production delays and increased costs.
  • Investing in the US can help companies build a more resilient supply chain and become less dependent on overseas production and its inherent vulnerabilities like global disruptions such as natural disasters, political instability, and the recent pandemic.
  • The US is the leading recipient of funds in the manufacturing sector, having received nearly $1 trillion from USA-based investors over the period covered by this report. This accounts for 71% of the total investments made by USA-based investors in the manufacturing sector.  
  • Through initiatives like reshoring, workforce development, and strategic trade policies, the goal is to reduce dependency on foreign suppliers and maintain a competitive edge in global manufacturing markets. Trade wars often result in the imposition of tariffs on imported goods. By investing domestically, USA-based investors can avoid these tariffs, which can help in cost management and maintaining competitiveness.
  • Supply chain disruptions are also one concern investors are taking into consideration. They have become more frequent and severe due to various factors. The COVID-19 pandemic exposed vulnerabilities in supply chains, with lockdowns, travel restrictions, and factory closures leading to disruptions in the availability of raw materials, components, and labor.

Geopolitical tensions can lead to increased market volatility, affecting the stock prices and valuation of manufacturing companies. Investors may experience higher levels of uncertainty and risk in the stock market, making it important to assess how geopolitical events may impact their overall portfolio. Investing domestically is the safer bet.

  • Investors deployed $1.3 trillion through mergers and acquisitions within the sector composing 64% of the deal flow. USA-based manufacturers that rely on imported raw materials or components may face increased costs due to tariffs. By acquiring component companies and smaller manufacturing companies they secure supply of critical raw materials, labor, and technology to reduce exposure to global supply chain disruptions. 
  • During the period covered by this report, private equity firms accounted for 13% of investments, amounting to $262 billion. Private equity investors evaluate companies on their ability to grow and produce returns. Currently, based on their internal evaluations, it appears that they have found the most value within the US. 
  • Venture capital contributes 2% of the total investment pool with $40 billion total. Venture capital investors seek out pioneering companies and cutting-edge technologies at their early stages with the anticipation that their investments will be at the forefront of both technological and market disruption. With the manufacturing sector experiencing significant technological advancements, these firms see opportunities to invest in start-up companies, which are at the forefront of these innovations.
  • Industrial supplies are influenced by the growing emphasis on automation, supply chain resilience, and sustainability. These companies received 36% of the entire investment pool for the last three years, totaling $530 billion. Investors are focusing on companies that offer innovative solutions in industrial automation, 3D printing, and advanced materials. 
  • Information technology has the second largest incoming investment with 19% totaling $280 billion. It remains a high-growth sector due to digital transformation across industries. Investments are directed toward software development, cybersecurity, cloud computing, artificial intelligence (AI), and internet of things (IoT). The shift to remote work has also led to increased investment in collaboration tools, cybersecurity solutions, and infrastructure to support remote operations. One notable deal was the acquisition of Xilinx, a semiconductor manufacturing company for $50 billion.
  • The third largest recipient sector was commercial industrial companies, which collectively received $246 billion in investment. Commercial industrial investments have been impacted by changes in consumer behavior and the shift towards e-commerce. Investments are focusing on modernizing warehousing and distribution facilities, automation technologies, last-mile delivery solutions, and sustainable infrastructure to improve operational efficiency and reduce environmental impact. One such deal was Mileway, a last-mile logistics company that was acquired for $23 billion in 2022.
Companies in the manufacturing industry play a pivotal role in meeting the diverse needs of businesses across various sectors, enabling them to streamline their operations, enhance efficiency, and maintain a competitive edge. Investment in manufacturing services offers investors a chance to diversify their portfolios and gain exposure to this ever-growing industry.
The manufacturing industry investment landscape by USA-based investors is intricately intertwined with the complexities of trade wars. These complexities prompt strategic collaborations and partnerships. The outlook remains exceedingly promising, defined by a landscape teeming with opportunities for both expansion and innovation. With technological advancements continually reshaping the industry’s landscape, companies are positioned to tap into new fields for growth and productivity.

