As we journey through the intricate landscapes of private equity and venture capital, one cannot overlook the heightened challenges faced by professionals in these sectorsThe dilemmas extend not just from investment rounds to post-investment management, but permeate deeply into the very fabric of everyday operations.

The year 2024 has dawned, bringing with it a barrage of nonsensical headlines from the primary marketAs we approach the end of the year, a particularly 'absurd' incident has emerged - the fact that Public Relations (PR) teams are now expected to bear the burden of revenue generation!

Recently, a colleague from the PR realm confided in me, desperately seeking advice on ‘how to aid our portfolio companies in PR efforts.’ Her predicament stemmed from a recent task assigned by her partners, compelling her team to manage PR for portfolio companies, and crucially, to do so for a fee.

This unconventional directive from her partners suggests a stark shift in expectations

It reflects a situation where not only must PR departments justify their existence, but they are also being pushed to generate income from companies in which they hold sharesIn other words, firms are now rummaging backward to seek financial returns from the startups they invested in.

Turning PR into a revenue stream

The private equity market has witnessed severe turbulence over the last couple of yearsGeneral partners (GPs) face comprehensive challenges concerning fundraising and exits that they have never encountered beforeThe environment is harsh, making the lives of investors just as difficultLayoffs, shrinking salaries, and a dearth of viable projects have turned what was once a thriving industry into an unrecognizable landscape plagued by an unprecedented ‘winter’.

Since last year, a plethora of professionals have found themselves either voluntarily or involuntarily stepping away from their roles

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As we moved into this year, those remaining in the field are confronted with increasing difficultiesOn one side, due to the socio-economic climate, firms are slashing costs and making fewer employees shoulder more responsibilitiesOn the flip side, underfunded institutions have adopted stringent measures to survive, pressuring ‘departments responsible for costs to begin generating income.’

A notable partner in one firm has gone so far as to lead the charge by advocating for their PR team to create new revenue-generating services for the firm.

Yet another nonsensical chapter in the primary market unfolds – “PR must find ways to generate income.”

My PR friend revealed that she lost two colleagues from her firm just this month, and as a result, she has found herself juggling multiple roles

Little did she know that the more outrageous demands were still to come.

She continued, explaining how she had a conversation with a partner last week who subtly indicated it was her duty to leverage her media relationships to promote the portfolio companies, with the caveat that these companies would need to pay for the promotional services.

This sort of request was astonishing, to say the leastFaced with such a directive, PR professionals are left with little choice but to scramble for solutions, reaching out to peers for advice on how to maneuver through this maze.

This year, amidst the tumultuous market conditions, it is not only the firms that are suffering; major financial and venture media outlets are equally caught in a bind, grappling with their own revenue pressures that limit their available resources.

Historically, PR professionals would cultivate strong relationships with venture reporters who would occasionally assist them by weaving in stories about firms or portfolio companies with relevant narrative arcs

However, as current conditions shift, this collaboration is becoming a vestige of the past, and it appears increasingly untenable.

In the face of such adversity, PR professionals are struggling just to meet the standard expectations set for their roles, let alone take on the additional burden of charging portfolio companies for PR services.

It is no surprise that many PR practitioners find themselves in a state of exasperation as they lament, “It's becoming increasingly difficult to work in this environmentFrustrations are piling up day by day.”

Investors are stepping back

Indeed, amidst the evolving landscape, industry participants are feeling the strain; anxiety has woven itself through the fabric of their work lives from early in the year to now

Looking ahead to the industry’s trajectory, many worry that further downturns could be looming.

Responding to this pressure, a considerable number of professionals have taken the bold step of leaving their positions, craving a moment of respite.

Since last year, a wave of individuals facing layoffs has felt a mix of confusion and anxietyThose remaining in the field have adopted a multi-hat approach, executing several roles simultaneouslyThis year, that struggle persists, now manifesting prominently in the form of voluntary resignations.

In just a month, I have witnessed three friends exit their rolesWhen inquiring about their future plans, the common response has been to take a break.

Through these discussions, I’ve gleaned that most who have resigned have pointed to overwhelming job-related stress, the insufferable grind of endless competition, and a pervasive sense of fatigue stemming from monotonous struggles where hope is but an elusive specter

They express sentiments of being utterly worn out, prompting them to bravely bid adieu to their once ‘glamorous’ careers.

Ultimately, the quest for financial stability looms large, as firms grapple with dwindling resources, decreasing compensation, and escalating complexities in tasks assigned.

One investment post-placement friend aired their grievances, stating, “It feels like I’m constantly stuck in a catch-22 between unreasonable demands from bosses and outlandish expectations from the companies we’ve funded.”

Today’s investment environment is rife with a prevailing sentiment: the idea of ‘wanting to exit the stage’ frequently plays on the minds of many investorsYet fueled by financial necessity, a greater number of individuals choose to endure, particularly in light of dire stories of prolonged unemployment experienced by their peers, compounded by the challenge of finding suitable new opportunities.

Even as uncertainty looms large, some assertively opt to depart from their roles

Reflecting on these circumstances, those who were among the ranks of abandoned job seekers last year appear fortunate; they managed to secure at least some compensation, while this year, those stepping away voluntarily emerge with remarkable courage, stemming surely from significant mental fatigue.

In a different era of robust market conditions, PR departments enjoyed the luxury of being seen as investment areas by companiesHowever, as we now traverse a challenging economic landscape, GPs are shifting their focus toward outcome-oriented approaches, which often translates into slashed budgets and increasingly challenging demandsThe mantra of wanting more whilst offering less has become an alarming norm.

Although budgets may be non-existent, maintaining brand influence remains criticalYet, some PR professionals are shouldered with the daunting task of generating measurable engagement metrics—compounding already complex challenges associated with brand narratives.

This upheaval, compounded by significant stalls in the fundraising, investing, and exit processes within the primary market, signifies that the tribulations extend beyond just PR personnel

Investor relations teams, investors, and all industry players share in the plight, leading many to question whether this era remains a fit for them.

Since the beginning of this year, engagements in the primary market have continued to dwindle, with both the number of fundraising projects and the total funds raised seeing notable decreasesReflecting the pressures both macroeconomic and market-wide, the state of fund accessibility remains persistently bleakReports from FOFWEEKLY highlight that in the third quarter, domestic private equity and venture capital investments have dropped by 12.02% in deal count and 11.11% in total investment amounts.

As the entire marketplace finds itself ensnared in a wintery trap, showing no signs of thaw, prevailing sentiment regarding the current trajectory remains bleak, with many preparing to exit.

Recently, Wang Chun Jie, a managing director at Shanyu Capital, noted, “The overall market sentiment feels worse than last year, with funds from market entities scarce

Although the rhythm of state-managed investments picked up in the latter part of the year to meet KPIs, the decision-making processes remain overwhelmingly protracted.”

This tempest isn’t limited to the GPs either— many funds of common types are feeling the strain.

Wang Chun Jie predicts, “The GP landscape will likely see continued contractions, with estimates suggesting that only 2,000 to 3,000 firms will still be active enough to engage in 3-5 projects annuallyInstitutions with state-owned backgrounds are becoming increasingly prevalent, and those remaining market-driven entities that can weather this cycle will emerge as the survivors of the industry.”

In Conclusion

Pessimistic outlooks seem to have monopolized the current primary market dialogue, with professionals exhibiting varying degrees of confusion and anxiety.

However, amidst the darkness of the financial winter lies opportunities for growth and transformation