The rhyme and reason of impact investing

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The Daily Pitch: VC

January 11, 2023

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

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

Negative PE returns could make it impossible for public pension plans to compensate all their retirees.

ReCode Therapeutics is partnering with AskBio and the Cystic Fibrosis Foundation, in news from JP Morgan's health conference.

In our recent analyst note, PitchBook lead analyst Hilary Wiek unpacks the impact market.

Today's Top Stories

Improving visibility into impact investing

Impact funds are closing in on a record year for fundraising, and our improved tagging and tracking of those funds has opened up insights into investor preferences. Real assets, particularly infrastructure, stands out in drawing a larger share of impact capital when compared to funds in the market overall. Different priorities in different geographies also come to light. For example, North America-based funds are the largest backers of efforts focused on air and pollution.

In our recent analyst note, PitchBook lead analyst Hilary Wiek unpacks the impact market, exploring the progression of impact fundraising trends going back to 2007. With tags based on the GIIN's IRIS+ framework, PitchBook clients can also dive deeper into the impact market, helping GPs and LPs to align their social and environmental goals.

read it now

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'Warning signs': PE could impact public pension plans' funding status this year

(RoseRodionova/Shutterstock)

Declining private equity asset values constitute a major threat to public pension plans this year. A reporting lag in private equity return data means that institutional portfolios with allocations to the asset class will reflect 2022's losses in their 2023 numbers.

While most investors believe the losses won't be as acute as those in public equities, pensions—and their beneficiaries—should be concerned about declining funded ratios. Negative PE returns could push the national average funded ratio to below 2007 and 2008 figures, making it impossible for pensions to compensate all of their retirees, according to an Equable Institute report.

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A message from Ansarada

What's in store for M&A in 2023? Twelve experts give their verdicts

Ansarada's new report, 2023 M&A Outlook: Q&A with the Top Global Dealmakers, turns to the experts for their global dealmaking predictions for the year ahead.

2022 was a challenging year for dealmakers, with global M&A figures falling far short of the heights achieved in 2021.

Persistent inflation, slowing growth, and rising geopolitical tension were already front of mind this time last year. Russia's invasion of Ukraine, the subsequent dislocation of energy prices, and the continuation of strict COVID-19 measures in China have continued to exert macroeconomic challenges.

Despite all this, dealmakers are far from pessimistic.

Read the expert dealmaker viewpoints on 2023 and the tremendous opportunities to explore in the current climate, including further forays into digitalization and ESG.

Download the report here

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ReCode lines up gene therapy partnerships

(Andrii Yalanskyi/Shutterstock)

PitchBook analyst Aaron Degagne reports from JP Morgan's healthcare conference in San Francisco with some gene therapy news:

Startup ReCode Therapeutics has struck new partnerships with Bayer's AskBio and the Cystic Fibrosis Foundation.

The company aims to deliver a gene editing-based treatment for cystic fibrosis, with initial safety data expected in mid-2024. Gene editing also holds the promise of advanced treatment for AIDS and cancer within the next decade.

ReCode's $200 million Series B in June 2022 gave it a multiyear cash cushion to weather fragile markets. That round reportedly valued ReCode at $492 million, up from $145 million in 2020.

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Insurtech's valuation declines spill over into the early stages

While insurance giants keep calm and carry on, many recently listed insurtech companies have floundered, indicating that they were overvalued before going public. Now, these corrections are catching up with the private markets, and PitchBook analysts foresee a challenging market ahead for VC-backed insurtech startups.

Our recent Emerging Tech Research highlights the biggest players in insurtech and breaks down the sector's rocky third quarter. The report also spotlights opportunities in geospatial intelligence and specialty insurance for new markets.

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Startups beware: Juggling board members may drop the ball

(Caroline Suttie/PitchBook News)

When it comes to startups, having a diverse and experienced board of directors can be a key factor to success.

As we head into this new year, the general consensus in the VC world is that funding will be harder to come by and times will be leaner in terms of running a business. Having a strong board with a big name on it is likely to come in handy both in terms of expertise and optics.

But what happens when one of those board members is also a member of a dozen others?

Overboarding, as the practice of accumulating board memberships is known, has been on many minds recently, particularly with publicly listed companies, which are taking a stance against it. According to PwC's 2022 Annual Corporate Directors survey, nearly half of respondents stated that an independent director shouldn't hold more than three board seats.

Loading up on directorships isn't unusual in the venture world. Around 15% of VC investors who have board seats hold more than four, according to PitchBook data.