References: Fortune Business Insights, Statista, PWC, McKinsey, Brink


Data Driven Decisions – A book by Joshua Jahani

Data Driven Decisions – A book by Joshua Jahani

Data Driven Decisions

Data Driven Decisions: Systems Engineering to Understand Corporate Value and Intangible Assets offers an insightful exploration into using systems engineering for corporate decision-making. Jahani delves into key considerations for businesses expanding globally, touching on joint ventures, valuations, and more.

The book provides a thorough framework to assess global regions for organizational fit, and techniques to gauge your firm’s intangible asset value. 

Joshua Jahani

Joshua Jahani teaches Systems Engineering at Cornell University and owns Jahani and Associates, a firm headquartered in New York City that provides investment banking advisory, investment banking transaction, and corporate development expertise to clients from around the globe.

Data Driven Decisions

Baruch Lev, Philip Bardes Professor (Emeritus) of Accounting and Finance, New York, NY

Spotlight on Industrial IoT and Logistic Technology Investments in the GCC

Spotlight on Industrial IoT and Logistic Technology Investments in the GCC

Investors from the Gulf Cooperation Council (GCC) have invested $11 billion in the industrial Internet of Things (IoT) sector, and $16 billion in the logistics technology sector since 2020. The Middle East region has traditionally been known for oil and gas extraction and production but is now actively pursuing a reduction in its dependency on oil and gas and diversifying into new sectors. The development of manufacturing and industrial sectors is a key investment focus of many sovereign wealth funds and politically connected investors across the region. Investors in the GCC are looking into industrial IoT and logistics technology companies abroad and striving to develop these sectors within the region.


This report provides a comprehensive analysis of investment activity in the industrial IoT and logistic technology by GCC-based investors. The dataset analyzed focuses on capital deployment, transaction types, geographical distribution, and investor preferences within the industry. By analyzing the data and trends from 2020 to Q1 2023, this report reviews the dynamic landscape of industrial IoT and logistic technology, offering insights into market dynamics and growth opportunities.

Industrial IoT Between 2020 and Q1 2023: Capital Market Analysis

  • Throughout the period from 2020 to Q1 2023, approximately $11 billion was invested into industrial IoT companies by GCC investors in 71 deals. The average deal size was approximately $149 million.
  • The overall chart shows that in most quarters, four or more deals were done with two outliers in Q3 2020 and Q4 2021. The amount invested was relatively static at less than $1 billion, excluding the outliers.
  • The major deal in this time frame was in Q4 2021 in a US company, Medallia, in which Mubadala Investment Company injected $6.4 billion. 
  • Medallia is a software company. Its SaaS platform, the Medallia Experience Cloud, captures experience data from signal fields emitted by customers and employees. It utilizes AI technology to analyze structured and unstructured data from these signal fields across human, digital, and IoT interactions.
  • Of the transactions in industrial IoT, 55% were mergers and acquisitions. This could be due to markets and valuation uncertainty, making buy-side mandates more attractive. 
  • There were notable investments made by venture capital (VC) of approximately $2 billion.
  • Only 2% of the capital deployed was in early stage VCs due to uncertainty around the companies making the investments that were perceived as high risk.
  • GCC investors deployed 72% of their capital into US-based industrial IoT companies. The industrial IoT market in the US was $44 billion in 2021, with a projected market value of $66 billion in 2023, with this significant market potential attracting investments from GCC investors.
  • Of the capital deployed, 19% was in Asia. This is because it is the second-largest industrial IoT market with a market value of $23 billion in 2021.
  • The remaining 9% of the capital was deployed into Europe, the Middle East, and other regions.

