PitchBook News - US PE middle market faces cooldown

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The Daily Pitch: VC

June 16, 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:

The US PE middle market is off to a moderate start in 2022 following last year's historic dealmaking run.

PE firms have been busy in the cybersecurity space. We took a look at the 10 most active investors since 2017.

In the debut of our emerging tech takes, our analysts explore a liquidity crisis at crypto lender Celsius Networks and a Florida electric utility's plans to emit virtually no carbon by 2045.

Today's Top Stories

US PE middle market faces global challenges in 2022

US middle-market PE firms got off to a moderate start in 2022 following last year's historic dealmaking run. The middle market was met with a number of challenges, including a turbulent global macroeconomic backdrop marked by raging inflation, the threat of higher interest rates, broken supply chains and Russia's invasion of Ukraine.

In our latest report on the US PE middle market, PitchBook analysts break down Q1 data related to inflation, add-ons and carveouts as well as the IT, energy and ESG verticals. The report also explores deals by size and sector, exits and fundraising performance. Takeaways include:

Many buyers hit the pause button on processes as uncertainty loomed, but markets appear to be moving forward as investors adjust and look for opportunities in a volatile environment.

US middle-market exit activity faced headwinds driven by market volatility and falling prices. However, middle-market exits may be less affected than the broader PE market because they are less reliant on public listings.

Fundraising activity remained healthy in Q1 but is showing signs of slowing for middle-market sponsors, who face a challenging fundraising environment as they compete against large GPs for LP capital.

read the report

Analyst Tech Takes: June 16

(Silas Stein/picture alliance via Getty)

Fears are spreading that a liquidity crisis at crypto lender Celsius Network could have spillover effects that will scare off investors and prompt swift regulatory action. The fintech company made money on customers' crypto deposits by locking them up in high-yield but illiquid positions that are now proving hard to unwind. Celsius has frozen withdrawals and is reportedly in talks with restructuring lawyers.

Read more from Robert Le

Meanwhile, Florida's largest electric utility, NextEra, plans to reshape its business so that it emits virtually no carbon by 2045. The plan, which goes beyond "net zero" strategies launched by other companies, could have significant implications for battery technology and solar energy production, potentially pressuring other utilities to step up their green energy plans.

Read more from James Ulan

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A message from American Investment Council

Fueling health care innovation

Private equity is playing an increasingly important role in life sciences. Over the past decade, PE firms have sponsored almost 1,000 companies in the life sciences ecosystem—including contract research organizations, staffing providers and drug ingredient manufacturers.

Today, however, PE firms are starting to finance the drugs themselves. In 2021, Bain Capital and NovaQuest Capital Management injected $125 million into Cerevel Therapeutics to help finance the entire Phase 3 trials of its promising therapy for Parkinson's disease.

In conjunction with PitchBook, the American Investment Council has released Improving Medical Technologies: Private equity's role in life sciences. PE's role as an innovative capital provider is much more extensive than many realize.

To download the report and learn more, click here.

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The most active PE investors in cybersecurity

(DrAfter123/Getty Images)

Since 2017, the top 10 private equity firms in the cybersecurity space have completed 146 deals with a median deal size of over $541 million, according to PitchBook data.

Tech-focused Thoma Bravo has completed the most deals, followed by TA Associates and Insight Partners.

Recommended Reads

Nike turns 50 this year, and the brand isn't planning on slowing down anytime soon. [The New York Times]

Why Netflix's setbacks may represent a warning for streamers. [Fast Company]

The SEC war on greenwashing has begun. [Bloomberg]

Since yesterday, the PitchBook Platform added:

13

VC valuations

1862

People

587

Companies

25

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2011 Vintage Global Real Assets Funds
	VC Deals
	China's MegaRobo snags $300M
	AlphaSense secures $225M Series D
	Edtech company UpGrad books $225M
	Metropolis collects $167M Series B
	DataStax brings in $115M
	B Capital leads $100M Series C extension for Fountain
	Turntide scores $80M
	Postscript picks up $65M Series C
	Fundraising
	Third Rock wraps Fund VI with $1.1B
	Felicis Ventures alums raise $450M for new VC firm
	Inovia Capital nabs $325M for fifth early-stage vehicle

The Daily Benchmark

2011 Vintage Global Real Assets Funds

Median IRR

3.44%

Top Quartile IRR

11.02%

1.17x

Median TVPI

Select top performers

FIP Lantánidos

Grain Infrastructure Fund

KKR Global Infrastructure Investors

*IRR: net of fees

29 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

China's MegaRobo snags $300M

Beijing-based MegaRobo has raised $300 million in a Series C led by Goldman Sachs Asset Management, Asia Investment Capital and GGV Capital. Founded in 2016, the company offers AI-based automation solutions for the life sciences industry.

