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The Daily Pitch: VC

October 11, 2022

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

How private valuations for fintech companies might fare, based on the performance of their public counterparts.

Some legacy tech companies are turning to PE as they navigate the complicated transition to cloud-based subscription models.

Our Female Founders Dashboard breaks down another difficult quarter for female-founded startups looking to raise funds.

Today's Top Stories

Public fintech valuations remain far off their highs

Many of the recent traditional IPOs and de-SPAC transactions have not resulted in as big a payday as expected for late-stage fintech investors, as stocks of fast-growth, low-profit companies in the sector are 60% to 80% off their peak.

Our analysts believe a challenged IPO market with lower valuations means that executing an IPO will be more difficult and valuations will be lower, at least in the short term. The trend could affect the performance of certain growth equity and late-stage VC funds.

Our Fintech Q3 Public Company Valuation Guide tracks stock performance, revenue forecasts, and market caps of key publicly traded fintech companies in sectors including payments, insurtech and property tech.

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Female founders' fundraising sees weakest quarter in nearly two years

PitchBook's Female Founders Dashboard shows that in Q3, startups with female founders completed the fewest deals and raised the least capital since Q4 2020.

With only $8.2 billion raised across 734 deals, Q3 saw the fourth consecutive quarterly decline in fundraising by female-founded companies, a clear end to the momentum of 2021.

So far this year, female founders have raised a total of $32.4 billion across 2,815 deals. While that activity lags the highs seen last year, 2022 is still the second-best year on record.

Software companies were the strongest drivers of growth in Q3 2022, with startups in the industry raising $2.6 billion across 249 deals. Notable deals included a $175 million Series F for education platform developer Guild and a $152 million Series C for identity verification platform developer Alloy.

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A message from Deloitte

At $12.9 billion, life sciences dealmaking remains resilient

2021 may hold all-time records for private markets dealmaking in life sciences, but this year is proving unexpectedly resilient. At $12.9 billion across 461 deals, investment is still strong across the life sciences expansion-stage ecosystem. Deloitte's latest Road to Next installment breaks down how and why this sector is poised for robust investment and significant change, with highlights including:

How private market corrections in valuations are impacting life sciences companies in particular
Key regulatory developments to watch
Data on cumulative unicorn valuations, financing metrics and more

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PE investors offer patient capital to tech companies in take-privates

(Jirsak/Shutterstock)

The recent downturn in software valuations has not only offered PE firms a chance to scoop up cheap companies, but has also made some listed software developers consider replacing public shareholders with patient capital from private investors as they undertake the complicated transition to cloud-based subscription models.

For companies like Tufin, which was acquired this year, going private can provide insulation from shareholder pressure while undergoing this transition and contending with public market volatility.

Managing communication with public shareholders can be even more difficult for small-cap companies, especially in a volatile market, industry experts say. As a result, these companies often consider significant transitions with private capital partners.

Recommended Reads

Despite the global slowdown, China's domestic IPO market has remained active. [Bloomberg]

One writer's thoughts on how mismanagement and "monster trains" have wrecked US rail. [The New York Times]

US banks are likely to stockpile billions to prepare for potential losses from bad loans. [Financial Times]

Since yesterday, the PitchBook Platform added:

26

VC valuations

1707

People

547

Companies

23

Funds

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Quick Takes

	The Daily Benchmark
	2018 Vintage European PE Funds
	VC Deals
	Foodology gobbles up $50M
	CrowdStreet nabs $43M
	Trendsi picks up $25M
	Endor Labs secures $25M seed round
	ARTA brings in $11M
	Exits & IPOs
	Getir in talks to buy Gorillas

The Daily Benchmark

2018 Vintage European PE Funds

Median IRR

24.08%

Top Quartile IRR

35.09%

1.47x

Median TVPI

Select top performers

INVL Special Opportunities Fund

EQT VIII

TDR Capital IV

*IRR: net of fees

31 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Foodology gobbles up $50M

Foodology, a Colombia-based cloud kitchen and virtual restaurant company, has raised $20 million in equity and $30 million in debt, according to reports. Investors including Andreessen Horowitz, Wollef and Kayyak participated in the funding.

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CrowdStreet nabs $43M

CrowdStreet, the developer of a real estate investment platform, has raised $43 million from investors including Cypress Equity Investments and Green Visor Capital.

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Trendsi picks up $25M

Trendsi has raised $25 million in a round led by Lightspeed. The funding values the Bay Area-based company at $134.5 million, according to PitchBook data. Trendsi offers an ecommerce platform designed to help consumer brands manage operations.

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Endor Labs secures $25M seed round

Endor Labs has raised $25 million from investors including Dell Technologies Capital and Sierra Ventures. The company helps software development and security teams manage open-source dependencies and related operational risks.

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ARTA brings in $11M

ARTA has raised an $11 million Series A led by AXA Venture Partners. The New York-based company is a developer of fulfillment technology designed to help merchants, marketplaces and auction houses manage transactions of high-value goods and collectibles.

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PitchBook webinar: Best practices for cash flow forecasting

Don't miss our webinar on the best practices for cash flow forecasting.

We'll discuss the best strategies that allocators and private market investment advisers can use to manage alternatives portfolios. Our analysts will touch on best practices for setting commitment schedules and thinking about liquidity needs due to uncalled commitments. Key takeaways include:

Hear about cash-tiering strategies for uncalled commitments from PitchBook analyst and former LP Hilary Wiek.
Learn how our analysts approach commitment pacing challenges by focusing on data and patience.
Explore the LP cash flow forecasting and commitment pacing models now available to our clients.

Register now to secure your spot.

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Exits & IPOs

Getir in talks to buy Gorillas

Turkish food delivery startup Getir is in advanced talks to acquire Berlin-based competitor Gorillas, Bloomberg reported. The deal would involve a mixture of cash and equity, according to the report. Gorillas has raised funds from investors including Coatue, DST Global and G Squared.

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