Logistics Technology Between 2020 and Q1 2023 – Capital Market Analysis

  • Throughout the period of Q1 2020 to Q1 2023, approximately $16 billion was invested in logistics technology companies in 70 deals.
  • In June 2022, Abu Dhabi Investment Authority executed a buyout transaction with VTG AG, a logistics company based in Germany, for $7 billion.
  • In December 2021, Mubadala Investment and other investors transacted a private investment in GRAB, a publicly traded company for $4 billion. 
  • Of the deals 51% were in mergers and acquisitions, followed by PIPE deals, which represent 25% of the deals. 
  • PIPE deals are generally safer, especially in uncertain markets, and offer faster liquidity to investors. 
  • M&A deals were attractive during this period due to lower valuations stimulated by the slowdown in the markets.
  • Europe represents 54% of the total capital because of the significant deals in Germany, which leads in the ranking of industrial transportation companies in Europe.
  • This is followed by Asia, representing 31%. Asia’s e-commerce logistics market is anticipated to account for more than 57% of total market growth between 2020 and 2025. 
  • Singapore is the world’s busiest trans-shipment hub, which makes it an attractive market to GCC investors interested in logistics technology companies.
The Middle East region is expected to pursue sector diversification through investments within the region and abroad. The manufacturing industry is expected to grow steadily in the coming years as the government initiates and encourages industrial growth and reinforces reduced dependency on the oil and gas sector. It is expected that GCC investors will play an important role in the capital markets after the economic slowdown.

References: Fortune Business Insights, Statista, PWC, McKinsey, Brink


USA Health Care Technology in 2022

USA Health Care Technology in 2022

In 2022, $110 billion was invested into health care technology. The health care sector in the USA experienced growth in capital market activities due to the impact of the COVID-19 pandemic, and approximately 45% of the transactions were in M&A deals. Health tech innovators played a vital role during the industry’s response to the pandemic and in the post pandemic recovery.


Investors have been consistently deploying capital into companies thinking ahead and planning for the future of the health care sector, positioning health care tech companies well for success.

USA Health Care Technology – Market Breakdown

  • Health care technology means any technology, including medical devices, IT systems, algorithms, artificial intelligence (AI), cloud, and blockchain, that is designed to support health care organizations and improve medical outcomes.
  • The benefits of technology in health care include increasing speed, accuracy, and accessibility in improving patient experience and care and real-time information exchange.
  • Health care technology is used in various forms, including, but not limited to, disease diagnosis and treatment, medical imaging, health care operations, and clinical research.

USA Health Care Technology in 2022 – Capital Market Analysis

  • In 2022 Q1, around $31 billion was invested into health care technology companies in the USA, accounting for 28% of total investments.
  • This figure dropped by 23% to $24 billion in Q2. This may be attributed to the invasion of Ukraine and the global geopolitical tension.
  • The highest capital investment per deal was seen in Q4, when the market started to pick up again, with an average of $33 million per deal.
  • The total amount invested in USA-based health care technology companies by Asian and Middle Eastern investors in 2022 was$10 billion over 137 transactions.
  • In 2022 Q4, $4 billion was invested, accounting for 40% of total investments in 33 transactions, averaging $121 million in each transaction. This is linked to the relaxation of COVID-19 regulations, which helped boost optimism.
  • The increase in capital investments by Asian investors was led by China as they began to relax COVID-19 restrictions.
  • The USA contributed the highest share (57%) of capital raised by region.
  • Europe was significantly impacted by the Russia-Ukraine war, which caused high inflation rates throughout the year. However, in Q4 the Eurozone recovered and outperformed other regions. Europe accounted for 19% market share.
  • East Asia only accounted for 17% of the total capital raised in 2022 due to ongoing COVID-19 restrictions.
  • China accounted for 52% of investments made by Asian and Middle Eastern investors into USA-based health care technology companies in 2022, due to the COVID-19 pandemic’s impact on the public’s overall mental and physical wellbeing.
  • China is followed by Hong Kong, which accounted for 17% of total investments in 2022 after achieving strong growth in Q4.
  • South Korea, Singapore, UAE, and India accounted for a combined 24%.

