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In today's Daily Pitch, you'll find: - Our latest PitchBook-NVCA Venture Monitor details how dealmaking, exits, fundraising and valuations responded to rising interest rates and complicated macroeconomic trends in Q3.
- After reaching near-record amounts in Q2, venture debt deal values fell by half in Q3.
- While 2022 has been one of the busiest years for PE investment in China in the last decade, it still represents a significant slowdown from last year's peak.
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| US VC sends mixed signals as deal activity and fundraising diverge | | The third quarter of 2022 saw a less resilient venture landscape in the US compared with the first half of the year. Deal activity across all stages recorded signs of distress, and the market continued to become increasingly consolidated, with fewer exits than at any time in recent history.
Dry powder remains at the highest level in our dataset, after years of record fundraising. This capital will help support seed and early-stage investment, but it is not likely to come to the rescue of highly valued, late-stage companies that are seeing an enormous decline in capital availability.
The latest PitchBook-NVCA Venture Monitor, sponsored by Insperity and J.P. Morgan, details how dealmaking, exits, fundraising and valuations responded to rising interest rates and complicated macroeconomic trends during Q3. Key takeaways: - Venture-backed companies collected nearly $43 billion during Q3. The figure is below the heights of 2021 and early 2022 but above historical averages—representing a durable, positive trend in the industry.
- On the exit front, there have been just 59 public listings so far this year, compared with 303 in 2021 and 145 in 2020.
- While overall fundraising figures are strong, established managers received the lion's share of commitments while emerging GPs struggled.
| | | | | | | | | Venture debt lending dips as borrowing costs rise | |  | | (Amnaj Khetsamtip/Shutterstock) | | | Startups rushed to secure venture debt earlier in the year. But after an initial surge, their appetite for debt has waned in recent months.
After reaching near-record amounts in Q2, venture debt deal values fell by half in Q3, according to PitchBook data. Investors say debt financing declined as the cost of borrowing increased. | | | | | | | |
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| A message from the U.S. National Science Foundation | | |
| | SkyNano utilizes carbon emissions as a feedstock for low-cost, sustainable manufacturing of advanced carbon materials for batteries, tires, plastics, etc.
SkyNano (NSF-2132768) is one of hundreds of deep tech startups funded annually by the National Science Foundation (NSF), a government agency that plays a central role in accelerating discoveries into the marketplace.
Each startup can receive up to $2 million to support translational research & development. By investing roughly $200 million in startups annually, NSF helps teams navigate the earliest stages of technology translation. In the past five years, these companies have gone on to raise billions in follow-on capital, and the portfolio has had 200+ exits.
Learn more about NSF funding at seedfund.nsf.gov | | | | | | | |
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| China PE deal activity lags after record high | |  | | Beijing (anek.soowannaphoom/Shutterstock) | | | After raising a record $88.6 billion in 2021, private equity investment in China has fallen this year as deal activity slows down.
Part of the reason for the cooling sentiment is that China, which holds its 20th Communist Party congress this week, has faced a barrage of economic headwinds resulting from its rickety real estate sector and "zero COVID" policies. | | | | | | | | | European fintech enters new normal as funding cools | |  | | (Lerbank-bbk22/Shutterstock) | | | Europe's fintech sector is likely to see an increase in consolidation as market conditions remain choppy.
