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PitchBook News - How VC valuations are faring

Top Tier sees VC opportunities amid downturn; a16z banks on the metaverse; Sequoia leads $100M round for Glean; Klarna faces valuation drop
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The Daily Pitch: VC
May 19, 2022
Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A
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In today's Daily Pitch, you'll find:
  • Andreessen Horowitz has raised $600 million for a new gaming fund as it doubles down on an investment thesis centered in the metaverse.

  • Top Tier Capital's founder and managing director shares his perspective on the market downturn and VC opportunities.

  • Our latest US VC Valuations Report explores how startup valuations are faring in the face of market headwinds.
Today's Top Stories
US VC valuations yet to see full impact of market volatility
Valuations of VC-backed companies endured a quick shift to a difficult market in the first three months of 2022. While the numbers do not yet depict the immediate impact of the ongoing volatility, PitchBook analysts say that investor sentiment has changed over the last quarter.

Our latest US VC Valuations Report explores how startup valuations across the venture lifecycle are reacting in the face of market headwinds—which include rising interest rates, high inflation and geopolitical tension due to the war in Ukraine. Key takeaways include:
  • Early-stage deal sizes and pre-money valuations hit record highs in Q1. At the outset, the numbers suggest that early-stage startups are a bit more insulated from turbulence in the public markets than those at later stages.

  • As tech stocks took the brunt of the market volatility over the past few months, the average late-stage pre-money valuation decreased from the highs of 2021, along with the top-decile figure.

  • The average public listing valuation fell to $993.1 million in Q1. While the figure is still elevated on a historical scale, it represents roughly one-third of 2021's $2.8 billion.
read the report
 
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LP Spotlight: Top Tier sees VC opportunities in market downturn
(Malorny/Getty Images)
David York, founder and managing director at Top Tier Capital, a VC-focused fund-of-funds specialist, has seen several investment downturns over the course of his nearly 40-year career.

Today, San Francisco-based Top Tier boasts a relationship with over 100 firms, including some of the most recognizable brands in VC, such as Andreessen Horowitz, Accel, Index Ventures and Craft. It also invests in direct and limited partner secondaries.

We spoke with York about how this downturn compares to those he experienced earlier in his career and what he thinks will be the best opportunities and most significant risks amid the venture market pullback.
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Partner Perspectives
How New York's venture ecosystem fared in 2021
New York has long been a prominent area for venture activity, and 2021 was no exception. Dealmaking and exit activity in the region surged as companies and firms alike sought to take advantage of lively market conditions.

First Republic Bank's New York Venture Ecosystem Review explores key trends in the region, including:
  • Analysis of record-breaking deal and exit value.
  • Sector breakdowns examining New York's most active investment areas.
  • Deal activity among women-led companies.
Read the report here
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Andreessen Horowitz's $600M gaming fund banks on the metaverse
(Yagi Studio/Getty Images)
Andreessen Horowitz has launched a $600 million effort dedicated to gaming, as it looks to build on a vision for the metaverse. In doing so, the firm is shrugging off a trillion-dollar crypto sell-off and steep declines in publicly traded gaming stocks.

Already, a16z's crypto portfolio has pushed forcefully into blockchain gaming. The new fund will allow the firm to address the broader market.
read more
 
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Recommended Reads
The effects of automation have been fiercely debated for decades, but maybe we shouldn't be blaming robots for taking our jobs. [The New Yorker]

For years, Apple has worked in secret on an AR and VR headset. Technical and leadership challenges have caused the project to struggle to get off the ground. [The Information]

Inside one photographer's attempt to document Indigenous culture by photographing every federally recognized tribe in the US. [The New York Times]
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Quick Takes
  The Daily Benchmark  
  2017 Vintage Global Funds-of-Funds  
  VC Deals  
  Sweden's Klarna faces valuation drop in new round  
  Sequoia leads $100M Series C for Glean  
  Laekna Therapeutics collects $61M  
  N3TWORK Studios picks up $46M  
  Animal-free milk developer drinks up $28M  
  Seclore banks $27M  
  UrbanFootprint announces $25M in new funding  
  Heartex secures $25M Series A  
  Fundraising  
  Tusk Venture Partners locks in $140M for Fund III  
 
