PitchBook News - Challenges linger for insurtech

Foodtech reckons with rising prices; ESG scrutiny boosts sustainability specialists; Wonder savors $350M; Overair lands $145M for electric aircraft
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The Daily Pitch: VC
June 15, 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 Q1 2022 Insurtech Report examines why venture funding for such companies is slowing down.

  • Our foodtech market map explores how investors are reacting to changes in consumer demand.

  • Sustainability ratings provider EcoVadis is seizing on increased scrutiny of corporate ESG goals by raising a $500 million investment.
 
Today's Top Stories  
Insurtech sector to meet obstacles for the foreseeable future
The insurance industry has been generally slow to adopt new technologies that enable companies to drive cost savings, efficiency and productivity across the entire insurance value chain. And while increased competition, COVID-19 and other factors have encouraged innovation in the sector, analysts believe that venture funding for insurtech companies will slow for the foreseeable future.

Our Q1 2022 Insurtech Report breaks down the industry's landscape, VC activity in the space, crypto insurance and more. Some key takeaways include:
  • Insurtech companies have been viewed as overpriced in the private markets, and this is reflected in our index of recently listed public insurtech companies, which was down more than 40% over the 12 months ending March 31.

  • In Q1 2022, insurtech companies globally raised $2.6 billion across 154 VC deals, representing a 13.4% quarter-over-quarter decrease in deal value and the lowest amount of invested capital since Q3 2020.

  • During the quarter, the median pre-money valuation for VC-backed, late-stage insurtech companies decreased 61.9% to $68.5 million.
read the preview
 
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Market Map: Foodtech reckons with rocketing grocery prices
(Malte Mueller/Getty Images)
Consumer buying habits are changing as rapid inflation shows up in prices at the grocery store. The shift is creating risks and opportunities for foodtech startups and incumbents, who must adjust priorities ahead of an expected decline in consumer demand over the coming quarters.

Our foodtech market map explores how the industry is reacting and investing in light of these challenges.
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A message from West Monroe  
A new approach to unlock divestiture value
M&A due diligence windows and access to management are shrinking. It's more important than ever for buyers and their advisors to have a well-defined divestiture approach.

Yet too often, their approach is solely focused on standalone run-rate and one-time costs rather than identifying potential value from a top-line revenue, profitability, and cashflow perspective.

These buyers, in their urgency to establish the carveout separation, also risk replicating inefficient systems and processes.

To gain a competitive edge in the bid process, strategic and private equity buyers should look beyond these conventional approaches. West Monroe recommends starting here:
  • Replace a separation management office with a value management office
  • Quantify the value of data analytics assets
  • Focus on talent transformation
  • Optimize technology investments
Learn new ways to unlock divestiture value
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ESG scrutiny gives sustainability platforms a boost
(Jasmin Merdan/Getty Images)
With a fresh $500 million investment, sustainability ratings provider EcoVadis is seizing on an opportunity to measure corporate ESG.

An ongoing debate on the uses and abuses of ESG has prompted regulators and corporations to seek more standardized reporting. Enter a cadre of startups that have joined EcoVadis with larger round sizes to capture growth in the nascent sector.
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Allocator perspectives on 2022's market challenges
Various forces have disrupted the global markets over recent years. While supply chain issues caused by the COVID-19 pandemic and Russia's invasion of Ukraine have upset global markets and blindsided analysts, many investors that have anticipated a resurgence of inflation since the stimulus coming out of the global financial crisis may feel better prepared to address the current environment.

It remains to be seen if the supply-driven inflation can be rectified structurally before lasting damage occurs. Reports of hiring freezes have become prevalent, even as unemployment remains at historically low levels.

Our recent analyst note discusses factors LPs are considering in 2022, including the denominator effect, call and distribution activity, and opportunistic tactics for the current environment. Key takeaways include:
  • Overall, there is still plenty of dry powder available to support existing portfolios, though that will vary from fund to fund.

  • Inflation and rising interest rates can be destructive to investment returns, but LPs are tactically eyeing cash, real estate, real assets and private debt for potential areas of relief.

  • LPs are likely to take a breath at times of market volatility, though how long that breath lasts can depend on factors such as governance and the portfolio's purpose.
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Recommended Reads
Ithaca, New York, has committed to fully decarbonizing by 2030. To achieve that goal, the city is creating a "digital twin" that can model energy use, building by building. [Bloomberg]

Apple wants to end passwords for everything. Here's how it would work. [The Wall Street Journal]

The past two years have been blighted by supply shortages, but now, some retailers are struggling with the opposite problem: a deluge of stuff nobody wants to buy. [Wired]
 
