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The Daily Pitch: VC

August 24, 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:

PE finds a stable sector ripe for dealmaking: cybersecurity. Deal value so far in 2022 has already reached a new record for the decade.

How this year's market uncertainty has shaped valuations across stages and sectors, according to our Q2 2022 US VC Valuations Report.

Six charts that highlight how European VC valuations fared in the first half of the year.

Today's Top Stories

How uncertainty has shaped different stages of US VC valuations

US VC valuations have begun, in some ways, to mirror the broader market uncertainty, but certain stages and sectors have proved remarkably resilient, as some startups remain able to demonstrate their potential for value creation.

Our Q2 2022 US VC Valuations Report, sponsored by Silicon Valley Bank, shows how investor sentiment has—and hasn't—changed over the past quarter, and what that may mean for deal sizes, liquidity and more as the year goes on. Key takeaways from the report include:

Early-stage median pre-money valuations showed signs of contractions, recording their first quarter-over-quarter decline in more than two years, falling 16% in Q2 to $52 million.

Seed-stage investment has held up better than any other stage, with deal counts and sizes remaining elevated and median pre-money valuations up 33% this year over 2021.

Nontraditional investors have concentrated their more cautious behavior at the top end of the market—the top quartiles of deal size participation and valuation both fell by more than 13% in H1, but such declines aren't present at the medians.

Only 10 public listings for companies valued over $1 billion were recorded through June 30, compared with more than 100 in 2021, as the public market climate continues to put pressure on exit valuations.

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H1 European VC valuation trends in six charts

(wacomka/Shutterstock)

European VC valuations are faring better than expected given the more challenging market conditions for venture investors and startups.

Valuations rose across all stages in the first half of 2022, but the growth is unlikely to last as we head toward the end of the year.

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A message from Treya Partners

E-commerce: Long-term revenue impact of holiday peak performance

Poor performance during holiday peak for e-commerce companies can impact revenue far beyond the holiday season, with the primary driver of customer experience being timely order fulfillment. E-commerce companies looking to out-perform their competitors must now manage a volatile supply chain, challenges with maintaining sufficient inventory, and the rising cost of shipments.

In this article, we cover common challenges and issues that e-commerce companies will encounter in the 2022 peak holiday season and a guide to reduce fulfillment challenges, thereby driving higher customer satisfaction and securing revenue both for today and the future.

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PE dealmaking thrives in cybersecurity sector

(Song_about_summer/Shutterstock)

PE firms are on pace this year to conclude cybersecurity deals worth a record amount as investors look to take advantage of the sector's declining valuations and stable business model characterized by low client churn and high margins.

Other forces driving industry consolidation, and opening the door to PE deals, include its fragmented state—which lends itself to buy-and-build strategies—and customers' increasing desire to do business with a single cybersecurity firm for all their needs instead of buying piecemeal offerings from small niche producers.

Recommended Reads

How Sam Bankman-Fried, owner of an expanding crypto empire, is trying to bail out the industry after its sharp downturn. [The Wall Street Journal]

For the first time since its founding, Pershing Square Capital has a new CIO. [Institutional Investor]

Scientists are learning more about the human genome by studying people who look alike but aren’t related. [The New York Times]

Since yesterday, the PitchBook Platform added:

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Quick Takes

	The Daily Benchmark
	2012 Vintage Global VC Funds
	A message from Moss Adams
	Insights for industry deals
	VC Deals
	Celonis raises $1B at nearly $13B valuation
	Yonghui seeks new funding ahead of $1.5B IPO
	Anyscale adds $99M to Series C
	Digital Diagnostics secures $75M in KKR-led round
	Ready Player Me picks up $56M
	Inworld AI secures $50M for virtual characters
	VendorPM brings in $20M Series A
	Zitara raises $12M to advance battery management systems
	Fundraising
	Medical Excellence Capital closes on $145M

The Daily Benchmark

2012 Vintage Global VC Funds

Median IRR

19.21%

Top Quartile IRR

33.92%

2.13x

Median TVPI

Select top performers

BioGeneration Ventures II

Emergence Capital Partners III

Flagship Ventures Fund IV

*IRR: net of fees

37 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

A message from Moss Adams

Insights for industry deals

The volatile market conditions of 2022 affect the recent record high transaction activity in the broadband and telecommunications sector.

Longer-term factors in the industry, including the advances of managed services, plus overall demand for greater technical capacity, remain intact and will likely help revive dealmaking in the medium term. Deal sizes across venture, PE, and M&A remain on the upper end when they close, even in the more subdued dealmaking climate.

Explore how current market trends and conditions could affect your business and any potential transaction plans in this industry report.

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VC Deals

Celonis raises $1B at nearly $13B valuation

Celonis, a process mining software provider, has raised a $400 million Series D extension led by the Qatar Investment Authority. The funding also includes a $600 million credit facility and values the Munich-based company at nearly $13 billion.

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View 22 competitors »

Yonghui seeks new funding ahead of $1.5B IPO

Yonghui Fresh Food is aiming to raise $200 million ahead of its $1.5 billion IPO, Bloomberg reported. Backed by Sequoia, Hillhouse Capital and Tencent, the company delivers fresh food products.

View details

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Anyscale adds $99M to Series C

Anyscale has raised an additional $99 million in Series C funding co-led by Addition and Intel Capital. Based in the Bay Area, the company offers a platform for scaling AI applications. In December, Anyscale raised $100 million in a round co-led by Andreessen Horowitz and Addition.

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View 17 competitors »

Digital Diagnostics secures $75M in KKR-led round

Digital Diagnostics has raised a $75 million Series B led by KKR. The company is the developer of an AI-based healthtech platform for autonomous and assisted medical diagnosis.

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View 15 competitors »

Ready Player Me picks up $56M

Ready Player Me has raised a $56 million Series B led by Andreessen Horowitz. The Estonia-based company offers a platform for creating cross-game avatars.

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View 8 competitors »

Inworld AI secures $50M for virtual characters

Inworld AI has raised a $50 million Series A co-led by Section 32 and Intel Capital. Based in the Bay Area, the company provides a platform for developing AI-driven virtual characters for use in gaming, the metaverse and business applications.

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View similar company »

VendorPM brings in $20M Series A

VendorPM has raised $20 million in a round led by Prudence, with support from investors including Bessemer Venture Partners, Navitas Capital and Alate Partners. Based in Toronto, the company's property management platform connects building managers and service vendors in the US and Canada.

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View similar company »

Zitara raises $12M to advance battery management systems

Zitara has raised a $12 million Series A led by Energy Impact Partners. Based in the Bay Area, the company provides embedded software for battery-powered assets. NextView Ventures, Collaborative Fund and Trucks VC also participated in the round.

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View similar company »

Fundraising

Medical Excellence Capital closes on $145M

Medical Excellence Capital has held a first close of its inaugural fund on $145 million. The vehicle has already deployed funding in seven life sciences companies, including Aspen Neuroscience and Immunitas Therapeutics.

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View 7 investments »

Chart of the Day

Source: PitchBook's Q1 2022 Real Assets Report

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