USA Health Care Technology in 2022 – Deal Type Analysis

  • In 2022, 45% of the transactions in health care technology were mergers and acquisitions. This could be due to markets and valuation uncertainty, making buy-side mandates more attractive.
  • There were notable investments made by venture capital (VC) and private equity (PE) firms despite market conditions, with around $13 billion invested by VCs and $24 billion by PEs.
  • Noticeably, only 4% of the capital deployed was in IPOs, confirming the low valuations with a decreased appetite for companies to go public.
  • In 2022, 60% of the transactions in health care technology made by Asian and Middle Eastern investors were mergers and acquisitions, which was lower than in previous years due to high inflation rates in the USA.
  • There were notable investments made by VCs and PEs despite market conditions that accounted for 9% and 28%, respectively.
  • Noticeably, only 2% of the capital deployed was in PIPE deals.
In 2022, health care technology companies witnessed growth opportunities, evidenced by the amount of capital deployed. Economic uncertainty and global geopolitical factors impacted deal types and investments. Middle Eastern and Asian investors played a vital role in the transactions, especially after the pandemic created an economic, social, and health impact, all of which highlight the importance of further developing the health tech sector.

Sources: Pitchbook Data, Inc.


Generative AI

Generative AI

Companies within the Generative Artificial Intelligence (AI) sector have raised over $15 billion since 2022. Many companies, including OpenAI, have attracted the attention of Silicon Valley and the financial media, bringing the sector to the forefront of venture conversations.


Venture capital transactions account for 45% of the capital deployed into announced Generative AI capital market transactions and 77% of all transactions conducted in the sector. The venture capital transactions showcase the momentum and growth potential of the industry.

Introduction to Artificial Intelligence Research and Analytics

AI language models utilize AI in complex linguistic structures that allow human-like interactions. The technology is set to disrupt traditional search engines by providing detailed answers to queries rather than just providing links.

The latest generation of AI language models has a wide variety of applications, including, by not limited to, complex coding, drafting legal contracts, and even creating music and art.

  • Since 2020, $15 billion has been invested in Generative AI companies across 1,164 transactions. The average deal size of approximately $13 million indicates the sector’s early-stage nature and growth potential.
  • Anthropic, an AI safety and research company, conducted the largest transaction in the period, closing closed $580 million Series B round in April 2022 at a pre-money valuation of $3.42 billion. A consortium of angel investors and Alphabet conducted the deal.
  • OpenAI conducted a private secondary transaction with Fenrir Asset Management of an undisclosed amount on January 13, 2023. The company’s most significant capital raised to date of $1 billion was completed in July 2019, with Microsoft being the sole investor.
  • Approximately $7 billion has been invested into early-stage AI research and analytics companies through venture capital transactions. The capital was deployed over 871 deals with a median size of $8 million.
  • Venture capital transactions, including grants, seed and angel funding, and accelerator programs, contributed 45% of the capital deployed into announced Generative AI capital market deals. These transactions accounted for 77% of the deal count conducted in the sector over the same period.
  • POs and PIPEs accounted for a smaller portion of market activity due to the early stage of the technology and companies.
  • USA-based Generative AI companies raised $9.7 billion through 608 transactions, with a median deal size of approximately $16 million between 2020 and 2022. USA-based companies raised 64% of the capital deployed in the sector, accounting for 52% of the deal count over the same period.
  • Companies from Israel, China, and the United Kingdom have also conducted significant capital market transactions raising $1.43 billion, $1.22 billion, and $1.07 billion, respectively.
Generative AI is set to disrupt many industries, including search engines, client services, and IT services. Early-stage companies are well-funded in the sector, particularly in the USA, by some of the largest technology companies, such as Google and Microsoft. Investors and founders need to be aware of the opportunities and threats that AI research and analytics technologies possess.

Sources: Pitchbook Data, Inc.


The USA Technology Sector in 2022: Market Overview

The USA Technology Sector in 2022: Market Overview

Investors in emerging markets are performing an increasingly important function in funding early-staged USA-based technology companies. Capital invested by Middle Eastern and Southeast Asian investors in the sector increased by 85% between 2021 and 2022, with venture capital transactions responsible for 57% of all investments in the industry in 2022.

