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| In today's Daily Pitch, you'll find: | | | | | |
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| How the current macro environment will shape PE and VC | |  | | (koto_feja/Getty Images) | | | The turbulent start to 2022 has had a profoundly negative effect on public equities, sending stocks tumbling and leading to billions of dollars in losses. The private markets aren't immune to this volatility. VC-backed companies have announced layoffs and delayed fundraises, while PE firms balance an appetite for take-private opportunities with the very real possibility of a recession.
Our latest analyst note, the second in an ongoing series, details the current macro backdrop's potential long-term impacts on deal activity, valuations, sustainability and more across private equity and venture capital. How will these trends play out—and where should investors be paying attention? | | | | | | | | | | Q&A: Churchill expects private debt to shine amid rate hikes, volatility | |  | | (erhui1979/Getty Images) | | | Major US stock indexes have fallen by double digits since the start of the year, pushed lower by a combination of increasing inflation, Federal Reserve rate increases, supply constraints and geopolitical disruptions. PitchBook analysts say there's a 20% chance of a recession in the next 18 months.
These dynamics are producing a decline in valuations among VC-backed companies and changing the calculations around leverage and valuations in buyout deals.
Against this background, we spoke with Randy Schwimmer, the co-head of senior lending at Churchill Asset Management, Nuveen's $37 billion private capital arm. He shared his outlook on economic conditions and how he expects private debt to perform during the ongoing turmoil in the financial markets. | | | | | | | |
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| A message from PitchBook Media | | |
| As market volatility spikes, share your expertise with your clients | | Markets are in turmoil—everyone is trying to figure out what is coming next. This is an opportunity to seize and share your firm's expertise and insights for challenging times. By partnering with PitchBook Media, you can reach an actively growing audience across multiple channels, including: - A succinct, timely message in The Daily Pitch newsletter that reaches over a million private market professionals, many of whom are looking for guidance and relevant insights.
- Sponsorship of market-leading industry reports that dive into pressing issues like the challenges for formerly high-flying startups as valuations grow pressured.
- Audience-specific advertisements within the most relevant PitchBook newsletter, whether VC, PE or M&A.
Reach out to learn more | | | | | | | |
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| Q1 European VC valuation trends in six charts | |  | | (Andriy Onufriyenko/Getty Images) | | | European VC valuations have continued on their upward trajectory across all stages following a record 2021.
Here's a closer look at six charts from our Q1 European VC Valuations Report that showcase the data behind European valuations. | | | | | | | | | | VCs hit with 'fundraising pain' as LPs deal with venture overexposure | |  | | (Mykyta Dolmatov/Getty Images) | | | Limited partners are overwhelmed by an unprecedented number of VC firms coming back to market with new and, in most cases, larger funds this year.
They're responding to the onslaught by walking away from some existing relationships or reducing check sizes, even for solid performers.
Many VC firms, including several major names, are having doubts that they will be able to close new vehicles at their original targets. | | | | | | | | | | Information security becomes leading IT priority in 2022 | | Digital transformation and geopolitical risk have combined to move the information security sector to the top of IT agendas, pushing it past other categories of enterprise software. Ransomware has become a prevalent issue for many organizations, with security software spending on track to reach $114 billion in 2022. Meanwhile, startups are staring down another bear market, which could propel consolidation among the recent wave of cloud and endpoint security leaders.
Our Q1 2022 Emerging Tech Research Report on information security provides an update on the industry, exploring emerging opportunities in cloud-native application protection platforms, security service edge and threat intelligence. The report also includes a market map that helps visualize the various subsegments of the industry, from application security to identity and access management. Other key takeaways include: - VC investment in the information security space faced pressure from declining share prices of high-growth incumbents, dropping 35.8% quarter-over-quarter to $5.1 billion.
- Median late-stage valuations took a hit, dropping 26.1% from 2021. Early-stage VC investment remains robust, though a slowdown may be on the horizon as market conditions remain depressed.
- An overall tech market slowdown put the IPO market on ice with no listings recorded for Q1.
- Web3 security remained a driving theme for VC funding despite a bear market for cryptocurrency.
| | | | | | | | | | Instagram head Adam Mosseri's vision for how big tech could make way for Web3, shifting power from tech platforms to content creators. [Wired]
Why investors at TIFF Investment Management think it may be time to invest in floundering growth stocks. [Institutional Investor]
Elon Musk's rushed financing agreement for Twitter will leave the social media company with an annual interest expense approaching $1 billion. [Bloomberg] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 531 Deals | 1593 People | 408 Companies | 32 Funds | | | | | | |
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| 2015 Vintage Global Real Assets Funds | | | | | | |
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| A message from Performance Improvement Partners | | |
| Proven do's and don'ts of tech due diligence | | 43% of companies with high digital maturity report net profit margins significantly higher than industry averages.
Yet, many private equity firms still see technology due diligence as primarily a risk-management box to check before acquisition.
In the digital era, identifying technology risk is only part of the value-creation equation.
