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In today's Daily Pitch, you'll find: - Our newest Emerging Tech Research update finds that pure-play IoT startups are struggling despite huge growth in the sector.
- VCs are making record investments in quantum computing—even though the finish line may be years away.
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| IoT market grows, but pure-play startups stumble | | The growing market for internet-of-things technology is estimated to reach $414.9 billion in spending this year, presenting a plump opportunity for VC-backed startups despite significant barriers to entry.
Our IoT Emerging Tech Research VC update for H1 2021 identifies potent segments for startups, including cybersecurity, edge AI and predictive maintenance. Key insights include: - VC-backed exit value has already more than doubled year-over-year to $30.4 billion, driven by IPOs for IoT-adjacent security companies. But the stock of IoT software company C3.ai has plunged following a record-setting IPO late last year.
- Funding for pure-play IoT startups has softened, suggesting that the market is better addressed as a secondary use case for software products than as part of a primary value proposition.
- Device-level IoT security has emerged as a hot area, with two startup acquisitions by security incumbents in the space thus far in 2021.
| | | | | | | | | | VCs bet on the technologically unproven field of quantum computing | |  | | (johnason/Getty Images) | | | While a fully functional quantum machine, the kind that consistently performs better than a traditional computer, is still a long way off, venture capitalist interest in the nascent technology is at an all-time high. - Quantum computers hold the potential to one day generate tremendous value by facilitating breakthroughs in anything that requires complex calculations, from drug discovery to electric vehicle battery manufacturing.
- Tech giants including Google and IBM, as well as startups like Rigetti Computing, IonQ and PsiQuantum, are all competing to make the most powerful and reliable quantum machine.
- Although investors are betting that some real-life applications will emerge within the next five years, most quantum computer hardware developers will still need significant capital infusions.
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| The digitization of everything | | As digitization spreads throughout the vast ecosystem of private and public companies, it is taking many different forms. In the latest edition of the Road to Next series, Deloitte examines how expansion-stage business software companies are adapting to the sudden surge in demand over the past 18 months, especially with regard to attendant challenges. Key findings include: - With a record sum of investment in the year already, business software companies have more resources than ever, but must decide how best to allocate that capital to sustain rapid growth.
- As they expand, business software companies increasingly face challenges related to evolving digital service taxes—how can they best prepare?
- An analysis of how hybrid work models will affect business operations and financial implications.
Read it now | | | | | | | |
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| | Earlier this year, Greensill Capital collapsed into insolvency. Can the UK lender's demise be attributed to one simple problem? [Bloomberg]
As the European airline industry looks beyond the pandemic, many companies are jostling for position in what could be a major reshaping of the sector. [Financial Times]
Do physical assets like farmland and infrastructure offer investors a refuge from inflation, or could they become victims of their own success? [The Economist] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 27 Deals | 105 People | 42 Companies | | | | | | |
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| 2014 Vintage Global VC Funds-of-Funds | | | | | | |
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| Whatnot seeks $1.5B valuation | | | Social media shopping startup Whatnot plans to raise new funding at a $1.5 billion valuation from Andreessen Horowitz and others, The Information reported. The California company graduated from Y Combinator last year and has raised two rounds this year, most recently at a $507 million valuation in May, according to PitchBook data. | | | | | | | | | Amagi has raised over $100 million from investors including Accel and Avataar Venture Partners. The New York-based company offers cloud-based broadcast and advertising tools to content owners and streaming platforms. | | | | | | | | | | | | |
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| PE-backed Monte Nido buys Walden Behavioral Care | | | | | | | | | Produce distributor acquired by PE-backed GS Foods Group | | | Highview Capital- and A&M Capital-backed food distributor GS Foods Group has acquired C&C Produce, a distributor of produce products based in Kansas City, Mo. Established in 1992, C&C operates the largest produce warehouse in the Midwest, serving over 4,000 customer locations across six states. | | | | | |
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| EG Group considering $15B sale | | | TDR Capital-backed gas station giant EG Group is exploring a sale that could value the company at around $15 billion, Bloomberg reported. UK-based EG Group's empire includes gas stations, fast food stops, coffee shops and other outlets. | | | | | | | | Permira weighing $1.2B sale of German chemical maker | | | Permira is reportedly considering a sale of German specialty chemicals maker CABB in a deal that is expected to value the group at more than €1 billion (about $1.2 billion), Reuters reported. CABB also makes products used in foods, pharmaceuticals and pesticides. Permira originally backed CABB in 2014. | | | | | |
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| Spark to raise $2B across two funds | | | Spark Capital is seeking to raise $2 billion across two funds, The Wall Street Journal reported. The backer of Plaid and Discord is targeting $650 million for its next main fund and $1.35 billion for the firm's fourth growth vehicle. | | | | | | | | | | Falfurrias closes fifth fund at $850M | | | Charlotte-based Falfurrias Capital Partners has closed its fifth namesake fund at $850 million. The proceeds will be invested in lower middle-market businesses. The private equity firm closed its fourth fund at $500 million in 2019. | | | | | |
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| Harvard to ditch fossil fuel funds | | | Harvard's $41.9 billion endowment is phasing out all investments in private equity funds with fossil fuel holdings as part of a broader climate-related overhaul to its investment strategy. The LP is also building up a portfolio of fund investments that support the green economy, including MIT's VC firm The Engine. | | | | | |
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