Our new venture growth methodology

Q&A: UK's Downing on private market opportunities; recession odds are now a coin flip; leveraged loan issuers see earnings rise; Vial collects $67M
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The Daily Pitch: VC, PE and M&A
December 1, 2022
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Today's Top Stories  
Unveiling PitchBook's methodology for venture growth
The VC market has changed tremendously since PitchBook developed a methodology for better defining the asset class by stages. The biggest shift has been in the late stage, which up until now was defined as all financings for companies that are more than five years old or have raised a Series C round.

But as VC-backed companies stay private for longer and collect more capital along the way, we have found that the smaller startups in our late-stage dataset have become considerably different from the larger ones.

To better address the variations and trends in late-stage venture, we have created a new category: venture growth stage. This segment is defined as funding rounds Series E or later or financings involving companies that are at least seven years old and have raised at least six VC rounds.

In our latest analyst note, PitchBook analyst Kyle Stanford details how the new stage has changed over the last decade and explains why its risk profile differs from angel, seed, early and late stages.
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Q&A: Investment manager Downing on private market opportunities
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While many listed asset managers are looking to increase their exposure to the private markets, one boutique firm already has most of its assets invested in the space.

We spoke to Kostas Manolis, head of private market investments at the UK's Downing, about where there are opportunities and how the firm is adapting to changing investor sentiment.
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A message from CohnReznick  
New guide: 14 key strategies for private equity value creation
The private equity ownership horizon is short, and finding the fastest and most reliable route to value creation is key.

This new ebook from CohnReznick explores 14 value creation “sprints” that enable more immediate top-line, bottom-line, and operational impacts. Whether you're at the onset of an investment, fully involved in implementing an existing value creation plan, or dealing with performance-inhibiting challenges, focusing on these distinct "sprints" can help set you up for a series of early wins and ultimately the timely achievement of your objectives.

Get your copy to give life to your value creation roadmap, with insights for optimizing areas such as:
  • Working capital, finance, and accounting
  • Supply chain, sourcing, and procurement
  • Pricing strategies and sales
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Hard landing ahead? Recession odds are now a coin flip
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The US faces a roughly 50% chance of a recession before the end of 2023. Here's the good news: An economic contraction, should it occur, is likely to be relatively short and buck the most pessimistic predictions.

That's according to Morningstar analysts, who lay out the case for inflation to fall quickly in 2023. Such an outcome would give the Fed a chance to ease off of monetary tightening and for GDP growth to bounce back in 2024.
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Leveraged loan issuer earnings rise 14% as credit metrics improve
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In a surprising sign of stability at the riskier end of the credit spectrum, US leveraged loan issuers posted robust earnings growth in the third quarter, buoying debt coverage in the process, according to LCD.

The relatively strong showing in the $1.4 trillion asset class is of particular importance as loan issuers face substantially higher funding costs, which grow with each Fed rate hike due to the floating-rate nature of the debt. Other key takeaways from LCD's quarterly earnings analysis:
  • Leverage at publicly filing loan issuers declined slightly.

  • The share of issuers with cash flow coverage of less than 1.5x—a potential red flag—tumbled.

  • Interest coverage—a metric for how easily a company can pay interest expense—has increased substantially from the pandemic-era low of 4.14x.
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FTX collapse could trigger decline in institutional capital in crypto funds
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The FTX collapse sent a chill through the cryptocurrency market. For institutional investors who are already generally skeptical about the legitimacy of crypto, the company's downfall marks another reason to steer clear of the asset class.

With the asset class's promise of high potential returns and minimal correlation to other securities, institutional investors grew more confident in its potential over the past few years. But the FTX meltdown may diminish some of that institutional confidence and undermine the funding of crypto funds.
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Recommended Reads
US and European banks are endeavoring to offload $42 billion in buyout debt—quickly. [Bloomberg]

Americans want to support unions, but are they held back by their understanding of what unions used to be? [The New Yorker]

Junk bonds are seeing a modest end-of-year rally as investors bet on an improved economic outlook in 2023. [The Wall Street Journal]
 
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Quick Takes  
  The Daily Benchmark  
  2017 Vintage Global Secondaries Funds  
  A message from PitchBook Media  
  PitchBook's 2023 Media Kit released  
  VC Deals  
  Vial raises $67M  
  Teampay lands $65M  
  Iecure gets $65M  
  Wedding startup Joy lands $60M  
  OneRail secures $33M  
  ResortPass grabs $26M  
  CommonGround grabs $25M  
  Recycling startup CleanFiber raises $10M  
  PE Deals  
  Nova Infrastructure acquires Xchange Telecom  
  Weinberg sells Hoodmart to Valesco Industries  
  PE firms provide new financing for Job.com  
  Portfolio Companies  
  Kore Power raises $75M from energy services companies  
  Exits & IPOs  
  Sentry acquires VC-backed Codecov  
  Fundraising  
  New Fare debuts with $20M fund  
  Crystal View wraps up $140M  
  Corporate M&A  
  RBC to buy HSBC Canada for $10B+  
 
