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Global approaches to sustainable investing

Investors take the reins with structured deals; volatility grips AI, machine learning; TripActions books $9B+ valuation; Pillow pockets $18M
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The Daily Pitch: VC
October 14, 2022
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In today's Daily Pitch, you'll find:
  • As traditional venture funding dries up, cash-strapped startups are turning to structured equity.

  • The results of our 2022 Sustainable Investment Survey, which asked over 500 global investors for their take on sustainable investing practices.
 
Today's Top Stories  
Sustainable Investment Survey shows ESG politicization
This summer, we surveyed more than 500 LPs, GPs and service providers about their sustainable investment practices, gathering information on the motivations, metrics and challenges of a field that is getting ever more attention.

Our 2022 Sustainable Investment Survey illuminates the drivers behind investment decisions, breaking down data by region and respondent type. The report also highlights perspectives of allocators and VCs, along with contrasting views on ESG. Takeaways include:
  • 73% of European asset managers use an ESG risk-factor framework and 70% offer impact investing strategies, compared to 56% and 61%, respectively, for North Americans.

  • 78% of VCs have either fully or partially integrated sustainable principles into their investments, with social impact among the most important drivers.

  • As ESG investment grows, so does opposition to it; the percentage of respondents who have no plans to incorporate sustainable investment practices nearly doubled over 2021, mainly driven by North American LPs.

  • Difficulties measuring outcomes and benchmarking goals are the biggest obstacles for sustainable investing, highlighting the ongoing data-related challenges.
read the survey
 
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Investors take the reins with structured deals
(Brian A Jackson/Shutterstock)
As traditional venture funding dries up, cash-strapped startups are turning to structured financing deals that contain more protective terms for investors.

Many of these transactions include multiple liquidation preferences and significant conversion discounts.

The increasing use of structured financing in deals is yet another sign that the pendulum has swung in investors' favor after the end of a long bull market during which founders, who often received more offers of financing than they needed, could cap investor returns or impose other terms.
read more
 
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A message from the American Investment Council  
Diamonds in the rough
Private equity's calling card is improving businesses, but investors have quietly created hundreds of them through carveouts. After buying "noncore assets"—which is a polite way of saying unloved or under-resourced business units of much bigger corporations—PE firms give them the attention and resources they need to become independent companies, often with new names, logos, and management teams. More than 4,000 such companies have been created over the past decade.

In conjunction with PitchBook, the American Investment Council has released Diamonds in the rough: How PE breathes new life into unloved businesses. With long-term visions, PE investors can take those businesses off the backburner and give them the chance they need to become successful, standalone companies.

To download the report and learn more, click here
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Ukraine war sparks PE interest in European energy
(Red ivory/Shutterstock)
PE firms are investing large amounts in European energy companies as impacts of the Russian invasion of Ukraine diminish the supply of much-needed resources, such as oil and natural gas, in the region.

These investors have shown interest in all types of energy companies, despite growing environmental concerns over fossil fuels.
read more
 
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Market Map: Economic volatility reshapes the outlook for AI & ML
(Jenna O'Malley/PitchBook News)
Ongoing economic turbulence has changed outlooks on AI and machine learning's growth.

Cloud computing costs are coming under scrutiny, and general economic volatility is favoring startups that prioritize efficiency over those that focus on model accuracy and complexity.

Explore our AI and machine learning market map to see where investors are putting their money.
explore the data
 
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Recommended Reads
How VC firms are taking advantage of falling prices in the public markets. [The Wall Street Journal]

After a decade of investing in social media darlings like Glossier and Allbirds, VCs say they're moving on from direct-to-consumer startups. [Fortune]

Can startups significantly lower the cost of gene sequencing? [The New York Times]
 
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Quick Takes  
  The Daily Benchmark  
  2020 Vintage Global Secondaries Funds  
  VC Deals  
  TripActions hits $9.2B valuation  
  Odyssey Therapeutics raises $168M  
  Uniswap Labs brings in $165M  
  SecuriThings grabs $21M  
  Social app provider VUZ raises $20M  
  Crypto investments platform Pillow collects $18M  
  Fundraising  
  Lightrock amasses $841M for debut climate fund  
  Next Play wraps up $200M  
  Palo Santo raises $50M for psychedelic therapeutics fund  
 
 
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The Daily Benchmark  
2020 Vintage Global Secondaries Funds
Median IRR
89.79%
Top Quartile IRR
92.27%
1.48x
Median TVPI
Select top performers
Stepstone Secondaries Fund IV
Coller International Partners VIII
Blackstone Strategic Partners Infrastructure III
*IRR: net of fees
14 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
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VC Deals  
TripActions hits $9.2B valuation
TripActions has raised a $154 million equity round as well as a $150 million structured capital transaction led by Coatue. The funding values the company at $9.2 billion. Palo Alto-based TripActions offers software for managing corporate travel and expenses.
View round
 
View 35 competitors »
 
Odyssey Therapeutics raises $168M
Odyssey Therapeutics has raised a $168 million Series B led by General Catalyst. The company develops immunomodulators and oncology medicines.
View round
 
View similar company »
 
Uniswap Labs brings in $165M
Uniswap has raised a $165 million Series B led by Polychain Capital. Based in New York, the company operates a decentralized crypto exchange platform.
View round
 
View 3 competitors »
 
SecuriThings grabs $21M
SecuriThings has raised a $21 million Series B led by USVP. Based in Tel Aviv, the company's internet-of-things security platform helps enterprise customers manage and secure physical devices in real time.
View round
 
View 45 competitors »
 
Social app provider VUZ raises $20M
VUZ has raised $20 million from investors including Caruso Ventures and Panthera Capital, TechCrunch reported. Based in Dubai, the company offers a social app for VR-based entertainment.
View round
 
View 20 competitors »
 
Crypto investments platform Pillow collects $18M
Pillow has raised an $18 million Series A co-led by Accel, Quona Capital, Elevation Capital and Jump Capital. Based in Singapore, the company offers a DeFi platform for cryptocurrencies including bitcoin and ethereum.
View round
 
View similar company »
 
 
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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Fundraising  
Lightrock amasses $841M for debut climate fund
Lightrock has closed its debut climate impact fund on €860 million (about $841 million). The vehicle will be used to back European and North American growth-stage companies in areas including energy transition, sustainable food and agriculture, decarbonization, and sustainable transportation. Initial investments will range from €10 million to €40 million.
View details
 
View 81 investments »
 
Next Play wraps up $200M
Next Play Capital has closed its third flagship fund on $200 million, exceeding its $150 million target. California-based Next Play invests in funds and companies across the consumer, fintech, IT and SaaS sectors.
View fund
 
View 53 investments »
 
Palo Santo raises $50M for psychedelic therapeutics fund
Palo Santo, which invests in companies developing psychedelic medicines and therapies for the treatment of mental health and central nervous system disorders, has closed its latest fund on $50 million.
View details
 
View 23 investments »
 
 
Chart of the Day  
"Competition between investors at the early stage has also increased in recent years, in turn, driving up round sizes and valuations. Aside from time lags expected in an illiquid asset class such as VC, competition could be a factor helping valuations and round sizes stay high in the current climate."

Source: PitchBook's Q2 2022 European VC Valuations Report
 
Who's in the newsletter today?
Investors
Accel
Caruso Ventures
Coatue
Elevation Capital
General Catalyst
Jump Capital
Lightrock
Next Play Capital
Palo Santo
Panthera Capital
Polychain Capital
Quona Capital
USVP
Companies
Odyssey Therapeutics
Pillow
SecuriThings
TripActions
Uniswap
VUZ
 
 
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