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PitchBook News - VC, PE and a healthcare disruption

US PE middle market a mixed bag; PE's growing bet on vets; Prime Movers Lab raises $500M fund; Morpheus Space lands $28M
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The Daily Pitch: VC
September 15, 2022
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In today's Daily Pitch, you'll find:
  • Middle-market dealmaking stayed steady in H1, but fundraising was another story, according to our new US PE Middle Market Report.

  • Pet ownership in the US has grown dramatically in recent years, and so has PE's footprint in the veterinary industry.

  • How PE and VC could benefit from Walmart, Amazon and CVS disrupting healthcare services.
 
Today's Top Stories  
Walmart, Amazon, CVS want to disrupt healthcare services. Here's how PE, VC could benefit
(Courtesy of Walmart)
Walmart has a 10-year partnership with UnitedHealth. Amazon plans to acquire One Medical. CVS has a deal to buy Signify Health.

What does the retail wave mean for healthcare? Senior healthcare analyst Rebecca Springer unpacks these outsiders' strategies and what it all means for incumbent PE- and VC-backed companies.
read more
 
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Dealmaking holds steady, fundraising slows in US PE middle market
PE deal activity in the US middle market totaled $228.2 billion in H1—a sharp drop from 2021's record but on pace for a healthy year nonetheless. Firms have abundant dry powder, and large GPs averse to making massive bets in the current environment have eagerly turned their eyes to smaller investment opportunities.

Yet the middle market's size advantage in the dealmaking space proves a hindrance when it comes to fundraising, according to our Q2 2022 US PE Middle Market Report, sponsored by Antares Capital and Baker Tilly. Among the takeaways:
  • The crowded fundraising landscape is expected to have its biggest negative effect on the middle market, as LPs pushed near their allocation limits prioritize relationships with larger, more-established fund managers.

  • Add-on activity accounted for 73% and 62.5% of deal count and value, respectively—both all-time highs.

  • Deal sizes have trended downward, with middle-market deals over $500 million making up their lowest share of count and value in at least a decade.

  • Exit activity in Q2 fell for the second consecutive quarter, with the cumulative value of $35.6 billion falling below the average quarterly value for the five years pre-pandemic.
read it now
 
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A message from the U.S. National Science Foundation  
Invention to impact
With phone scams and phishing texts on the rise, Forward Edge-AI is developing artificial intelligence for public safety and national security using machine learning and blockchain technologies.

Forward Edge-AI (NSF-2028451) is one of hundreds of deep tech startups funded annually by the National Science Foundation (NSF), a government agency that plays a central role in accelerating discoveries into the marketplace.

Each startup can receive up to $2 million to support translational research & development. By investing roughly $200 million in startups annually, NSF helps teams navigate the earliest stages of technology translation. In the past five years, these companies have gone on to raise billions in follow-on capital, and the portfolio has had 200+ exits.

Learn more about NSF funding at seedfund.nsf.gov.
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Got a pet? There's a good chance that private equity backs your vet
(Bachkova Natalia/Shutterstock)
More than 90 million households in the US have at least one pet, nearly all of which will require a trip to the vet at some point. As pet ownership has surged in recent years, so too has the veterinary sector—and private equity's interest in it.

PE deals in the vet industry have totaled over $45 billion since the start of 2017. We spoke to investors about the sector's appeal, as well as its challenges.
read more
 
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VCs put the brakes on insurtech
In an industry that is slow to embrace new tech, insurtech startups are finding success developing fresh approaches to established practices like underwriting and claims management and penetrating new markets such as cyberrisk.

However, the outlook for insurtech companies is still challenged, and PitchBook analysts expect venture investment in the sector will slow for the foreseeable future. In Q2, global VC funding fell 42.1% year-over-year to $2.6 billion, as insurtech startups selling risk faced scrutiny and those debuting on the public markets watched their stock prices plummet.