 
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The Daily Benchmark
2017 Vintage Global Funds-of-Funds
Median IRR
25.94%
Top Quartile IRR
35.68%
1.67x
Median TVPI
Select top performers
TrueBridge Capital Partners Fund V
Top Tier Venture Capital VIII
StepStone Tactical Growth Fund II
*IRR: net of fees
34 Funds in Benchmark »
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VC Deals
Sweden's Klarna faces valuation drop in new round
Buy now, pay later startup Klarna could see its valuation fall by as much as 30% as it seeks to raise new capital, the Wall Street Journal reported. The Stockholm-based company is understood to be seeking up to $1 billion from new and existing backers in a deal that could put its value in the low $30-billion-range. Klarna is currently Europe's most valuable VC-backed startup and was most recently valued at $45.6 billion following a SoftBank-led round in June. Earlier this year, it was reported that Klarna was aiming to secure new funds at a valuation of between $50 billion and $60 billion.
View details
 
View 87 competitors »
 
Sequoia leads $100M Series C for Glean
Glean has raised $100 million at a $1 billion valuation in a round led by Sequoia. The startup's platform enables employees to search for information across all their companies' SaaS apps at once. Glean's customers include Databricks, Outreach and Grammarly.
View round
 
View similar company »
 
Laekna Therapeutics collects $61M
Laekna Therapeutics has raised a $61 million Series D led by CS Capital. The Shanghai- and New Jersey-based company is developing therapeutics intended to treat cancer and liver diseases.
View details
 
View similar company »
 
N3TWORK Studios picks up $46M
N3TWORK Studios has raised a $46 million Series A led by Griffin Gaming Partners. Based in the Bay Area, the company is a developer and publisher of blockchain games. Peter Levin, managing director at Griffin, will join the company's board.
View details
 
View 35 investments »
 
Animal-free milk developer drinks up $28M
Imagindairy, an Israeli creator of animal-free milk proteins, has raised an additional $15 million in seed financing led by Target Global, bringing the round's total to $28 million.
View round
 
View similar company »
 
Seclore banks $27M
Seclore has raised a $27 million Series C co-led by Origami Capital Partners and Oquirrh Ventures. The company's browser-based data security platform is used by more than 2,000 companies and government organizations.
View round
 
View 28 competitors »
 
UrbanFootprint announces $25M in new funding
Berkeley, Calif.-based UrbanFootprint has raised a $25 million Series B led by Citi and Social Capital. The startup provides an urban intelligence platform that unifies climate, environmental, urban, socioeconomic and customer data, helping governments, utilities, financial institutions and urban planners decide where to invest and deploy resources.
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View 7 competitors »
 
Heartex secures $25M Series A
Heartex has raised $25 million in a round led by Redpoint Ventures. Based in the Bay Area, the company is the developer of an open-source data labeling platform. Unusual Ventures, Bow Capital and Swift Ventures also participated in the funding.
View round
 
View similar company »
 
PitchBook Webinar: Private equity in the European insurance sector
Join PitchBook on May 24 at 7 a.m. PT/3 p.m. BST for a webinar discussing key drivers and risk factors in the European PE insurance sector. PitchBook analysts will examine the overflow of activity in the space driven by broker deals and emerging technology solutions poised to disrupt the business model.

Key takeaways include:
  • Key factors driving PE deal activity in the European insurance broker space.

  • Top PE sponsors in European-headquartered insurance brokers.

  • How technology will impact the European insurance broker business model going forward.
Register now to secure your spot
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Fundraising
Tusk Venture Partners locks in $140M for Fund III
Tusk Venture Partners has closed its third flagship fund with $140 million in commitments. The vehicle will be used to continue backing early-stage tech companies that operate in highly regulated industries. The New York-based firm closed its second fund on $70 million in 2019.
View fund
 
View 44 investments »
 
Chart of the Day
Source: PitchBook's Q1 2022 European VC Valuations Report
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Who's in the newsletter today?
People
Peter Levin
Investors
Bow Capital
CS Capital
Citi
Griffin Gaming Partners
Oquirrh Ventures
Origami Capital Partners
Redpoint Ventures
Sequoia
Social Capital
SoftBank
Swift Ventures
Target Global
Tusk Venture Partners
Unusual Ventures
Companies
Databricks
Glean
Grammarly
Heartex
Imagindairy
Klarna
Laekna Therapeutics
Outreach
Seclore
UrbanFootprint
 
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