Meanwhile, fintech startups in the region can expect venture capital funding and valuations to continue to fall, according to a new report from Finch Capital. | | | | | | | | | | CVC Capital Partners, Europe's largest PE firm, plans an IPO with implications for the entire sector. [Financial Times]
Employers burned by the labor shortage have taken to hoarding workers and may be hesitant to lay off workers even when the economy cools. [The New York Times]
Building wealth via homeownership is a time-tested American tradition. Now a new project is trying to replicate that mechanism in the rental market. [Axios] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 503 Deals | 1816 People | 468 Companies | 37 Funds | | | | | | |
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| 2013 Vintage Global PE Funds with more than $1B | | | | | | |
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| Data privacy company DataGrail raises $45M | | | | | | | | Blockchain development startup Tatum nabs $41.5M | | | | | | | | FOLX Health picks up $30M | | | FOLX Health has raised a $30 million Series B led by 7wireVentures. Based in Boston, the company provides digital healthcare services to the LGBTQIA+ community. | | | | | | | IronVest emerges from stealth with $23M | | | IronVest has raised $23 million in seed financing led by Accomplice. The New York-based company offers a biometric-based security platform intended to protect digital accounts in industries such as banking and healthcare. | | | | | | | | | Connectbase has raised $21 million in a Series C led by DigitalBridge Ventures. Based in Boston, the company operates a marketplace for buyers and sellers in the connectivity industry. | | | | | | | Zerion banks $12M+ Series B | | | Zerion has raised $12.3 million in a round led by Wintermute Ventures. The company's mobile wallets are designed to help DeFi investors, NFT collectors, and Web3 builders track and manage portfolio transactions. | | | | | |
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| PitchBook webinar: The state of sustainable investing | | Join PitchBook to discuss the findings from our 2022 Sustainable Investment Survey. Analysts Hilary Wiek and Annika Villegas will touch on report insights, including the politicization of ESG, the increasing popularity of impact investing and challenges in the sustainable investing ecosystem. Key topics include: - The politicization surrounding ESG in 2021 and 2022 has had far-reaching impacts on investors and service providers with US-based investments, clients and stakeholders.
- Investors and advisers seeking to incorporate ESG into their portfolios have varying goals and philosophies, leading to the proliferation of greenwashing allegations.
- How the lack of clarity around defining and measuring impact outcomes and difficulty benchmarking nonfinancial goals were both frequently cited among the top challenges of sustainable investing.
Register now to secure your spot. | | | | | | | |
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| Brookfield Renewable strikes nearly $8B nuclear deal for Westinghouse | | | | | | | | Vista Equity to pick up KnowBe4 in $4.6B take-private | | | Vista Equity Partners has agreed to purchase Florida-based KnowBe4 for $4.6 billion, The Wall Street Journal reported. The deal comes 18 months after the cybersecurity company raised $152 million from its IPO. | | | | | | | Godspeed's SilverEdge acquires QVine | | | Godspeed Capital Management-backed SilverEdge Government Solutions has acquired QVine. Executives at QVine, which creates custom software for intelligence agencies, are co-investing equity in the deal. | | | | | |
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| Kodiak Robotics secures $30M loan | | | | | | |
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| RedBird, OTPP's FireBird Energy to be acquired by Diamondback | | | | | | | | One Equity offloads part of Brush to Baker Hughes | | | One Equity Partners has sold off the power generation business within one of its portfolio companies, Brush Group, to energy technology company Baker Hughes. One Equity, which acquired Brush in 2021, is holding on to the company's power distribution and networks businesses. | | | | | |
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| Veritas pulls in $10B+ for latest fund | | | Veritas Capital has closed its eighth flagship fund on $10.65 billion, surpassing its hard cap of $8.5 billion. The vehicle will target investments in sectors such as government, software, aerospace and defense. | | | | | |
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| Blackstone partnership with insurance firm expected to boost AUM | | | Blackstone plans to invest $500 million in insurance company Resolution Life and help it raise an additional $2.5 billion, The Wall Street Journal reported. Under the deal, Blackstone will manage some of Resolution Life's illiquid investments, which could ultimately add over $60 billion to the firm's AUM, the report said. | | | | | |
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"After raising and then deploying record amounts of capital in 2021, sponsors have been returning to their LPs and seeking re-ups throughout 2022. As a result, many LPs have already hit their allocation targets for the year. The consensus view at this year's Super Return conference was that two out of every three funds in the market today will need to push their closings into 2023."
Source: PitchBook's Q3 2022 US PE Breakdown | | | | | |
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