PitchBook News - Editor's choice: Our top summer reads

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The Daily Pitch: VC

September 5, 2022

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Editor's Note

For Labor Day, PitchBook News presents a special edition revisiting some of our top articles from this summer, including exclusive features, commentary and analysis. Happy reading!

Today's Top Stories

What was Adam Neumann's big pitch?

(Michael Kovac/Getty Images)

We can't stop thinking about Adam Neumann. What did he say to land a billion-dollar valuation from Andreessen Horowitz for his real estate venture, Flow? And what was Marc Andreessen's justification for backing one of the most controversial founders in the world?

Critics and hot-takers weighed in after a16z's August announcement of its investment in Flow, reportedly $350 million. Neumann was dragged as yet another man who fails upward, and Marc Andreessen was caught in the critical crossfire, following recent headlines about his stance against multifamily housing development in his own community.

Flow could be just another honest crack at real estate tech, but it also portends a revival of the weirdness of WeWork with its yogababble, tortured branding and dubious promises of tech disruption.

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Q&A: Jefferies veteran dealmaker examines PE secondary market trends

(DNY59/Getty Images)

Falling valuations in public and private markets have put added pressure on the pace of private equity exits, which slowed in Q2 2022 for the second consecutive quarter. PE firms chose to hold on to portfolio companies longer, instead of selling investments at unattractive prices.

Yet the drop in exits, if followed by a decline in distributions, could lead to a flourishing secondaries market. On one side, many PE firms will pursue GP-led secondary deals to extend their ownership of valuable assets; on the other side, LPs may also resort to the secondary market to unload older assets and free up capital for new commitments.

We spoke to Andy Nick, a managing director at Jefferies' private capital advisory arm, about the private equity secondary market—including how it has fared amid sustained public market volatility and what to expect for secondary deal flow and pricing in the coming year.

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Market Map: Fintech payment startups hold their own in uncertain times

(PCH-Vector/Getty Images)

The increasing digitalization of financial services has benefited fintech startups over the last few years, with the pandemic speeding up this trend. The payments segment, in particular, has seen rapid change, leading to the rise of venture-backed startups selling corporate credit cards, payroll software and checkout services.

Explore our fintech market map to see where investors are putting their money.

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Here's what climate tech investors think of the Inflation Reduction Act

(Jenna O'Malley/PitchBook News)

When tech investor Abe Yokell heard about the $369 billion bill to fund climate investment in the US, he almost fell out of his seat. Yokell, a managing partner at Congruent Ventures, wasn't alone. Climate tech investors and advocates were shocked by the largest investment in decarbonization the US has ever made.

The package will supercharge an already strong environment for climate tech investment. US VC funding for climate tech has been on a tear, topping $16 billion in 2021, more than double the prior year, according to PitchBook data. And leading PE firms such as TPG and Brookfield Asset Management have raised billions to finance green projects.

Investors say the bill will reduce the green premium on pricey technologies, speed up the network effect of electric vehicles and renewable electricity, and provide capital that goes where VCs won't. In short, it's Christmas for climate tech.

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Emerging opportunities bring hydrogen fuel cells back to the stage

Hydrogen fuel cell technology, once viewed as the future of green cars, has fallen by the wayside as lithium-ion batteries have gained traction as the primary means of powering electric vehicles. While many larger corporate and state players have made substantial investments in the space, VC activity has remained limited compared with investment into battery-powered mobility solutions.

Our recent Emerging Tech Research analyst note tracks recent VC deal activity in the hydrogen EV sub-segment and explores emerging applications in trucking, aerospace, warehousing and marine vessels, sectors wherein the climate-friendly fuel has the potential to outperform its gas and electric peers.

read it now

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Wealth managers want to pass the baton. PE firms are ready.

(Drew Sanders/PitchBook News)

A once-in-a-generation wave of consolidation is sweeping the wealth management industry, fueled by PE interest, generational turnover and acquisitions.

Founders and other senior executives are eyeing retirement at the same time that private equity firms have been drawn to wealth managers' recurring asset-based fee revenue, low churn and the potential to hasten growth.

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Middle-market PE firms prepare for a shift

(PM Images/Getty Images)

As the private equity world begins winding down from a torrid year of dealmaking, some sponsors in the middle market have switched into "risk-off" mode.

The public markets' downturn and subsequent volatility, along with rising interest rates and the possibility of a recession, have led middle-market sponsors to begin changing their approach to dealmaking after 2021's good times.

Those factors are creating opportunities to scale platform companies through add-on acquisitions and buy high-growth businesses held in VC portfolios at lower prices.

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