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PitchBook News - How US PE adapted in 2022

Microsoft's $10B OpenAI deal stands alone; Sanofi gives CVC arm a $750M boost; relaxing of cannabis laws entices investors
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The Daily Pitch: VC
January 13, 2023
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Today's Top Stories  
How US PE adapted to 2022's harsh environment
For all the headwinds that hit the private equity world in 2022, firms still managed to do over $1 trillion in deal value—down 18% from 2021. Early in the year, the record-breaking pace of new deals, exits and fundraising collided with higher interest rates. By mid-year, traditional debt markets closed, and PE firms had to adjust to make deals happen and keep the LBO machine humming.

Our 2022 Annual US PE Breakdown, sponsored by Stout, CBIZ Private Equity Advisory, Golub Capital, and Apex, explains how the industry's activity has slowed and evolved.
  • The market stayed resilient: That's, in large part, due to availability of debt from private credit funds.

  • Deals count was stable: The number of deals fell only 5% year-over-year, but deal sizes were smaller, adding up to less value overall.

  • Exits plummeted: For just the second time in 14 years, exit value failed to keep up with fundraising and new platform investments.

  • Dry powder found a home: The new year capped the best two-year run for PE take-privates in 15 years.
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Just how big would Microsoft's $10B OpenAI deal be? Unprecedented.
Sam Altman, CEO of OpenAI, speaking at TechCrunch Disrupt.
(Steve Jennings/Getty Images)
The hottest topic in tech right now is Microsoft's planned $10 billion investment into generative AI startup OpenAI. The screenshots of the startup's viral ChatGPT have clogged social media feeds. But just how big is this deal?

A dive into PitchBook's data suggests it is unprecedented. Read more about how the deal stacks up to those in the past and what it could all mean for generative AI startups' values in the future.
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Sanofi to bolster CVC activities with $750M commitment
A researcher works in Sanofi's oncology laboratory.
(Thomas Samson/Getty Images)
Pharmaceutical company Sanofi has agreed to a multiyear commitment to invest over $750 million in its corporate venture capital arm.

This infusion of capital will be welcome news for the pharmaceutical and biotech startup industry, which has seen funding activity return to pre-2020 levels with the venture downturn.
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Relaxing of cannabis laws entices investors
(Infin8ly Elevated Events/Shutterstock)
A divided Congress infused fresh uncertainty into the US cannabis industry. Still, a law removing cannabis from Schedule 1 classification is likely to go into effect late this year or in 2024, according to Morningstar analysts. If this happens, states would choose their own cannabis laws, and multistate operators would be recognized by all financial services companies as well as the IRS.

Here's what that would mean for investors in the quickly growing cannabis landscape.
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Recommended Reads
Discoveries that push science in new directions are happening less often than they did in the last century, according to a new study. [Axios]

The value of corporate pension assets fell dramatically. Here's why that doesn't matter. [Institutional Investor]

One writer's thoughts on how ChatGPT shouldn't be banned in schools and how it might instead be used as a tool. [The New York Times]
 
Since yesterday, the PitchBook Platform added:
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VC valuations
2142
People
701
Companies
29
Funds
See what our data software can do
 
Quick Takes  
  The Daily Benchmark  
  2016 Vintage Global Real Estate Funds  
  VC Deals  
  CoVenture invests $60M in consumer insights specialist  
  No Meat Factory snags $42M  
  Butter nabs $21.5M  
  Oula secures $19M+  
  Portfolio Companies  
  Stripe slashes internal valuation again  
  Microsoft takes stake in Paige  
 
 
The Daily Benchmark  
2016 Vintage Global Real Estate Funds
Median IRR
12.70%
Top Quartile IRR
15.83%
1.43x
Median TVPI
Select top performers
Blackstone Edison Managed Partners
Bensell Host US Fund
FCP Realty Fund III
*IRR: net of fees
69 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
VC Deals  
CoVenture invests $60M in consumer insights specialist
Consumer Edge, which provides multinational data and insights on consumer spending and behavior, has raised $60 million from CoVenture.
View details
 
View 4 competitors »
 
No Meat Factory snags $42M
Plant-based protein maker No Meat Factory has raised a $42 million Series B led by Tengelmann Growth Partners. The Canadian startup plans to use the funding to expand its North American manufacturing.
View details
 
View similar company »
 
Butter nabs $21.5M
Payments platform Butter has raised a $21.5 million Series A with backing from Norwest Venture Partners and Atomic, Forbes reported. The startup focuses on preventing accidental churn for clients because of failed payments. The company's raise puts its valuation close to $100 million.
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View similar company »
 
Oula secures $19M+
Maternity care clinic Oula has raised a $19.1 million Series A led by 8VC. The startup also has backing from Metrodora, Chelsea Clinton's investment fund. Oula has opened two clinics in the New York City area.
View details
 
View similar company »
 
 
PitchBook webinar: 2023 European Private Capital Outlook
Join us for a webinar examining developments in the European private capital markets and the outlook for 2023. PitchBook analysts will discuss important deals, exit trends and fundraising activity, along with what could be on the horizon for the landscape in a time of global market uncertainty. Key takeaways include:
  • The European VC and PE dealmaking landscape in 2022 and beyond.

  • An update on the exit environment and its impact on PE- and VC-backed companies.

  • Challenges and opportunities within fundraising for GPs and LPs.
Register now to secure your spot.
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Portfolio Companies  
Stripe slashes internal valuation again
Stripe has reduced its internal valuation by another 11%, The Information reported. The fintech startup, which now has an implied valuation of $63 billion, has cut its internal valuation by around 40% in total during the last six months, according to the report. Stripe's previous backers include Sequoia, Baillie Gifford, General Catalyst and GV.
View details
 
View 104 competitors »
 
Microsoft takes stake in Paige
Microsoft has furthered its investment in AI by taking an undisclosed stake in AI pathology startup Paige. The company is also partnering with the startup to provide its platform within the Azure cloud suite of products.
View details
 
View 17 competitors »
 
 
Chart of the Day  
Source: Q4 2022 PitchBook-NVCA Venture Monitor
 
Who's in the newsletter today?
Investors
8VC
Atomic
Baillie Gifford
Chelsea Clinton
CoVenture
GV
General Catalyst
Metrodora
Microsoft
Norwest Venture Partners
Sequoia
Tengelmann Growth Partners
Companies
Butter
Consumer Edge
No Meat Factory
Oula
Paige
Stripe
 
 
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