View round

View similar company »

AlphaSense secures $225M Series D

AlphaSense has raised $225 million in a round co-led by Goldman Sachs Asset Management and Viking Global Investors, valuing the New York-based company at $1.7 billion. AlphaSense uses equity research, event transcripts, news, trade journals and more to provide a market intelligence and search platform for companies and financial institutions.

View round

View 31 competitors »

Edtech company UpGrad books $225M

UpGrad has raised $225 million at a $2.25 billion valuation from investors including Lupa Systems and Educational Testing Service, Bloomberg reported. The Indian edtech company partners with universities to offer an online higher education platform for working professionals and others.

View round

View 44 competitors »

Metropolis collects $167M Series B

Metropolis has raised $167 million in a round co-led by 3L Capital and Assembly Ventures. Based near Los Angeles, the company is the creator of a platform that uses computer vision and machine learning to automate parking operations for commercial real estate owners.

View round

View similar company »

DataStax brings in $115M

DataStax has raised $115 million in a round led by Goldman Sachs Asset Management. Based in Santa Clara, Calif., the company offers a multi-cloud serverless database that's designed to help enterprise customers build and run real-time applications.

View round

View 31 competitors »

B Capital leads $100M Series C extension for Fountain

Fountain, which offers a recruiting platform for gig and hourly workers, has raised $100 million in funding led by B Capital Group, adding to its Series C round. Based in the Bay Area, the company's customers include Sweetgreen, GoPuff and Deliveroo.

View round

View 14 competitors »

Turntide scores $80M

Turntide has raised $80 million at a more than $1 billion valuation from investors including OGCI Climate Investments and Fifth Wall. Based in the Bay Area, the company makes energy-efficient motors and electrification technologies intended for use in electric vehicles, building and agricultural operations.

View round

View 5 competitors »

Postscript picks up $65M Series C

Postscript has raised $65 million in a round led by 01 Advisors. The company provides an SMS-based marketing platform intended to help Shopify merchants offer personalized experiences to their customers.

View round

View 6 competitors »

PitchBook Webinar: How startups leverage database innovation to accelerate growth

AI, internet of things and information security are some of the fastest growing fields in the private market, capitalizing on innovation in database technology to propel their growth.

In our upcoming webinar, PitchBook senior analyst Brendan Burke will dive into software innovation trends, the startup environment that surrounds them and how they will impact the broader tech investment landscape.

Register for the webinar today

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Fundraising

Third Rock wraps Fund VI with $1.1B

Boston-based Third Rock Ventures has raised $1.1 billion for its sixth flagship fund, which will be used to continue the firm's focus on companies that improve the lives of medical patients. Third Rock has raised $3.8 billion to date and invested in 60 companies. The VC firm closed its fifth namesake vehicle on $770 million in 2019.

View fund

View 62 investments »

Felicis Ventures alums raise $450M for new VC firm

FPV, the VC firm founded by Felicis Ventures alumni Wesley Chan and Pegah Ebrahimi, has launched with $450 million, Bloomberg reported. The firm will reportedly target the consumer, enterprise and healthcare sectors, making deals at all stages, with a focus on early-stage transactions.

View fund

View 1 investments »

Inovia Capital nabs $325M for fifth early-stage vehicle

Inovia Capital has raised $325 million for its fifth early-stage fund, which it will use to invest in tech-focused companies. The vehicle has already backed healthtech startup Signal 1 and cybersecurity specialist Flare. Operating in Canada, the US and the UK, Inovia raised $334 million for its first continuation fund in October.

View details

View 196 investments »

Chart of the Day

Source: PitchBook's Q1 2022 US VC Valuations Report

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