Economic growth has continued in emerging markets such as the Middle East and Southeast Asia, prompting early-stage technology companies to be mindful of international fundraising opportunities.

The Decline of the USA Technology Market in 2022

Publicly listed technology stock in the USA fell by 30% in 2022 (Forbes.com). Economic uncertainty, inflation, and increased interest rates to reduce excess liquidity within the market were driving factors in the decline. The decrease in investor appetite for technology stocks has led to a sharp reduction in valuations, and decreased access to funding from USA markets.

  • The Dow Jones U.S. Technology Index was down by over 35% in 2022, in contrast to 2021, which was a landmark year for the index, setting a record high of 4,866.69 on December 27, 2021 (SPGlobal.com).
  • Other technology-focused indexes illustrated similar diminishing returns, with the Nasdaq Composite falling 33% in 2022 (Forbes.com), indicating a reduced appetite for technology stocks.
  • Valuation negotiations between founders and investors have altered drastically. Valuation based on projected revenue multiples is no longer the norm, and early-stage investors increasingly utilize traditional price-to-earnings ratios (TechCrunch.com).

Growth of Emerging Markets in 2022

  • Increasing interest rates and escalating fuel prices caused slow growth in developed markets in 2022. The USA and UK experienced GDP (Y-o-Y Q4) growth rates of less less than 1% compared to 2021 Q4, with similarly slow growth occurring across the European Union (tradingeconomics.com).
  • Conversely, the increase in fuel prices, caused in part by the war in Ukraine, aided the GDP growth of Middle Eastern states such as Saudi Arabia (9% Y-o-Y Q4 GDP), the UAE (4% Y-o-Y Q4 GDP), and Qatar (4% Y-o-Y Q4 GDP). Post covid reopening economies, large infrastructure projects, and the tourism sectors’ continued development have also contributed to the region’s growth.
  • Despite challenging global economic conditions, Southeast Asia remains one of the world’s fastest-growing emerging regions. Malaysia, Indonesia, and Singapore all grew GDP by over 4% in Y-o-Y Q4 2022, driven by reopening travel routes and increased trade and commerce.
  • $400 billion was invested by Middle Eastern and Southeast Asian investors into USA-based technology between 2012 and 2022, with 60% occurring between 2020 and 2022 and $155 billion deployed in 2022 alone.
  • The deal count conducted by Middle Eastern and Southeast Asian investors into USA-based technology companies increased from under 150 transactions in 2012 to over 1,000 in 2021.
  • The sector’s deal count decreased by 24% between 2021 and 2022, yet capital invested in the industry increased by 85% during the same period, showing a continued appetite to invest in USA-based technology companies and a leaning towards more significant deals.
  • Venture capital transactions accounted for 57% of the deal count by Middle Eastern and Southeast Asian investors into USA-based technology companies in 2022.
  • Despite challenging economic conditions, the focus on early-stage companies further highlights the appetite to invest in USA-based technology companies, showing the strength of the US technology industry and the trust that international investors have in the US financial markets.
Early-stage technology companies from the USA should consider opportunities to raise funds internationally. Uncertain economic conditions in developed economies have reduced capital market activity, particularly for early-stage transactions. Middle Eastern and Southeast Asian investors have an increased appetite for USA-based tech companies, evidenced by the growing amount of capital deployed.

Sources: Pitchbook Data, Inc.


Renewable Energy: Southeast Asia

Renewable Energy: Southeast Asia

Renewable energy in Southeast Asia is a growing sector with a market size of $205 billion and capital investments totaling $11 billion between 2020 and 2022. The region is committed to renewable energy and integrating sustainable practices into legacy industries.

This report provides an overview of the renewable energy market in the Southeast Asia region, including a market breakdown, capital market analysis, and transaction analysis.

