PitchBook News - The impact of down rounds in VC

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The Daily Pitch: VC

September 23, 2022

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In today's Daily Pitch, you'll find:

Our latest analyst note takes a look at what's in store for companies taking down rounds in the current market.

PE firms have been ramping up their investments in European asset managers, with deal value breaking last year's mark before the end of Q3.

St. Louis, Phoenix and Austin top the list of US cities seeing explosive growth in capital raised by female-founded startups.

Today's Top Stories

What do down rounds really mean for companies?

The swift decline of the public markets has left many private startups with extended valuations and no exit opportunities in sight. In such an inhospitable market, many companies will be coming face-to-face with down rounds. But what do down rounds really mean for founders and investors in the long run?

Our latest analyst note dives into the data on post-down round exits, difficult IPO markets and investment returns to determine what's in store for companies taking down rounds in the current market. Key takeaways include:

Just 13% of companies raising a down round from 2008 to 2014 were unable to raise a new round or exit immediately after the down-valuation investment.

The majority of down rounds occur at the late stage, where there is ample room to adjust valuations that have grown enormously over the past decade.

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Check out where female founder fundraising is growing fastest in the US

Austin (Peter Tsai Photography/Getty Images)

While San Francisco and New York City are major hubs for female-founded startups, other cities have seen more significant growth in the amount of capital raised by female founding teams since 2020.

The Southwest, led by Austin, Dallas-Fort Worth and Phoenix, has seen explosive growth in capital raised by female-founded startups since 2020, while Washington, DC, and Denver have also seen a surge.

Recommended Reads

With market conditions worsening, it's hard for PE firms to achieve successful outcomes if they focus on nothing but chasing new deals. [Institutional Investor]

The luxury home market has finally faltered thanks to inflation, recession fears and rising interest rates. [The Wall Street Journal]

As the US raises interest rates, the rest of the world bears the pain. [The Economist]

Since yesterday, the PitchBook Platform added:

6

VC valuations

1699

People

494

Companies

18

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2020 Vintage Global Funds-of-Funds
	VC Deals
	Crypto exchange FTX eyes $1B round
	Rivus Pharmaceuticals raises $132M
	AccessFintech banks $60M Series C
	Theorycraft Games nabs $50M
	Somewear Labs picks up $13M+

The Daily Benchmark

2020 Vintage Global Funds-of-Funds

Median IRR

28.11%

Top Quartile IRR

63.70%

1.24x

Median TVPI

Select top performers

Private Equity Core Fund IX

Adams Street 2020 Global Fund

Blockchain Coinvestors Fund II

*IRR: net of fees

24 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Crypto exchange FTX eyes $1B round

FTX is planning to raise up to $1 billion in new funding that would maintain the company's roughly $32 billion valuation, CNBC reported. The crypto exchange operator raised a $400 million Series C in January.

View round

View 6 competitors »

Rivus Pharmaceuticals raises $132M

Rivus Pharmaceuticals has raised $132 million in a round led by RA Capital Management. The company develops therapeutics for cardio-metabolic diseases.

View round

View similar company »

AccessFintech banks $60M Series C

AccessFintech has raised $60 million in a round led by WestCap. The company offers data sharing and workflow collaboration tools for financial institutions.

View round

View 33 competitors »

Theorycraft Games nabs $50M

Game development studio Theorycraft has raised a $50 million Series B led by Makers Fund, with support from NEA and Andreessen Horowitz.

View round

View similar company »

Somewear Labs picks up $13M+

Somewear Labs has raised a $13.7 million Series A from investors including Bling Capital and the Webb Investment Network. Based in the Bay area, the company offers a critical communications platform for a wide range of users, including wildland firefighters and other rescue mission operators.

View round

View similar company »

Chart of the Day

Source: Q3 2022 Analyst Note: Serial entrepreneurs raise more capital, but at what cost?

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PitchBook News - The impact of down rounds in VC

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