Our recent Emerging Tech Research report on insurtech unpacks the sector's VC trends and spotlights emerging opportunities in climate change insurance and no-code insurance platforms. It also includes company highlights on Noyo, Nuon AI and Herald.
read the preview
 
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Recommended Reads
The world's biggest automakers are betting on a startup taking advantage of the Inflation Reduction Act to recycle old batteries as material for building electric cars. [The Wall Street Journal]

Rather than selling Patagonia or taking it public, the founder has transferred ownership to a specially designed trust and a nonprofit organization. [The New York Times]

The airlines are wondering why passengers aren't stowing their carry-on bags like tacos. [The Wall Street Journal]
 
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Quick Takes  
  The Daily Benchmark  
  2016 Vintage Global Debt Funds  
  VC Deals  
  Acelyrin banks $300M Series C  
  Nile emerges from stealth with $125M  
  Redesign Health brings in $65M  
  Podcasting platform Podimo picks up $58M+  
  Cyrebro secures $40M  
  Construction tech startup Kojo raises $39M  
  Morpheus Space collects $28M  
  Nyshex nabs $25M Series B  
  Fundraising  
  Prime Movers Lab raises $500M  
  Two Sigma Ventures brings in $400M  
 
 
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VC Deals  
Acelyrin banks $300M Series C
Acelyrin has raised $300 million in a round led by Access Biotechnology. Based in Los Angeles, the company is a developer of drug candidates for inflammatory diseases like psoriatic arthritis and axial spondyloarthritis.
View round
 
View similar company »
 
Nile emerges from stealth with $125M
Nile has raised $125 million from investors including March Capital, 8VC, JC2 Ventures and Iconiq Capital. The Santa Clara-based company offers enterprise networking tools for continuous monitoring and analytics.
Redesign Health brings in $65M
Redesign Health has raised $65 million Series C led by General Catalyst, with support from CVS Health Ventures and UPMC Enterprises, Fast Company reported. Redesign helps develop and launch technologies for healthcare companies.
View round
 
View similar company »
 
Podcasting platform Podimo picks up $58M+
Podimo has raised €58.6 million (about $58.5 million) in a round led by 83North, Highland Europe and Saban Ventures. The Danish startup offers a subscription service for audio entertainment and podcasts.
View round
 
View 9 competitors »
 
Cyrebro secures $40M
Cyrebro has closed a $40 million Series C led by Koch Disruptive Technologies. The Israeli startup is the developer of a platform for security operations center infrastructure.
View round
 
View 110 competitors »
 
Construction tech startup Kojo raises $39M
Kojo has raised $39 million in Series C funding led by Battery Ventures. Based in the Bay Area, the company is the developer of a materials management platform designed to connect workers, accounting teams, vendors and contractors for construction projects.
View round
 
View 2 competitors »
 
Morpheus Space collects $28M
Morpheus Space has raised $28 million in a round led by Alpine Space Ventures. The company develops electric propulsion devices for spacecraft.
View round
 
View 2 competitors »
 
Nyshex nabs $25M Series B
Collate Capital has led a $25 million Series B in Nyshex, which provides a digital contracting platform for ocean freight shipping.
View round
 
View 41 competitors »
 
 
Fundraising  
Prime Movers Lab raises $500M
Prime Movers Lab has raised $500 million for its debut early growth fund. The firm targets startups developing potential breakthrough technologies in sectors such as energy, transportation and biotech.
View fund
 
View 48 investments »
 
Two Sigma Ventures brings in $400M
Two Sigma Ventures has raised a combined $400 million across two vehicles. Its fourth flagship fund will focus on early-stage startups, and its second opportunity fund will back growth-stage companies.
View fund
 
View 106 investments »
 
 
Chart of the Day  
Source: PitchBook's H1 2022 Global Real Estate Report
 
Who's in the newsletter today?
Investors
83North
8VC
Access Biotechnology
Alpine Space Ventures
Battery Ventures
CVS Health Ventures
Collate Capital
General Catalyst
Highland Europe
Iconiq Capital
JC2 Ventures
Koch Disruptive Technologies
March Capital
Prime Movers Lab
Saban Ventures
Two Sigma Ventures
UPMC Enterprises
Companies
Acelyrin
Cyrebro
Kojo
Morpheus Space
Nyshex
Podimo
Redesign Health
 
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