PitchBook News - US PE faces a regime change

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The Daily Pitch: VC

June 9, 2022

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

In today's Daily Pitch, you'll find:

Our latest Quantitative Perspectives Report delves into the key elements of a new, inflation-fueled regime that could impact the US private equity market.

Public PE firms struck a cautious tone in their first-quarter earnings reports, reflecting a more challenging economic environment.

Climate tech startups had a strong start to the year and could draw sustained interest as the ongoing energy crisis spurs investment in green technologies.

Today's Top Stories

How a new regime could impact the US PE market

If recent market movements and economic data are any indication, a shift in the underlying investment environment means private equity is in for some significant changes.

The asset class is entering a new regime, highlighted by high inflation, that has put policymakers in a difficult position and will likely result in less support of economic growth and financial markets. PE dealmaking will be bolstered in the short term by near-record amounts of dry powder and a strong funding market, but investors will face challenges such as rising interest rates and decreased liquidity for exits.

Our Q2 2022 Quantitative Perspectives Report delves into the key elements of this new regime and how it could affect the PE market, exploring everything from valuations to recession and inflation risks. Highlights include:

Based on data through the end of May, our economic modeling indicates only a 19% chance of a recession in the next 18 months.

Deal activity decreased in Q1 but remained well above short- and long-term trends. Meanwhile, exit activity slowed dramatically, with deal value hitting just $66.7 billion for the quarter.

After a modest decline in Q2 2020, PE fund returns were exceptionally strong, driven mainly by unrealized gains that may not materialize given the market's reassessment of asset valuations.

During the last six years, PE managers have moved away from commodity-focused businesses and turned their focus to the tech sector.

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Ongoing energy crisis fuels strong 2022 for climate tech companies

(Norbert Hentges/Getty Images)

Global climate tech startups have already raised $13.7 billion so far this year and could draw sustained VC interest as the ongoing energy crisis spurs investment in green technologies.

VC investors are broadening their scope beyond EV and battery makers to encompass companies that offer carbon capture tech, lithium mining and indoor vertical farms.

Recommended Reads

TSMC chair Mark Liu on how the world's largest chipmaker is reimagining the semiconductor industry. [Fortune]

Why private credit may not be the best choice for short-term investors. [Institutional Investor]

The SEC's proposed changes to US stock trading rules are facing criticism from Wall Street. [The Wall Street Journal]

Since yesterday, the PitchBook Platform added:

20

VC valuations

1787

People

568

Companies

24

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2018 Vintage Global Real Estate Funds
	People
	Sarah Guo leaves Greylock to start own fund
	VC Deals
	Insurtech startup Branch lands $147M
	CareBridge raises $140M
	Immuta nabs $100M in Series E funding
	London's Codat snags $100M
	LibLab secures $42M in Insight Partners-led round
	Thrive Capital leads $40M round for Nava Benefits
	Encamp picks up $30M
	CareAcademy books $20M
	Fundraising
	Vale launches $100M mining tech fund

The Daily Benchmark

2018 Vintage Global Real Estate Funds

Median IRR

11.24%

Top Quartile IRR

14.40%

1.15x

Median TVPI

Select top performers

Invesco Strategic Opportunities III

LEM Multifamily Fund V

TPG Real Estate Partners III

*IRR: net of fees

82 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

People

Sarah Guo leaves Greylock to start own fund

Sarah Guo is stepping down from her position as a general partner at Greylock Partners to launch her own fund. Guo joined Greylock in 2013 and led investments in companies including Awake Networks and Cleo.

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VC Deals

Insurtech startup Branch lands $147M

Branch has raised a $147 million Series C led by Weatherford Capital, valuing the company at $1.05 billion. Launched in 2019 and based in Ohio, Branch is a provider of home and auto insurance products.

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CareBridge raises $140M

CareBridge has raised $140 million in a round led by Oak HC/FT. Based in Nashville, the company is a provider of value-based healthcare services for individuals receiving home and community-based care.

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Immuta nabs $100M in Series E funding

Boston-based Immuta has raised $100 million in a round led by NightDragon. Founded in 2015, the data automation company helps organizations discover, protect and monitor sensitive information. Immuta has now raised around $267 million in total private funding.

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View 50 competitors »

London's Codat snags $100M

Codat has raised a $100 million Series C led by JP Morgan Growth Equity Partners, with support from investors including Canapi Ventures and Plaid. The company's API enables software providers and financial institutions to build integrated products for small and medium-sized businesses.

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LibLab secures $42M in Insight Partners-led round

LibLab has raised a $42 million Series A led by Insight Partners. The company offers developer tools intended to automate the development, production and maintenance of software development kits.

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View similar company »

Thrive Capital leads $40M round for Nava Benefits

Nava Benefits has raised a $40M Series B led by Thrive Capital. The benefits brokerage helps employers compare health plans from more than 600 providers.

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View similar company »

Encamp picks up $30M

Encamp has raised a $30 million Series C led by Drive Capital. Based in Indianapolis, the company offers an environmental compliance and reporting platform.

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View 9 competitors »

CareAcademy books $20M

CareAcademy has raised $20 million in a round led by Goldman Sachs Asset Management. Based in Boston, the company offers a training platform for home-care professionals and family caregivers.

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View 14 competitors »

Fundraising

Vale launches $100M mining tech fund

Brazilian mining giant Vale has launched a VC arm with $100 million. Vale Ventures will invest in startups that reduce waste and carbon emissions in the mining process, as well as those working to increase the supply of metals needed for energy transition.

Chart of the Day

Source: PitchBook's Q1 2022 European Venture Report

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PitchBook News - US PE faces a regime change

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