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Quick Takes  
  The Daily Benchmark  
  2014 Vintage Global Debt Funds  
  A message from ON Partners  
  Shifting the operating partner role in 2022  
  VC Deals  
  Wonder gathers $350M in Series B funding  
  Overair takes off with $145M  
  Invoca hits $1.1B valuation with $83M round  
  DealHub locks down $60M  
  The Wildcard Alliance bags $46M for Web3 gaming  
  Proscia secures $37M  
  Metawave takes home $26M in convertible and debt financing  
  Fundraising  
  Sequoia scores $2.85B for investing in India and Southeast Asia  
  Amplify Partners nails down $700M  
  Suzano launches CVC arm with $70M  
  Launch Africa raises $36.3M for inaugural fund  
 
 
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The Daily Benchmark  
2014 Vintage Global Debt Funds
Median IRR
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Top Quartile IRR
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Median TVPI
Select top performers
Strategic Value Special Situations Fund III
KSL Capital Partners Credit Opportunities Fund
GoldenTree Distressed Fund II
*IRR: net of fees
56 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
A message from ON Partners  
Shifting the operating partner role in 2022
ON Partners, a top-20 retained executive search firm, has further established its position at the intersection of functional C-level posts, PE-backed companies and operating partner roles spanning a variety of industry sectors.

So far in 2022, consultants at ON see demand growing for executives with active, functional experience, such as GTM, operations, IT and finance, to take on OP roles to strengthen and elevate these key functions across the portfolio.

With the potential of increased market volatility, having a functional OP available to help a PE firm with due diligence before acquiring a company—and improving operations within the existing portfolio—is key.

To learn more about the evolution of the operating partner role and what's driving the change, click here.
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VC Deals  
Wonder gathers $350M in Series B funding
New York-based Wonder has raised a $350 million Series B led by Bain Capital Ventures. The startup partners with chefs to create and deliver food to customers via mobile restaurants. It is currently working to launch 11 additional restaurants.
View round
 
View similar company »
 
Overair takes off with $145M
Overair, an electric vertical takeoff and landing vehicle company, has raised $145 million from Hanwha Systems and Hanwha Aerospace. The startup will use the funding to support an all-electric experimental prototype that's expected to fly in the second half of 2023. Overair was spun out of Karem Aircraft in 2020 and is based in Santa Ana, Calif.
View round
 
View 8 competitors »
 
Invoca hits $1.1B valuation with $83M round
Invoca, a provider of AI-based conversation intelligence for revenue teams, has raised an $83 million Series F. The funding was led by Silver Lake and values the company at $1.1 billion. Invoca's tech is used by marketing, sales, customer experience and ecommerce teams.
View round
 
View 42 competitors »
 
DealHub locks down $60M
DealHub has raised $60 million in a round led by Alpha Wave Ventures. The Austin-based company offers a unified configure price quote, contract lifecycle management, and subscription management platform for sales organizations.
View round
 
View 60 competitors »
 
The Wildcard Alliance bags $46M for Web3 gaming
Web3 game developer The Wildcard Alliance, a subsidiary of Texas-based Playful Studios, has raised a $46M Series A led by Paradigm. Griffin Gaming Partners and Sabrina Hahn also participated in the round.
View round
 
View 3 competitors »
 
Proscia secures $37M
Proscia has raised a $37 million Series C from investors including Highline Capital Management, Triangle Peak Partners and Alpha Intelligence Capital. The Philadelphia-based company, which is working to digitize pathology research, has now raised around $72 million in total funding.
View round
 
View 23 competitors »
 
Metawave takes home $26M in convertible and debt financing
California-based Metawave has raised $26M in convertible and debt financing as it prepares for its upcoming Series B. The company's sensor technology helps autonomous vehicles detect objects in all weather conditions.
View round
 
View 2 competitors »
 
 
Fundraising  
Sequoia scores $2.85B for investing in India and Southeast Asia
Sequoia has raised $2.85 billion to support investments in India and Southeast Asia. The new capital consists of growth and venture funds for the firm's India division and an $850 million Southeast Asia fund, its first vehicle dedicated to the region.
View details
 
View 1,106 investments »
 
Amplify Partners nails down $700M
Amplify Partners has raised $700 million across a pair of funds: $400 million for its fifth namesake effort, which will back early-stage startups, and $300 million for its fifth select vehicle, which will support existing portfolio companies. The California-based firm backs startups that build technical products using machine learning and AI.
View details
 
View 115 investments »
 
Suzano launches CVC arm with $70M
Suzano, a Brazilian hardwood pulp producer, has revealed the launch of Suzano Ventures, a global corporate venture capital initiative. Targeting seed and Series A deals, the VC arm will invest $70 million across a variety of businesses that are addressing environmental challenges.
View details
 
View 7 investments »
 
Launch Africa raises $36.3M for inaugural fund
Launch Africa Ventures has closed its first fund, raising $36.3 million in commitments. Based in Mauritius, the firm typically backs B2B and B2B2C startups at the seed and pre-Series A stages, with average check sizes of up to $300,000. Launch Africa has invested in 108 startups across 21 African countries.
View fund
 
View 94 investments »
 
 
Chart of the Day  
Source: PitchBook's Q1 2022 Global M&A Report
 
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