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Nontraditional VCs react to market headwinds

Most AI startups regress from 2021's boom; Tiger Global pumps the brakes on VC deals; Hannah Grey wraps up debut fund; Ultima Genomics grabs $600M
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The Daily Pitch: VC
June 1, 2022
The Daily Pitch is powered by PitchBook's industry-defining research and best-in-class data
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In today's Daily Pitch, you'll find:
  • Our latest analyst note explores how economic headwinds could make nontraditional VCs slow their pace—and deflate ballooning deal values.

  • The value of deals led by Tiger Global has declined significantly in recent months as the firm shifts its focus to writing smaller checks at earlier stages.

  • VC investment in AI and machine learning slumped in line with the market in Q1, but some notable subsegments remain resilient.
 
Today's Top Stories  
Nontraditional VCs react to market headwinds
Nontraditional investors have flooded into the US venture market over the past few years, with more than 4,000 such institutions making at least one deal in 2021 alone. These investors, which include asset managers, corporate VCs, PE firms and sovereign wealth funds, deploy capital into venture with widely different strategies and return profiles.

Our latest analyst note explores how economic headwinds could make each of these investor types slow their pace, but for equally varying reasons. Such a pullback may take some of the air out of the ballooning VC deal values of recent years.
read it now
 
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Tiger Global pumps the brakes on VC deals
(hachiware/Getty Images)
The onetime champion of bigger-is-better VC deals is catching its breath after more than a year of fast-paced check writing.

The value of deals led by Tiger Global has declined significantly in recent months as the firm shifts its focus to writing smaller checks at earlier stages. The move reflects a growing skepticism among large, late-stage investors that could have ripple effects in the VC ecosystem.
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A message from Allvue Systems  
Private equity dry powder hits new highs (and brings old challenges)
As dry powder continues to fuel growth in private equity, some fund managers are feeling the challenge of trying to identify the best opportunities fast enough. Having so much committed capital has created a delicate balancing act: As the amount of dry powder has risen, the time to collect it has compressed. Plus, limited partners expect their investment to be committed in a timely manner, and with trillions of dollars on the sidelines, competition to find the next unicorn is tougher than ever.

How has dry powder grown? What are the risks of too much dry powder? And what can GPs do to stay balanced?

Learn the answers to these questions and more in this article from Allvue Systems.
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Breakthrough AI innovations stand out amid chillier market conditions
VC investment in AI startups slumped around 21% quarter-over-quarter to $23.9 billion in Q1. However, the total remained in line with quarters prior to Q4 2021 and median late-stage valuations rose more than 11% to $100 million.

While most of the categories within AI and machine learning are on pace to decline in VC funding this year, standout sectors including accounting automation, autoML, genetic analytics and supply chain optimization continued to grow.

On the exit front, PitchBook analysts predict that an uptick in AI mega-exits will be pushed out until market conditions improve and acquirers can bear the high operating costs of building sophisticated AI models.

Our latest AI & ML Emerging Tech Research update deep dives into the vertical's investment activity and trends, comprehensively assessing emerging opportunities in conversational AI, silicon photonics and revenue operations.
read the report
 
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PE fund performance sinks as pandemic boost fades
(sakchai vongsasiripat/Getty Images)
A tighter policy environment is putting downward pressure on risk assets and causing PE returns to normalize after several standout quarters.

In Q3 2021, global PE fund returns dropped to 6.8%, the strategy's lowest quarterly IRR since the pandemic rocked markets in Q1 2020. Preliminary data from Q4 shows that further declines may soon follow.
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Recommended Reads
Companies kept alive by cheap and plentiful debt are now facing a reckoning as the borrowing landscape shrinks. [Bloomberg]

A look at median compensation across 275 companies in the S&P 500 index in 2021. [The Wall Street Journal]

As our global supply chains grow, what can we gather from the junk that washes up on shore? [The New Yorker]
 
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Quick Takes  
  The Daily Benchmark  
  2011 Vintage Global Debt Funds  
  VC Deals  
  Ultima Genomics exits stealth with $600M  
  ShareChat collects $300M  
  Seemplicity picks up $32M  
  Vendia nabs $30M  
  Utopia brings in $23M  
  Synaptic secures $20M Series B  
  Fundraising  
  Bonfire Ventures collects $230M+ across two funds  
  Hannah Grey wraps up debut fund  
 
 
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The Daily Benchmark  
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Top Quartile IRR
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Davidson Kempner Long-Term Distressed Opportunities Fund
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VC Deals  
Ultima Genomics exits stealth with $600M
Ultima Genomics has raised roughly $600 million from investors including Founders Fund, Andreessen Horowitz, D1 Capital and Lightspeed. The California-based company aims to scale up genomic research by providing a low-cost sequencing platform.
View round
 
View similar company »
 
ShareChat collects $300M
Mohalla Tech, the parent company of social media app ShareChat, has raised $300 million from investors including Alphabet, Temasek and India's Times Group, Reuters reported. The round values the Bengaluru-based company at roughly $5 billion.
View round
 
View 18 competitors »
 
Seemplicity picks up $32M
Seemplicity has raised a $26 million Series A led by Glilot Capital Partners in addition to $6 million in seed financing led by S Capital. Based in Tel Aviv, the company is the developer of a productivity platform designed to help security teams automate processes and manage risk.
View round
 
View similar company »
 
Vendia nabs $30M
Vendia has raised a $30 million Series B led by NewView Capital, TechCrunch reported. The company offers a blockchain-based platform designed to help businesses share their code and data in real time.
View round
 
View similar company »
 
Utopia brings in $23M
Utopia Labs has raised a $23 million Series A led by Paradigm. The company's operating system helps decentralized autonomous organizations, or DAOs, manage payments, expenses and financial reporting.
View round
 
View similar company »
 
Synaptic secures $20M Series B
Synaptic has raised $20 million in a round led by Valor Equity Partners. The Indian company provides investors with data on public and private companies including website traffic, product reviews, search trends and more.
View round
 
View 4 competitors »
 
 
Don't miss our upcoming webinar
The investing environment has fundamentally shifted in the past several months, with inflation at a 40-year high, the Fed tightening monetary policy and growing fears of an economic recession.

In this webinar, our analysts will discuss the broader macroeconomic backdrop, how it has influenced the recent volatility and sell-off in public equity markets, and what it means for private markets now and going forward. The webinar will be held June 7 at 8 a.m. PT/11 a.m. ET.

Register now
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Fundraising  
Bonfire Ventures collects $230M+ across two funds
Bonfire Ventures has raised $168 million for its third core seed fund and $63 million for its second opportunity fund. Founded in 2017, the California-based VC firm invests in seed-stage B2B software companies.
View fund
 
View 117 investments »
 
Hannah Grey wraps up debut fund
Denver-based VC firm Hannah Grey has closed its first fund on $51.6 million, TechCrunch reported. The vehicle has already been used to invest in 13 companies, including edtech startup Subject and Wave, the provider of an emotional health platform.
View fund
 
View 5 investments »
 
 
Chart of the Day  
Source: PitchBook's H2 2021 Greater China Venture Report
 
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Who's in the newsletter today?
Investors
Alphabet
Andreessen Horowitz
Bonfire Ventures
D1 Capital
Founders Fund
Glilot Capital Partners
Hannah Grey
Lightspeed
NewView Capital
Paradigm
S Capital
Temasek
Times Group
Valor Equity Partners
Companies
Seemplicity
ShareChat
Subject
Synaptic
Ultima Genomics
Utopia Labs
Vendia
Wave
 
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