 
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The Daily Benchmark  
2017 Vintage Global Secondaries Funds
Median IRR
22.60%
Top Quartile IRR
26.99%
1.55x
Median TVPI
Select top performers
Auldbrass Partners Secondary Opportunity Fund II
Northleaf Secondary Partners II
Lexington Middle Market Investors IV
*IRR: net of fees
20 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
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A message from PitchBook Media  
PitchBook's 2023 Media Kit released
Year to date, PitchBook's newsletters have over 161 million impressions and over 744,000 report downloads. Partnering with PitchBook Media is a way to feature your firm's insights in one of the most popular venues for timely and relevant PE and VC articles, news, asset class reports and custom white label reports.

The brand-new 2023 Media Kit contains all the details to help your firm position itself in front of a VC or PE audience.

Click here to download it today or to speak to someone on the media team.
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VC Deals  
Vial raises $67M
Vial, a contract research organization that supports biotech companies in clinical trials, has secured $67 million in a Series B led by General Catalyst.
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Teampay lands $65M
Spend management platform Teampay has raised $65 million in a Series B led by Fin Capital.
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Iecure gets $65M
Gene editing startup Iecure closed its Series A with $65 million co-led by Novo Holdings and LYFE Capital.
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Wedding startup Joy lands $60M
Joy, a platform for planning weddings and hosting gift registries, has secured $60 million in Series B led by General Catalyst.
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View 7 competitors »
 
OneRail secures $33M
Last-mile logistics company OneRail has raised $33 million in Series B led by Piva Capital and Arsenal Growth Equity.
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View 51 competitors »
 
ResortPass grabs $26M
ResortPass has raised a $26 million Series B co-led by Declaration Partners and 14W. The company connects users with amenities at hotels and resorts.
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View 1 competitors »
 
CommonGround grabs $25M
Virtual meeting startup CommonGround, whose investors include Matrix Partners and Grove Ventures, has raised $25 million.
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Recycling startup CleanFiber raises $10M
CleanFiber, which recycles cardboard to create cellulose insulation for homes, has raised $10 million from AXA Investment Managers.
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PE Deals  
Nova Infrastructure acquires Xchange Telecom
Investment firm Nova Infrastructure has acquired Xchange Telecom, which provides internet and other services to residential and commercial customers in New York and New Jersey. The deal draws from Nova's Fund I, which closed on $565 million in July.
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Weinberg sells Hoodmart to Valesco Industries
Weinberg Capital Group has sold Ohio-based kitchen ventilation system manufacturer Hoodmart—also known as North American Kitchen Solutions—to Valesco Industries and Centerfield Capital Partners, thereby exiting its 2016 investment.
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PE firms provide new financing for Job.com
Recruiting platform Job.com has received financing from Ghost Tree Partners and existing investor Serengeti Asset Management. The company, which received earlier backing from SOJA Ventures, plans to use the funds to grow through acquisitions and speed up its tech development.
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Portfolio Companies  
Kore Power raises $75M from energy services companies
US lithium-ion battery manufacturer Kore Power has raised $75 million in the first close of a private placement from investors including Siemens Financial Services, which led the round, as well as Quanta Services, Nidec Motor Corporation, Honeywell Ventures and Trog Hawley Capital.
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Exits & IPOs  
Sentry acquires VC-backed Codecov
Code-monitoring specialist Sentry has purchased Codecov, which has received funding from investors including Draper Associates, BoxGroup and Tribe Capital. Codecov's platform helps to streamline developers' workflows.
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View 3 competitors »
 
 
Fundraising  
New Fare debuts with $20M fund
New Fare Partners, a firm investing exclusively in early-stage food and beverage startups, has raised $20 million for its first fund. The vehicle will target startups offering next-generation consumer brands, supply chain technologies, marketplaces and more
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Crystal View wraps up $140M
Real estate PE investment firm Crystal View Capital has closed its third fund on $140 million, surpassing its target of $95 million. Crystal View Capital Fund III has invested in 46 assets, of which nearly 80% are self-storage.
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Corporate M&A  
RBC to buy HSBC Canada for $10B+
Royal Bank of Canada has agreed to purchase HSBC's Canada banking operations for C$13.5 billion (about $10.1 billion), also acquiring the preferred shares and outstanding subordinated debt issued by the bank for roughly C$2.1 billion total.
View details
 
View 19 competitors »
 
 
Chart of the Day  
"VC-backed neural search companies are continuing to achieve traction at the early stage and raise outstanding rounds through economic volatility, as evidenced by the high valuations for Grata, Hebbia, and You, each of which use AI innovations to improve search results and personalization."

Source: Q3 2022 Artificial Intelligence & Machine Learning Report
 
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