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PitchBook News - US VC sends mixed signals

Venture debt lending dips as borrowing costs rise; European fintech enters new normal; DataGrail secures $45M; Kodiak Robotics grabs $30M loan
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The Daily Pitch: VC
October 13, 2022
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In today's Daily Pitch, you'll find:
  • Our latest PitchBook-NVCA Venture Monitor details how dealmaking, exits, fundraising and valuations responded to rising interest rates and complicated macroeconomic trends in Q3.

  • After reaching near-record amounts in Q2, venture debt deal values fell by half in Q3.

  • While 2022 has been one of the busiest years for PE investment in China in the last decade, it still represents a significant slowdown from last year's peak.
 
Today's Top Stories  
US VC sends mixed signals as deal activity and fundraising diverge
The third quarter of 2022 saw a less resilient venture landscape in the US compared with the first half of the year. Deal activity across all stages recorded signs of distress, and the market continued to become increasingly consolidated, with fewer exits than at any time in recent history.

Dry powder remains at the highest level in our dataset, after years of record fundraising. This capital will help support seed and early-stage investment, but it is not likely to come to the rescue of highly valued, late-stage companies that are seeing an enormous decline in capital availability.

The latest PitchBook-NVCA Venture Monitor, sponsored by Insperity and J.P. Morgan, details how dealmaking, exits, fundraising and valuations responded to rising interest rates and complicated macroeconomic trends during Q3. Key takeaways:
  • Venture-backed companies collected nearly $43 billion during Q3. The figure is below the heights of 2021 and early 2022 but above historical averages—representing a durable, positive trend in the industry.

  • On the exit front, there have been just 59 public listings so far this year, compared with 303 in 2021 and 145 in 2020.

  • While overall fundraising figures are strong, established managers received the lion's share of commitments while emerging GPs struggled.
read it now
 
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Venture debt lending dips as borrowing costs rise
(Amnaj Khetsamtip/Shutterstock)
Startups rushed to secure venture debt earlier in the year. But after an initial surge, their appetite for debt has waned in recent months.

After reaching near-record amounts in Q2, venture debt deal values fell by half in Q3, according to PitchBook data. Investors say debt financing declined as the cost of borrowing increased.
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A message from the U.S. National Science Foundation  
Invention to impact
SkyNano utilizes carbon emissions as a feedstock for low-cost, sustainable manufacturing of advanced carbon materials for batteries, tires, plastics, etc.

SkyNano (NSF-2132768) 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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European fintech enters new normal as funding cools
(Lerbank-bbk22/Shutterstock)
Europe's fintech sector is likely to see an increase in consolidation as market conditions remain choppy.

Meanwhile, fintech startups in the region can expect venture capital funding and valuations to continue to fall, according to a new report from Finch Capital.
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China PE deal activity lags after record high
Beijing (anek.soowannaphoom/Shutterstock)
After raising a record $88.6 billion in 2021, private equity investment in China has fallen this year as deal activity slows down.

Part of the reason for the cooling sentiment is that China, which holds its 20th Communist Party congress this week, has faced a barrage of economic headwinds resulting from its rickety real estate sector and "zero COVID" policies.
read more
 
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Recommended Reads
CVC Capital Partners, Europe's largest PE firm, plans an IPO with implications for the entire sector. [Financial Times]

Employers burned by the labor shortage have taken to hoarding workers and may be hesitant to lay off workers even when the economy cools. [The New York Times]

Building wealth via homeownership is a time-tested American tradition. Now a new project is trying to replicate that mechanism in the rental market. [Axios]
 
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Quick Takes  
  The Daily Benchmark  
  2013 Vintage Global PE Funds with more than $1B  
  VC Deals  
  Data privacy company DataGrail raises $45M  
  Blockchain development startup Tatum nabs $41.5M  
  FOLX Health picks up $30M  
  IronVest emerges from stealth with $23M  
  Connectbase secures $21M  
  Zerion banks $12M+ Series B  
  Portfolio Companies  
  Kodiak Robotics secures $30M loan  
 
 
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The Daily Benchmark  
2013 Vintage Global PE Funds with more than $1B
Median IRR
14.80%
Top Quartile IRR
20.24%
1.75x
Median TVPI
Select top performers
Sun Capital Partners VI
Altas Partners Pre-Fund Portfolio
TDR Capital III
*IRR: net of fees
39 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
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VC Deals  
Data privacy company DataGrail raises $45M
DataGrail has raised a $45 million Series C led by Third Point Ventures, with support from investors including Thomson Reuters Ventures and Felicis Ventures. DataGrail's data privacy software helps enterprise customers such as Instacart and Databricks build and manage privacy programs for their users.
View round
 
View 34 competitors »
 
Blockchain development startup Tatum nabs $41.5M
Tatum has raised $41.5 million in a round led by Evolution Equity Partners, with support from investors including Octopus Ventures, 3VC and Tensor Ventures. Founded in 2018, the company offers a blockchain development platform to manage and scale fintech and Web3 applications.
View round
 
View similar company »
 
FOLX Health picks up $30M
FOLX Health has raised a $30 million Series B led by 7wireVentures. Based in Boston, the company provides digital healthcare services to the LGBTQIA+ community.
View round
 
View 1 competitors »
 
IronVest emerges from stealth with $23M
IronVest has raised $23 million in seed financing led by Accomplice. The New York-based company offers a biometric-based security platform intended to protect digital accounts in industries such as banking and healthcare.
View details
 
View similar company »
 
Connectbase secures $21M
Connectbase has raised $21 million in a Series C led by DigitalBridge Ventures. Based in Boston, the company operates a marketplace for buyers and sellers in the connectivity industry.
View round
 
View 20 competitors »
 
Zerion banks $12M+ Series B
Zerion has raised $12.3 million in a round led by Wintermute Ventures. The company's mobile wallets are designed to help DeFi investors, NFT collectors, and Web3 builders track and manage portfolio transactions.
View round
 
View 10 competitors »
 
 
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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Portfolio Companies  
Kodiak Robotics secures $30M loan
Self-driving truck designer Kodiak Robotics has received a $30 million growth capital credit facility from Horizon Technology Finance. Kodiak's backers include Battery Ventures, CRV and Lightspeed. The company's vehicles deliver freight for commercial customers in Texas and Oklahoma.
View details
 
View 7 competitors »
 
 
Chart of the Day  
"After raising and then deploying record amounts of capital in 2021, sponsors have been returning to their LPs and seeking re-ups throughout 2022. As a result, many LPs have already hit their allocation targets for the year. The consensus view at this year's Super Return conference was that two out of every three funds in the market today will need to push their closings into 2023."

Source: PitchBook's Q3 2022 US PE Breakdown
 
Who's in the newsletter today?
Investors
3VC
Accomplice
Battery Ventures
CRV
DigitalBridge Ventures
Evolution Equity Partners
Felicis Ventures
Lightspeed
Octopus Ventures
Tensor Ventures
Third Point Ventures
Thomson Reuters Ventures
Wintermute Ventures
Companies
Connectbase
DataGrail
Databricks
FOLX Health
Instacart
IronVest
Kodiak Robotics
Tatum
Zerion
Service Providers
Horizon Technology Finance
 
 
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