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Plus: Checking in on emerging tech, the latest in private debt, PE fund sizes keep growing, London wants more tech listings & more
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The Weekend Pitch
May 29, 2022
Presented by Elements Global Services
(Drew Sanders/PitchBook News)
Free money is gone. Yesterday's valuations are a fiction. Markets have sold the companies of the future.

That's the assessment many tech investors have made in an uncoordinated information campaign comprised of decks, video calls and blog posts aimed at portfolio companies. What has gotten less play is the sober outlook for their own bottom lines.

I'm James Thorne, and this is The Weekend Pitch. You can reach me at james.thorne@pitchbook.com or on Twitter @jamescthorne.

In recent years, venture capital funds have enjoyed a phenomenal run. The asset class recorded an IRR of 30.5% over the past three years, according to the latest figures.

Many of those gains were on paper only, a fact that will become obvious as company valuations are marked back down. Fund returns for the first quarter are starting to trickle in, and they're ugly.

"Since the dot-com reset, we haven't seen such aggressive behavior in portfolio markups," said PitchBook analyst Zane Carmean. "Something in the mindset shifted that gave VC firms confidence to give hyper-optimistic numbers."
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Did you follow the private markets this week? Take our quiz to test your knowledge and catch up on what you missed.
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Quote/Unquote
(Karl Hendon/Getty Images)
"While the proposed rule changes could make the UK a more attractive listing destination over the long term, the immediate future for IPOs remains weak."

—PitchBook analyst Dominick Mondesir on proposed reforms to UK listing rules, which suggest that merging the premium and standard segments on the London Stock Exchange's main market could simplify entry and make it a more attractive destination.

Deal flow
Seed and early-stage deal activity from the 15 top-performing VC firms reflected a strong but slightly softening VC environment in Q1. Deal value reached $8 billion, down from $10.3 billion in Q4, but still the second-highest quarter on record through 2015. Our analysts recorded 227 deals, well above the average 164, though down from Q4's 240.

The tracked funds notched 22 deals sized $100 million or larger in Q1, down from 25 in Q4, but well above the historical average of five.

Read more in PitchBook's quarterly Emerging Tech Indicator.

Did you know ...
(tiero/Getty Images)
… That market turmoil is squeezing corporate borrowers who took on high levels of floating-rate debt in recent years. As rates rise, they will face higher interest expense and pressure on cash flows, a sharp reversal after years of inexpensive borrowing.

Datapoints
Global PE fundraising kept a steady pace through Q1, with $94.8 billion committed across 131 vehicles.

Fund count continued to dip while both average and median fund sizes ticked upward, demonstrating the continued shift in PE toward larger vehicles. Of PE funds closed during the quarter, 77.8% were larger than their predecessor, and median step-up increased to 62.4%.

Read more in our latest Private Fund Strategies Report.
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Recommended reads
Gamification has taken over the gig economy, but are jobs managed by incentives and algorithms better for the worker or the employer? [Bloomberg]

Individual investors are pushing cash into private markets as public markets tumble. [The Wall Street Journal]

Why Daniel Olayiwola decided to become the first Amazon warehouse worker to present a resolution at the company's annual shareholder meeting. [Wired]

Young healthcare investors on what they like about the industry—and how they want to change it. [Institutional Investor]

As influencers continue to promote risky and obscure digital currencies, they aren't always disclosing their financial ties. [The New York Times]

The US is the world's second-largest exporter, with $1.8 trillion worth of goods shipped out in 2021 alone. But that's not the whole story. Here's a breakdown of goods exports by state. [Visual Capitalist]
This edition of The Weekend Pitch was written by James Thorne and Ryan Prete. It was edited by Chris Noble and Sam Steele.

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