PitchBook News - VC deal terms by founder experience

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The Research Pitch

September 3, 2022

Presented by Laika

Market jitters return. Comments of further tightening in the US and Europe, and more warnings about pain ahead for consumers and businesses, sent equity and debt markets lower in August. To get our latest monthly breakdown, tracking returns across a range of indexes and sectors, click here.

What is the metaverse, exactly? Our premium research, which outlines seven core principles on how metaverse advocates and skeptics differ in their thinking, has been immensely popular. Read a free preview.

Serial entrepreneurs raise more capital—but at what cost?

Andreessen Horowitz recently wrote its largest check ever, to the tune of $350 million, securing a significant position in a serial entrepreneur-led startup called Flow.

Acknowledging the ever-present investor need to mitigate as much risk as possible in various market conditions, we ask the question:

What factors contributed to the materialization of such a deal?

Despite Adam Neumann's checkered history of generating strong returns, we believe he was able to leverage his reputable experience as a successful serial entrepreneur to garner new investment.

Experience matters in VC valuations. Click to see more data.

Raising capital is an incredibly arduous endeavor. For a startup founder, it's akin to baring one's soul.

One's initial intent to transform lives, industries, or societal inefficiencies is scrutinized down to the finest detail in an effort to expose return-damaging flaws and justify withholding investment.

Not only do investment due diligence processes finely comb through the startup's operations, but there is a pervasive emphasis on the entrepreneurial pedigree of founders.

That emphasis has allowed serial entrepreneur-led startups to leverage their experience and raise their first round of institutional capital seven to nine months ahead of their peers.

According to our data, a serial entrepreneur's experience not only streamlines the fundraising process but can generate deal sizes and pre-money valuations 2x-4x larger than their counterparts.

Our latest analyst note takes a closer look at the fundraising trends of successful serial entrepreneurs to quantify the level of influence entrepreneurial pedigree carries in the venture capital ecosystem.

Download the free research: Serial Entrepreneurs Raise More Capital, but at What Cost?

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

Best,

Max Navas
Analyst, Venture Capital

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Market Updates

Private real estate fundraising appears to be in decline—an unexpected development for a strategy typically regarded as an inflation hedge.

A shift in investors' interest has combined with the evolution of opposing market forces to alter the landscape, according to our latest Global Real Estate Report. Among the takeaways:

In H1, real estate made up a smaller share of total private market capital raised than in any year on record, due in part to the lure of real assets amid infrastructure's recent steadfast performance.

Real estate's one-year horizon IRR reached 24.8% through 2021—its best performance in a decade and just shy of the all-time high reached in 2011.

Opportunistic funds dominated capital raised, accounting for over 50% of the total, while distressed funds fell to just 1%, which may seem surprising in the current market.

get the free report

The VC storyline this year has been a sea change from the record-shattering figures of 2021.

Market volatility and falling valuations have altered the dealmaking and exit landscapes, and the future has, at times, seemed bleak.

Yet there are reasons for optimism, as public market performance has begun to stabilize and dealmaking carries on, according to our latest Quantitative Perspectives report.

Our research features more than 30 new charts on VC deals, exits, valuations, and more—quantifying trends like just how much dealmaking negotiations have swung in favor of investors:

get the free report

Thematic Research

Subsector and Startup Profile: Real Estate Tokenization + Lofty

The division of real estate into digital tokens has the potential to solve issues like illiquidity and high barriers to entry, which have long been associated with real estate investing.

Our new analyst note—which includes a startup profile on Miami-based Lofty—explores how the emergence of networks such as Ethereum, Algorand, and Solana has enabled VC-backed companies to slice real estate into small pieces stored on blockchains and traded.

Growing demand among both institutional and retail investors for exposure to the sector supports tokenization, yet barriers to adoption remain:

read the free research

Emerging Tech Research

VCs have put the brakes on insurtech.

And our analysts expect venture investment in the sector will slow for the foreseeable future.

In Q2, global VC funding in insurtech fell 42.1% year-over-year to $2.6 billion, as startups faced increased scrutiny and companies debuting on the public markets watched their stock prices plummet.

Our Insurtech Report unpacks the sector's VC trends and highlights emerging opportunities in climate change insurance and no-code insurance platforms. It also includes company spotlights on Noyo, Nuon AI, and Herald:

read a free preview

In the News

Our insights and data featured in the press:

After the San Francisco Bay Area and New York, the Los Angeles area has surpassed Boston to become the third-largest venture market in the country. [The Information]

VC investment in supply chain tech skyrocketed from $8.3 billion across 780 deals in 2017 to $41.3 billion across 1,203 deals last year. [Business Insider]

Valuations in early-stage rounds dropped 16% in the second quarter of 2022—the first decline since the start of the pandemic. [Wired]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

Webinars & Events

One upcoming 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.

ICYMI

Highlights from our other recent research:

Market updates

Global Private Markets Fundraising Report
European VC Valuations Report
US VC Valuations Report
Global Fund Performance Report
Global M&A Report

Thematic research

Emerging Technology Research

Coming next week (subject to change)

Greater China VC Report
UK & Ireland Private Capital Breakdown
ETR: AI & Machine Learning*
ETR: Carbon & Emissions Tech*

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PitchBook News - VC deal terms by founder experience

Older messages

The price of being a serial entrepreneur

VCs put the brakes on insurtech

Real estate's complex reality

Breaking down the metaverse

VC looks ahead to brighter days

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