Wonder

Research Outline

Prepared for Kyle S. | Delivered February 29, 2020

US Investment Managers by Size

Goals

Client wanted the following:

of private equity firms in the US under $500mm.
of Family Offices (private family funds) US under $500mm.
of hedge funds in the US under $1b
of venture capital funds in the US under $500mm
of companies in the US with revenues >$100mm

Early Findings

Of private equity firms in the US under $500mm.

 In Q1-Q4 2018, there were an average of 11,869 PE firms in the US according to the SEC. According to Pitchbook, in 2018, roughly 50% (approximately 5,934) of firms had AUM of less than $500mm. 
In 2018, analysts noted that average fund size was ballooning, writing, "Diving deeper, the average US PE middle-market fund was $669 million in 2017. And in 1H, that number jumped 27% to $847 million. At the current pace, that would easily surpass the record set in 2009, when the average middle-market fund was $786 million." 
This turned out to be the case. Looking at the end of Q2 2019, the number of PE funds according to the SEC was 12,957. According to Pitchbook, approximately 30% of funds (3,887) had AUM of less than $500mm. 

Additional Sources:

https://www.sec.gov/divisions/investment/private-funds-statistics/private-funds-statistics-2018-q4.pdf


Of Family Offices (private family funds) US under $500mm.

Given the vague nature of the term 'Family Office', coming up with an exact count is more difficult.  According to the Wall Street Journal, the threshold for single family offices is generally considered to be $100 million due to the costs and challenges of running such an entity. In the United States alone, there are approximately 20,407 individuals with more than $100 million in assets, as reported in the Credit Suisse 2018 Global Wealth Report. Of these individuals, 1,144 have over $500 million in assets. According to Family Office Exchange, a network of family offices and their managers, roughly 50% of high net worth individuals with assets between $100 and $500 million have a family office, resulting in 9,631 private family funds with assets under $500 million.

Keep in mind that this is an estimate and other sources disagree with this number. Family Wealth Report estimated that there were about 6,000 family offices total while Campden Wealth puts the figure at 7,300. That said, Family Office Exchange holds a bienniel survey of family offices and boasts that they are the "The world’s largest peer-to-peer network for ultra-wealthy families and their family offices and the leading authority on matters related to legacy wealth management."

Additional Sources:
https://www.reuters.com/article/us-wealth-family/burgeoning-family-offices-manage-59-trillion-campden-idUSKCN1UB15A 


Of hedge funds in the US under $1b
First half of 2019, there were an average of 9,438 hedge funds in the US. (9,389 in Q1, 9,486 in Q2, which is as far as the SEC data goes). According to Eureka Hedge, a hedge fund database aggregator, there are 1,495 hedge funds with AUM over $1b. Leaving 7,943 with less than $1b of capital. 

Paid resources that will have more data:
https://www.preqin.com/insights/global-alternatives-reports/2020-preqin-global-hedge-fund-report/26653
https://www.hedgefundresearch.com/reports/hfr-global-hedge-fund-industry-report



Of venture capital funds in the US under $500mm:
Is this asking the number of VC firms with AUM under $500mm or the number of current funds in the US that are less than $500mm. So for instance, if a VC firm is on fund VII, and has 7 funds of $100 million (i.e. $700mm AUM) do you want that to be counted as 7 funds or does this firm not count because it has over $500mm in AUM.  Either way, both are murky. If it's the former, it's hard to determine when a fund is 'closed' i.e. is no longer listed. If you want firms with AUM less than $500mm, knowing AUM would require access to a VC firm's internal valuation marks for all of its portfolio companies plus its remaining dry powder from previously raised fund(s).

Keep that complexity in mind while looking through these figures. According to The National Venture Capital Association (NVCA), in 2018, firms by AUM had the following distribution:
$0-$10M: 223
$10-$25M: 174
$25-$50M: 162
$50-$100M: 185
$100-$250M: 284
$250-$500M: 126
$500 - $1,000M: 60
$1B+: 86
total: 1,154 firms with AUM less than $500mm
 On a fund level, according to Crunchbase data, roughly 66 percent of the capital raised by U.S. venture investors went into funds raising $500 million or more. Additionally, 88% of new funds raised in 2018 were less than $500 million.  
Additional Sources: 
https://nvca.org/pressreleases/latest-nvca-yearbook-highlights-record-levels-reached-u-s-venture-ecosystem-2018/

Of companies in the US with revenues >$100mm
 According to NAICS, as of November 2019, there were 16,290,442 businesses in the US. Of these companies, 26,221 had revenues over $100m. See below for a more specific breakdown.
 $100 - $500M: 19347 
 $500 - $1,000M: 3,035 
 $1b+: 3,8389 
This number is in line with the number reported by Forbes in 2017: "[there are] 25,000 companies with revenues between $100 million and $500 million (the middle market) and only a few thousand companies with revenues above $500 million (the upper middle market)."
Additional Sources:

https://chiefexecutive.net/ma-investors-moving-lower-middle-market/