Recommended Reads

The Food and Drug Administration is pressing pause on tests of experimental medicines more often, a side effect of interest in promising but less-proven technologies. [The Wall Street Journal]

New England Patriots owner Robert Kraft and star NFL quarterback Tom Brady are among those sharing in the pain of FTX's sudden implosion. [Bloomberg]

Buy now, pay later providers such as Klarna have brought about a rejection of traditional credit in favor of these new-age layaway programs, which are riskier than they may seem. [The Atlantic]

Since yesterday, the PitchBook Platform added:

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People

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Funds

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Quick Takes

	The Daily Benchmark
	2020 Vintage North American Debt Funds
	VC Deals
	Chronosphere soars to $1.6B valuation
	Monogram Health raises $375M
	OpenAI to back Keller and Zeloof's Atomic Semi at $100M valuation
	Capella Space raises $60M
	Paytient nabs $40.5M in equity and debt
	The Easy Company lands $14.2M
	Fundraising
	Khosla plans to raise $3B

The Daily Benchmark

2020 Vintage North American Debt Funds

Median IRR

13.05%

Top Quartile IRR

21.25%

1.12x

Median TVPI

Select top performers

Hark Capital III

Castlelake V Dislocated Opportunities

MTP Energy Opportunities Fund III

*IRR: net of fees

49 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Chronosphere soars to $1.6B valuation

Engineering SaaS specialist Chronosphere has added $115 million in an extension to its $200 million Series C, bringing the startup's valuation to $1.6 billion. Alphabet's GV and Geodesic Capital joined existing investors including Lux Capital, General Atlantic and Founders Fund.

View round

View 25 competitors »

Monogram Health raises $375M

Healthcare startup Monogram Health has raised $375 million from several insurance and wellness firms such as CVS Health, Cigna Ventures, Humana and Memorial Hermann Health System, along with financial investors including TPG and Norwest Venture Partners. Monogram specializes in kidney and renal disease treatment.

View round

View 1 competitors »

OpenAI to back Keller and Zeloof's Atomic Semi at $100M valuation

Jim Keller and Sam Zeloof are seeking a $100 million valuation for their new startup, Atomic Semi, TechCrunch reported. According to the report, OpenAI, the creator of popular chatbot Chat GPT, has invested $15 million from its startup fund.

Capella Space raises $60M

Satellite imagery startup Capella Space has landed a $60 million investment from Thomas Tull's US Innovative Technology Fund. Capella specializes in synthetic aperture radar, a photo technology that allows for image capture in a variety of conditions.

View details

View 12 competitors »

Paytient nabs $40.5M in equity and debt

Health payments startup Paytient has raised a $40.5 million Series B, consisting of $33 million equity round led by Mercato Partners and $7.5 million in debt from Silicon Valley Bank.

View round

View similar company »

The Easy Company lands $14.2M

The Easy Company, which offers a Web3 social wallet, has raised a $14.2 million seed round from investors including Lobby Capital, Relay Ventures and 6th Man Ventures.

View details

View similar company »

Insights on over 100K clinical trials now available in PitchBook

In response to market volatility and slowing innovation in the computer hardware and software space, investors are turning to healthcare—specifically, non-cyclical industries like biotech and pharma—as the next wave of high-impact, high-return opportunities. However, biotech and pharma investing contain a different set of risk profiles compared to tech startups. Progress through clinical trial stages is the best indication of the ultimate commercial viability of a new drug or medical device—and therefore, the likelihood of achieving a solid investment return.

To help investors isolate biotech and pharma companies with the highest chance of success, we've launched a new clinical trial integration, providing insights on over 100,000 clinical trials alongside our industry-leading funding data. With this new tool, investors can reduce time spent on opportunity discovery and due diligence by viewing a company's funding status alongside its drug development pipeline.

Explore our new clinical trial integration.

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Fundraising

Khosla plans to raise $3B

Khosla Ventures is aiming to raise roughly $3 billion across three funds, Axios reported. The firm plans to raise $1.5 billion for its eighth flagship fund, $1 billion for a second opportunities fund and $400 million for seed investing. The firm has invested in companies including DoorDash, Instacart and Affirm.

View details

View 631 investments »

Chart of the Day

Source: PitchBook's 2022 DACH Private Capital Breakdown

AI gets a third of VC cash

Friday, January 10, 2025

Fund performance data drop; Read online | Don't want to receive these emails? Manage your subscription. Log in The Daily Pitch: VC January 10, 2025 The Daily Pitch is powered by PitchBook's

The rhyme and reason of impact investing

Older messages

What's behind VC's dizzying trends?

How US PE adapted in 2022

PE's year of transition

How resilient is healthcare, really?

Why is VC dry powder still piling up?

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