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The Daily Pitch: VC

October 10, 2022

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

Acquisitions of VC-backed startups have slowed to the lowest levels in years in Q3, but those numbers may not stay low for long.

Gen Z VCs founder Meagan Loyst discusses Generation Z's expanding influence in the investment community.

Our latest Quantitative Perspectives report analyzes key trends in macroeconomics and financial markets.

Today's Top Stories

Big tech set to shop for discounted startups

(maxsattana/shutterstock)

Acquisitions of venture-backed startups have slowed to the lowest levels in years in Q3. But investors and deal advisors expect M&A activity to increase significantly later this year and in 2023.

Merger talks were nearly non-existent in the summer, but it all changed around Labor Day. Large public tech companies are gearing up to buy startups at attractive prices.

"There is a lot [of deal activity] in progress right now," said one tech M&A attorney.

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Inflation, falling stocks and recession fears: How macro trends are shaping private markets

When we published our inaugural US Market Insights report one year ago, the stock market was strong and the potential for investor returns seemingly endless. A year on, the downturn has shaped a starkly different landscape and dealmaking has pulled back—but opportunities remain.

Our latest Quantitative Perspectives report examines key trends in macroeconomics and financial markets, providing commentary on how our analysts see the world today. The report, which also includes a spotlight on allocator momentum, features nearly 70 pages of data and more than 80 charts exploring the most interesting aspects of the current economy. Highlights include:

At $91 billion, VC funds had the highest amount of new capital allocations in 2021, though this momentum has slowed in 2022. Relative to asset class size, real estate and infrastructure debt saw the largest increase, with 21.5% growth.

Aggregate unicorn valuations now surpass $2.3 trillion, yet the pace of unicorn creation has slowed significantly in 2022, as market headwinds limit VC investment in large startups.

Our estimate for the total value of venture-backed companies in the US has reached $3.3 trillion, trailing the total PE-backed market cap by only 3%.

read the report

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A message from Apex Group

79% of PE firms are using third-party providers – find out why

More and more fund managers are turning to trusted partners to fulfil their growth ambitions in 2022 and beyond.

The key factors of any firm with portfolio diversification and global investment strategies are directly influenced by these core requirements right now and in the future:

Human resource needs
Complex regulations
Data security
Technology management
Investor scrutiny
Sustainable investment strategies

This eBook describes how outsourcing to a single-source partner will allow private equity firms to maximize growth and investor returns, reduce costs and risk, and effectively manage global regulations and data security.

To find out more about the benefits and savings that Apex Group's single-source solution can provide, download the Outsourcing eBook on the Apex Group website here.

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How the macro environment is a double-edged sword for private debt

Private debt fundraising has slowed in 2022. While the year ended June 30 is still in line with 2021's record-setting activity, H1's total of $82 billion in commitments accounts for less than 40% of that trailing 12-month figure.

The current macro landscape is a double-edged sword for private debt funds, according to our H1 2022 Global Private Debt Report, as floating-rate loans become more lucrative and fixed-rate loans more attractive. Highlights from the report include:

Direct lending remains the standout strategy, garnering more than a third of the private debt capital allocated in H1.

The private equity market's growth is expected to spur private debt fundraising, as increasingly large PE deal sizes and purchase price multiples provide opportunities for direct lenders.

North America has accounted for more than 88% of the capital raised this year, reclaiming ground from Europe-headquartered funds, which held a 31% share in 2021.

The leveraged loan and high-yield bond markets have struggled in 2022, according to LCD, with direct lenders stepping up in both the US and Europe to provide liquidity.

read it now

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Q&A: Gen Z VCs founder explains why the industry benefits from fresh blood

(VectorMine/Shutterstock)

Generation Z is expanding its influence in the investment community as both founders and investors.

We spoke with Gen Z VCs founder Meagan Loyst about how the next generation is changing the VC landscape.

Recommended Reads

Elon Must talks moving to Mars, Twitter and why aging is one "problem" that should not be solved. [Financial Times]

Following a string of scandals and risk management failures, Credit Suisse is under new management and embarking on a $3 billion debt buyback. [CNBC]

How billionaire investor Steve Cohen is applying a hedge fund-like approach to running the New York Mets. [Bloomberg]

Since yesterday, the PitchBook Platform added:

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Quick Takes

	The Daily Benchmark
	2014 Vintage Global Real Assets Funds
	VC Deals
	Jiko banks $40M
	Elpha Secure brings in $20M

The Daily Benchmark

2014 Vintage Global Real Assets Funds

Median IRR

8.70%

Top Quartile IRR

12.31%

1.28x

Median TVPI

Select top performers

BP Natural Gas Opportunity Partners

Quantum Energy Partners VI

Trilantic Energy Partners North America

*IRR: net of fees

49 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Jiko banks $40M

Jiko has raised a $40 million Series B led by Red River West. The company's fintech platform helps companies conduct banking and financial activities.

View round

View 8 competitors »

Elpha Secure brings in $20M

Elpha Secure has raised a $20 million Series A led by Canapi Ventures. The New York-based company is a developer of cybersecurity software for insurance policies.

View round

View similar company »

PitchBook webinar: The state of sustainable investing

Join PitchBook to discuss the findings from our 2022 Sustainable Investment Survey. Analysts Hilary Wiek and Annika Villegas will touch on report insights, including the politicization of ESG, the increasing popularity of impact investing and challenges in the sustainable investing ecosystem. Key topics include:

The politicization surrounding ESG in 2021 and 2022 has had far-reaching impacts on investors and service providers with US-based investments, clients and stakeholders.

Investors and advisers seeking to incorporate ESG into their portfolios have varying goals and philosophies, leading to the proliferation of greenwashing allegations.

How the lack of clarity around defining and measuring impact outcomes and difficulty benchmarking nonfinancial goals were both frequently cited among the top challenges of sustainable investing.

Register now to secure your spot.

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Chart of the Day

Source: PitchBook's H1 2022 Global Private Debt Report

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PitchBook News - Big Tech's hunt for cheap startups

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Raining on the dry powder parade

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Are down rounds really company killers?

US VC trudges through Q3

Do investors care about ESG?

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