Newsletters: 10/03/21

The Dunkable, Twistable Cookie That Is a Perfect Puzzle Clue

The Daily Beast Crossword is where power, pop culture, and politics intersect—quite literally.

Designed to be more challenging throughout the week, you can test your knowledge with five puzzles each week: Monday, Tuesday, Wednesday, Thursday and Sunday.

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Get in the Game

With Matt Gaffney

Today we have very common crossword entry OREOS at 31-Across, and instead of saying "Oh great, now I have to think up yet another clue for OREOS" when I wrote the puzzle, I thought instead: "This is exciting—I get to catch up on the @Oreo Twitter feed!"

It did not disappoint, since the Oreo Twitter feed is hilarious. There's a new variety called BOO! that's out for Halloween, which is funny since it could also be read as someone booing this new variety since they don't like it. I bet the Oreo Twitter writer noticed that. They're that good. I admit that I want to party with the Oreo Twitter writer.

Do you know of any snack foods with a better Twitter feed than Oreo's? No you don't, but if you in fact do then tweet it to #beastxword and I will see what's what.

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An embarrassment of endowment riches

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PitchBook

The Weekend Pitch

October 3, 2021

Presented by Deloitte

The University of North Carolina's endowment reported a 142% return from its venture capital holdings.
( Ryan Herron/Getty Images)

Some of America's largest university endowments unveiled eye-popping annual gains in the past week. Duke University reported a 56% return for the fiscal year ended June 30. Washington University in St. Louis generated a 65% gain.

These top-performing endowments can thank alternative assets—in particular, venture capital—for the banner year, which is said to be the best since 1986. But that short-term success could prove to be a double-edged sword.

I'm James Thorne, and this is the Weekend Pitch. You can reach me at james.thorne@pitchbook.com or follow me on Twitter @jamescthorne.

University endowments face an embarrassment of riches

Endowments performed well across the board, with the median return coming in at 27% for the period, according to Wilshire Trust Universe Comparison Service. Those funds managing more than $500 million did much better, notching median gains of 34%, on the back of private investments.

The VC holdings of the University of North Carolina's nearly $10 billion endowment returned 142% for the fiscal year, Pensions & Investments reported. The endowment gained 42.3% overall, and its private equity holdings came in at 44%.

On one hand, news of this bonanza bolsters the case for the endowment model that prioritizes alternative investments. It also provides a fitting coda to the legacy of David Swensen, the highly influential former Yale endowment chief who died earlier this year.

But the returns may become a headache for asset managers of endowments: The growth could be more mirage than oasis, and it provides ammunition to the endowment system's varied critics.

A message from Deloitte

Breaking down the business software boom

As unprecedented demand for revamps of tech stacks and investment in digitization continues, business software companies have enjoyed a massive influx of private capital.

However, with rapid growth comes significant challenges. The latest edition in Deloitte's Road to Next series breaks down how companies are grappling with these changes, including:

Key findings from analysis of investment trends
Recent regulatory changes with significant tax implications
Which tech stack segments are enjoying the most growth, and attendant hybrid workflow considerations

Read it now

Quote/Unquote

(z_wei/Getty Images)

"Venture debt usually takes between six to eight weeks to get set up. ... It involves multiple processes of pitching the company, sharing data, and then sharing more data, and then going through another committee. It feels a lot like raising a round of equity, but it is even more intensive for funding. It's a process that nobody likes."

—Miguel Fernandez, co-founder and CEO of Capchase, which helps companies finance growth based on future revenue payments.

On this week's episode of "In Visible Capital," Fernandez and QED Investors partner Matt Burton discuss how non-dilutive financing options may spur competition among VCs.

Datapoints

(cako74/Getty Images)

Warby Parker made its NYSE debut on Wednesday, more than a decade after its founding. The eyewear maker proved to be a highly influential brand whose direct-to-consumer business model was soon applied to staple goods from mattresses to sneakers.

The company ended its first day of trading with a $6.8 billion market cap on a fully diluted basis—more than double its last private valuation in 2020.

We took a deep dive into the company’s road to Wall Street, its rise in valuation and some key financial measures. Check out our visual timeline.

Deal Flow

Q1 is proving to be an outlier quarter for SPAC IPOs. The sprint has now slowed to a moderate pace, with 106 offerings raising a combined $20.9 billion in Q2 2021, according to PitchBook data.

Still, our analysts argue that the inefficiency of the pricing mechanism and the high cost of the traditional IPO process create a strong enough push to sustain the need for SPACs in the current ecosystem.

However, investors' appetite for SPAC deals may still be dampened by existential threats, such as lackluster aftermarket performance, litigation and regulatory headwinds. In fact, a range of factors can intensify the downward pressure on new SPAC IPO issuance.

Did you know ...

(steved_np3/Getty Images)

… That the cumulative number of unicorns across Europe has roughly tripled since the start of 2018? The European VC ecosystem saw the aggregate value of unicorns skyrocket to over €253 billion through Q2 2021, more than double the €107 billion recorded in all of last year, according to PitchBook data.

From record-low interest rates to rising participation by nontraditional investors, read about the factors driving valuation growth among Europe's venture-backed unicorns in our recent analyst note.