Learn the latest "do's and don'ts" of technology due diligence, based on hundreds of PE partnerships, with findings from proven technology experts on the front lines of today's deal environment.
Get the guide now | | | | | | | |
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| SoftBank-backed Picsart cuts 8% of staff | | | Picsart, a photo- and video-editing tools provider, has reportedly laid off 90 people, or 8% of its employees, in the latest instance of a SoftBank portfolio company to pare back its ranks. Picsart has raised over $197 million in total funding and was valued at $1.23 billion as of last August, according to PitchBook data. The Information reported that a Picsart spokesperson confirmed the job cuts. Picsart is the third SoftBank-backed startup to lay off personnel in recent weeks, following celebrity shout-out app Cameo and proptech startup Reef Technology. | | | | | |
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| Unit banks $100M Series C | | | Unit has raised $100 million at a $1.2 billion valuation in a round led by Insight Partners. Headquartered in New York and Tel Aviv, the company is the developer of a banking-as-a-service platform designed to help customers such as AngelList and HoneyBook embed financial services in their products. | | | | | | | | Imply Data hits $1.1B valuation | | | Imply has raised a $100 million Series D led by Thoma Bravo. The funding values the company at $1.1 billion. Imply uses Apache Druid, a real-time analytics database, to help developers access on-demand analysis and visualization. | | | | | | | | Fashinza brings in $100M Series B | | | | | | | | | Remix Therapeutics reels in $70M Series B | | | | | | | | | A.Team emerges from stealth with $60M | | | A.Team has raised a $55 million Series A co-led by Tiger Global, Insight Partners and Spruce Capital Partners. The New York-based company is the developer of a cloud-based team formation platform for product design specialists. The Series A follows a previously unannounced $5 million seed financing led by NFX. | | | | | | | | | Instabug has raised a $46 million Series B led by Insight Partners. Founded in Egypt and headquartered in San Francisco, the company offers a platform for reporting bugs and crashes and monitoring mobile application performance. | | | | | | | | Forma.ai secures $45M Series B | | | Toronto-based Forma.ai has raised $45 million in a round led by Acme Capital. The company's platform helps organizations optimize their sales compensation management processes. | | | | | | | | Arrived Homes scores $25M | | | | | | | | | | True Ventures has led a $20 million Series A for San Francisco-based Pipedream. The company offers an integration platform intended to help developers build workflow automations and connect cloud services. | | | | | | | | Tiger Global leads $15M Series A for Coinshift | | | Coinshift has raised a $15 million round led by Tiger Global. The company's treasury management platform enables decentralized autonomous organizations and crypto businesses to manage cash reserves. | | | | | |
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| Vista's credit arm invests $215M in Updater | | | | | | | | | Zips Car Wash to receive additional backing from Atlantic Street | | | Atlantic Street Capital has agreed to make an additional investment in portfolio company Zips Car Wash, a Texas-based car wash operator with more than 200 locations in the US. ASC, which has backed Zips since 2020, partnered with lead investor ICG, company management and minority owners on the deal. | | | | | | | | PE-backed Tendit completes add-on deal | | | Tendit has purchased Birrell Services, a Salt Lake City-based provider of commercial pressure washing, snow removal, parking lot sweeping, striping, landscaping and other exterior facility services. Tendit, which has been backed by Osceola Capital since 2019, is a provider of exterior facility maintenance services in the Mountain West. | | | | | | | | Ardian buys minority stake in Taxually | | | Ardian has acquired a minority stake in Taxually, which offers cloud-native tax compliance and automation software for international businesses. Founded in 2018 in Hungary, Taxually is available in more than 40 countries. | | | | | | | | PE-backed Beauty Industry Group snags Bellami Hair | | | | | | | | | Gemspring Capital purchases GoldenSource | | | Gemspring Capital has acquired GoldenSource, a provider of enterprise and master data management solutions for financial services companies. Founded in 1984, GoldenSource provides software to investment banks, asset managers and capital markets services firms. | | | | | | | | Kepler lands Service Station Vending Equipment | | | Kepler Capital has acquired a majority stake in Service Station Vending Equipment, a manufacturer of tire inflation air and vacuum vending machines. The company maintains 4,000 machines throughout New York, New Jersey, Maryland and several other states. | | | | | | | | PE-backed ACE Education Group acquires EIDM | | | Oakley Capital-backed ACE Education Group has acquired EIDM, a fashion business and styling school. Based in Paris, EIDM offers bachelor's and master's degrees, as well as recognized professional diplomas. | | | | | |
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| Generation closes $1.7B sustainability fund | | | Generation Investment Management has closed its fourth growth-equity fund on $1.7 billion. The vehicle will target investments between $50 million and $150 million in sustainability-focused companies. Based in London, Generation was co-founded by former US Vice President Al Gore and previous Goldman Sachs executive David Blood. | | | | | | | | Flying Fish Partners wraps Fund II on $70M | | | Seattle-based Flying Fish Partners has closed its second namesake fund on $70 million. The firm targets seed-stage deals for AI and machine learning companies throughout the US and Canada. The vehicle has already made 10 investments. | | | | | |
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