Renewable Energy in Southeast Asia: Market Breakdown

  • Renewable energy in Southeast Asia is a $205 billion industry with a forecasted compound annual growth rate (CAGR) of 7% between 2022 and 2027.
  • Southeast Asia has invested $2.7 billion into the renewable energy sector, with a deal count of 60 in 2022 alone, highlighting the rapid development of renewable energy in the region.

Renewable Energy in Southeast Asia: Capital Market Analysis

  • Renewable energy companies in Southeast Asia have received significant capital, totaling $10.69 billion since 2020 across 236 deals with an average deal size of $45 million.
  • Capital deployed grew significantly through 2021 but slowed considerably in 2022 due to a combination of a lower deal count and a smaller average deal size.
  • Mergers and acquisitions had the most significant capital investment in the renewable energy sector of about 46%, or $4.9 billion, since 2020, suggesting that considerable market consolidation is occurring within the industry.
  • Capital investments of 24%, or about $2.6 billion, in other deal types, such as secondary transactions in the sector, further highlight the high level of consolidation in the market.
  • Capital deployed in private equity transactions, $1.5 billion or 14% of all capital deployed, and venture capital transactions at 5%, or $535 million, showcases the fundraising opportunities for early-stage renewable energy companies and the growth potential of the sector.
  • Singapore has the most significant capital investment in renewable energy companies, totaling 52%, or $6 billion, since 2020, signifying their commitment toward sustainability and net zero carbon emissions.
  • The Philippines, as an emerging nation, has contributed 30%, or $3 billion, in the sector.
  • Emerging nations, such as Malaysia, Thailand, Indonesia, and Laos, have additionally conducted notable investments over the same period. The investment highlights the desire for growth in the renewable energy sector from all countries in the region.

The Company

Sun Energy provides its clients with environmentally friendly solar panels. Moreover, the corporation supports its clients by offering financial, market development, and rental services for solar panels with the intent to change the world through renewable energy positively.

Most Recent Financing Status

  • Sun Energy raised $25 million of Series A venture funding in a deal on November 22, 2021.
  • The round was led by PT Delta Dunia Makmur and TBS Energy Utama.
  • The funding will enable the company to develop more solar PV projects, cement its market position in Indonesia, and bolster further growth in the Asia-Pacific region.
Southeast Asia’s renewable energy sector is filled with firms that work together with the objective of sustainability and creating a positive change for a better world free of climate change. Many countries in Southeast Asia, including emerging nations, have proven to be committed to sustainability through investments placed into renewable energy, demonstrating their desire for this sector to grow.

Sources: Pitchbook Data, Inc.


Tony Hayward appointed as a Senior Director of Client Service and Operations

Tony Hayward appointed as a Senior Director of Client Service and Operations at Jahani and Associates

Jahani and Associates (J&A), a professional services firm focused exclusively on growth and  based in New York City, announced the appointment of Tony Hayward as a Senior Director of Client Service and Operations, effective January 4, 2023. Mr. Hayward is based in London, UK.

Mr. Hayward previously served as the President and Area Director (North Asia Area) of British American Tobacco (BAT). He built an impressive international finance career over 20 years with the organization, serving in various roles in the UK, Egypt, the United Arab Emirates, Romania, Poland, and South Korea during his tenure. He later went on to be the Executive Vice President and CFO of Reynolds American Inc., a subsidiary of British American Tobacco, in North Carolina. There, he oversaw the integration of Reynolds American into BAT while leading a team of 165 full-time employees with a $6 billion operating budget. As part of the Reynolds America senior leadership team, he helped drive significant growth in all metrics.

Mr. Hayward will support J&A’s strategy to significantly grow its advisory and trading business, and will oversee some of the firm’s most valuable client relationships. His deep experience leading international finance teams, his record of outstanding delivery in complex multi-billion dollar markets, and his global perspective make him a valuable addition to the J&A team as it grows its business throughout North America, the Middle East, Latin America, Northern Africa, and Southeast Asia.


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