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PitchBook News - VC's silver linings playbook

Also: What is the metaverse, exactly?; Top-performing VCs continue to place early bets on Web3 & DeFi; Guides on leveraged loans and high-yield bonds.
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The Research Pitch
August 27, 2022
Following PitchBook's acquisition of LCD, we've begun publishing research and news covering the US leveraged loan landscape. Be sure to check out these new guides! You can read LCD's news content here.
 
Public market declines will allow VCs to invest at more appealing prices
Pandemic effects have begun to ease and investors are looking ahead to inflation pressures.

Commodity shocks have resulted in high energy prices globally, and all eyes are on the Fed's response as time goes on. US public market declines starting in September have reached a nadir for the moment, and investors are considering their next steps.

In our latest Quantitative Perspectives report, we review how public market declines have reduced VC valuations.

We see ample opportunity for managers to deploy capital at attractive entry multiples. There is significant capital available to startups—even as the estimated demand for capital increases at both the early and late stages—and public market performance has begun to stabilize and even improve.
 
Charting annual changes in the Nasdaq and VC deal value.

Here are some key takeaways from the research:
  • Public companies that were previously VC-backed have had their price-to-sales multiples uniformly sliced, with the median ratio falling from 17.3x to 5.6x over the last year.

  • Late-stage demand for capital has increased YoY at twice the rate of the early stage. This translates to more opportunities for investors to negotiate with startups at that stage, especially as the ratio of capital demanded to the supply of capital shifts in favor of the investor.

  • Despite exit market headwinds, VC dealmaking has swung in favor of investors since peaking in founder friendliness in Q1 of this year, according to our VC Dealmaking Indicator. Lower valuations and increased capital demand have been the most investor-friendly conditions over that period.
For more data and analysis, click to download the free report: Silver Linings on the Time Horizon.

Feel free to reach out with any questions or feedback, or if you would like to discuss the research.
 
Best,

Alex Warfel, CFA
Quantitative Research Analyst
Share: Email LinkedIn Twitter Facebook
 
Emerging Tech Research  
 
What is the metaverse, exactly?

Our latest 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:
read a free preview
 
 
Top VCs are standing by Web3 & DeFi in their early-stage bets.

Traditionally strong tech categories, like fintech, have seen a funding drop.

Our Emerging Tech Indicator tracks activity from the world's 15 most successful VC firms in order to gauge technology funding trends, as overall ETI funding in Q2 declined significantly on a quarterly basis.

The report also provides an overview of the pace of early-stage investment trends across different areas of technology, diving deep within key segments like Web3 & DeFi, DevOps, foodtech, AI & machine learning, and ecommerce:
get the free report
 
 
Webinars & Events  
One new event for your calendar:
  • Sept. 14: Join PitchBook analysts Dylan Cox and Nalin Patel for a discussion on the progress of Europe's private capital market in the first half of 2022, with updates on deals, exits and fundraising activity. Register here.
 
In the News  
Our insights and data featured in the press:
  • Ultimately, Amazon's M&A activity points to it assembling the building blocks for a large health service offering value-based care. [FT]

  • Investor pressure forces fintechs to rethink inclusion goals. [Bloomberg Law]

  • Why VCs are flocking to fund metaverse startups. [Business Insider]

  • Dry powder falls as rising interest rates choke off cheap cash for investors. [City A.M.]

  • Venture capital deals in Europe are keeping a fast pace in 2022. [Bloomberg]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.
 
ICYMI  
Highlights from our other recent research:

Market updates
Thematic research
Emerging Technology Research
Coming next week (subject to change)
  • Real Estate Report
  • Global Markets Snapshot: August
  • ETR: Insurtech
  • Analyzing the data on serial entrepreneurs
 

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