The wild data on VC valuations

Also: Funding booms in foodtech and healthtech; Sleep tech and human movement tracking gain attention; Our past research on private market regulation.

Read online | Don't want to receive these emails? Manage your subscription. PitchBook Log in The Research Pitch February 12, 2022 Regulation was a big theme of the week as the SEC recently proposed more rules to make private markets less private. That prompted us to dig up some research from our library that dives into the details of how these markets operate and who has access to them: The Fine Print: Unraveling Fund Fees and Terms Private Market Access Points for the Masses US VC valuations soared in 2021, but will they hold up when it's time to exit? Historically elevated VC returns over the last few years drove the amount of capital available to US venture-backed companies to new heights in 2021. Both VC fundraising and nontraditional involvement set new records as institutional capital continued to seek growth assets in the market. This massive supply of capital led to unprecedented valuation growth across all stages of the venture market, with many stages recording a YoY doubling in median valuations. That expansion is all the more impressive given the already elevated valuations from the last five years of steady increases.   2021 late-stage valuation step-ups: 2.1x median, 2.9x average. This phenomenon was most pronounced in late-stage deals, where the convergence of nontraditional investors and mega-fund capital resulted in enormous valuation growth for these most mature startups. Looking forward, this segment of the market is closest to an exit event, which brings in some uncertainty on the sustainability of the current valuation levels. As valuation multiples revert back toward the mean in public markets, the private companies nearing an exit may receive some pushback on valuations from corporate acquirers or public market investors. We recorded historically high valuation step-ups at exit in 2021, but if this downward pressure on valuation multiples remains, we're likely to see some compression in those step-ups for 2022 exits. While down rounds have been extremely rare over the last few years, we'll be closely monitoring both down rounds and exits over the next few quarters to see how much of the revaluation of public equities will flow through into the VC dealmaking environment. For more analysis and 23 pages of valuations data, click to download our free 2021 Annual US VC Valuations Report. Feel free to reach out with any questions or feedback, or if you would like to discuss the research.   Best, Cameron Stanfill, CFA Lead Analyst, Venture Capital Share:            Thematic Research Trend Update: Human Movement Tracking and Sleep Tech A growing cohort of fitness- and sleep-focused startups are leveraging human movement tracking technology and looking to enhance sleep quality in real time. After attending recent industry events, our healthtech analyst has compiled a summary of trends driving VC investment in these emerging areas: Increased use of AI is supporting human movement tracking devices, primarily for fitness but with several other use cases. New sleep-tech products are focused on active in-sleep intervention solutions, rather than sleep preparation technology. read the free research note   Emerging Tech Research FOODTECH—VC investment in the foodtech sector surpassed $39 billion in 2021, representing 150% growth over the prior year. Over half of the capital went to two categories—online grocers and apps & marketplaces. Our latest research recaps the activity of last year, as COVID-19 accelerated adoption of food e-commerce and drove investment in ghost kitchens and third-party delivery providers, among other models: Activity slowed in Q4 due to a number of factors including a challenging labor environment. The maturation of the industry has been showcased in lucrative exit activity, including recent SPAC deals for Grab and Boxed. Alt-protein startups logged triple-digit growth last year and delivery robot companies also received massive funding. read an executive summary   ENTERPRISE HEALTHTECH—Exit value for enterprise healthtech startups rocketed to $36.2 billion in 2021, more than 6x the value of the previous year. VC funding in the maturing sector passed $20 billion, which marks a 67% increase YoY. Digitization is at the heart of it all, as the healthcare industry faces mounting pressure to reduce costs while also improving patient outcomes: The largest segments for VC deal value were operations & care management, insurtech, and customer acquisition tools. Prescription tech has benefited from increased consumer adoption of e-pharmacies. Opportunities for startups are growing as clinical trials become more decentralized. read an executive summary   Webinars & Events An event and webinar to add to your calendars: Feb. 16: Senior analyst Rebecca Springer will participate in a discussion on the state of the dermatology industry at McGuireWoods' 18th Annual Healthcare Private Equity & Finance Conference. Attendees also get PitchBook access through Feb. 25. More details here. Feb. 24: How can GPs navigate the current fundraising environment? Get free tips from our former LP on what institutional investors look for in a fund manager. Register here. In the News Our insights and data featured in the press: PE invaded sports in 2021 with nearly $2 billion in deals, and NBA teams are trading at particularly expensive valuations. "We're going to see a lot more deals going forward." [CNBC] "There's definitely a risk of losing major emerging companies when you have these large tech giants move out [of the Bay Area]." [LA Times] VC valuations climb higher still as hedge funds and other nontraditional investors pile in. [Institutional Investor] Southern California startups closed a record 831 venture deals in 2021, up nearly 39% from the previous year. [dot.LA] If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team. ICYMI Highlights from our other recent research: Market updates Global Fund Performance Report Global M&A Report PitchBook-NVCA Venture Monitor US PE Breakdown European Venture Report European PE Breakdown Thematic research Healthtech Partnership Tracker SoftBank Maps Out Latin America The Rise of Subscription Healthcare Mega-Funds in US PE: Fundraising and Performance PitchBook's Guide to GP Fundraising Emerging Technology Research Information Security Fintech Agtech Retail Healthtech Supply Chain Tech Coming next week (subject to change) Global Private Debt Report European VC Valuations Report ETR: Mobility Tech ESG, Impact, and Greenwashing in PE and VC Thanks for reading! Feel free to email us any time with feedback, questions, or tips! Learn more about the PitchBook Institutional Research Group, meet our analysts, or access our full research libraries for clients and non-clients. Were you forwarded this newsletter? Sign up at pitchbook.com/subscribe. 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