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The Daily Pitch: VC

August 23, 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 analysts outline seven core principles of the metaverse and analyze opportunities and challenges in the nascent vertical.

Publicly traded US PE firms could focus more of their firepower on acquiring stakes in their rivals.

Real assets fundraising is on pace to reach a decade-plus high, according to our Q2 Global Private Markets Fundraising Report.

Today's Top Stories

What is the metaverse, exactly?

From executive pronouncements to headlines and convention centers, talk of the metaverse is everywhere, but what exactly is it? Our latest Emerging Tech Research vertical snapshot aims to answer that question by outlining seven core principles of the metaverse that illustrate how both advocates and skeptics differ in their conceptions of a more immersive digital future.

The report analyzes metaverse opportunities and challenges across the pillars of access, infrastructure and experience—dimensions that capture the core areas of disruption entrepreneurs and executives will have to face as they ponder the future of the internet. The report also spotlights VC activity, key players and acquisitions in the vertical, as it unpacks how VCs can hope to capitalize on the metaverse.

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Rising real assets, declining dry powder and other global fundraising trends

Private fundraising totaled $639 billion in H1, roughly on pace to reach 2021's figure. LPs were largely undeterred from making commitments, as record distributions soothed fears about the private markets seizing up and the chance to capitalize on dipping valuations kept investors coming back to the table.

But what does the latter half of the year hold? Our Q2 2022 Global Private Markets Fundraising Report (formerly known as the Global Private Fund Strategies Report) follows the flow of capital, tracking the ups and downs of different strategies. The report, sponsored by Altvia, also includes a spotlight on the state of dry powder. Among the takeaways:

PE fundraising grew 46% in Q2 from Q1 to top $137 billion, but the slow exit environment is reducing capital flow back to LPs, potentially hindering future commitments.

The uncertain exit landscape, coupled with portfolio markdowns, is also putting pressure on VC fund returns, which may slow new fundraising through the rest of the year.

Real assets surpassed $44 billion in Q2, a slight dip from Q1, but 2022 remains on pace to overtake not only 2021's record, but potentially annual totals going back to 2008.

Dry powder looks to be on the decline, falling 13% from 2020's high to a total of $3.2 trillion as of June 30, with the trend felt more sharply in private equity.

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A message from RSM

How private equity fund managers are responding to dropping fund performance

Inflationary pressures, supply chain constraints, rising discount rates and more are prompting the market to revise portfolio company growth rates. As a result, private equity fund performance is set to drop. Managers with funds approaching the end of their term and facing sales are looking either at delaying exits or giving back unrealized gains from the past couple of years.

Navigating the economic slowdown may be difficult. RSM's financial services analyst presents the data, challenges and options for fund managers, as well as top considerations to offset the slowdown's impact on private equity.

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SoftBank led LatAm's rise, and its retreat

São Paulo (Caio Pederneiras/Shutterstock)

Few investors have made their mark on a region like SoftBank has in Latin America. The Japanese firm was involved in more than a third of LatAm VC deals by value since 2019 and amassed a stable of unicorns along the way.

But in 2022, SoftBank has pulled back as part of a wave of retreating investors. That has contributed to a sharp correction in VC funding for LatAm startups—one that risks erasing the significant gains made in last year's boom times.

Recommended Reads

Startups are hoping to create cleaner jet fuels out of carbon—now at a much cheaper cost because of tax credits for clean fuel production from the Inflation Reduction Act. [CNBC]

The IPO market is on pace for its worst year in decades, leaving fledgling companies with few options but to burn through cash while they wait for the stock market to calm. [The Wall Street Journal]

Ecommerce software startups are set up for an M&A spree as earlier-stage companies may soon become open to exits at lower valuations. [The Information]

Since yesterday, the PitchBook Platform added:

18

VC valuations

1898

People

565

Companies

17

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2017 Vintage Global PE Funds
	VC Deals
	Fervo Energy raises $138M
	Tamara brings in $100M
	Japanese healthtech startup Ubie lands $26M+
	Highline banks $13M Series A
	Myplanet secures $11M
	Avelos Therapeutics wraps up $8M

The Daily Benchmark

2017 Vintage Global PE Funds

Median IRR

26.05%

Top Quartile IRR

36.93%

1.57x

Median TVPI

Select top performers

Spectrum Discretionary Overage Program

Falfurrias Capital Partners Fund III

HgCapital Mercury 2

*IRR: net of fees

141 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Fervo Energy raises $138M

Fervo Energy has raised $138 million in a round led by DCVC. The company uses technologies from the oil and gas sector such as horizontal drilling and distributed fiber optic sensing to generate carbon-free geothermal power.

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Tamara brings in $100M

Saudi Arabia-based Tamara has raised $100 million in a round led by Sanabil Investments, Arab News reported. Founded in 2020, the fintech company is a provider of a buy now, pay later platform.

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Japanese healthtech startup Ubie lands $26M+

Ubie has raised a $26.2 million Series C from investors including Norinchukin Capital, NVenture Capital and Dai-ichi Life Insurance. Based in Tokyo, the company offers a medical data platform designed to help patients, medical institutions and pharmaceutical companies connect and share information.

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Highline banks $13M Series A

Highline has raised $13 million in a round led by Jump Capital, Costanoa Ventures, Foundation Capital and other investors. The Dallas-based company's payments platform offers automated bill payments and related services.

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View 1 competitors »

Myplanet secures $11M

Myplanet has raised $11 million in a round led by Tercera. The company develops an online consultancy platform for retailers.

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View similar company »

Avelos Therapeutics wraps up $8M

Avelos Therapeutics has raised an $8 million Series A from investors including SV Investment, UTC Investment and Quad Investment Management. Based in South Korea, the company is the developer of an oncology drug discovery platform.

View details

View 127 investments »

Chart of the Day

Source: Q2 2022 PitchBook Analyst Note: Private Equity's Opportunity in Supply Chain Management

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PitchBook News - Exploring the metaverse

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