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PitchBook News - What patents portend for startups

Private market investors stay bullish; can startups grow into their valuations?; Nex Cubed unveils $40M HBCU founders fund; Voyager Space lands $80M+
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The Daily Pitch: VC
February 7, 2023
The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data
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In today's Daily Pitch, you'll find:
  • Analysts introduce PitchBook's growing patent data collection, explaining how patents can signal a company's success.

  • A State Street survey shows that institutional investors are still bullish on the private markets—and in particular, private equity.

  • Investors were hoping that startups could grow into their sky-high valuations, but even those with lots of runway may struggle to catch up.
 
Today's Top Stories  
When scrying a startup's future, try looking at patents
To measure a fledgling company's success, investors and other observers look at revenue and growth, but clever ideas—the startup's intellectual property—and the ways they're protected can also be a key predictor of what comes next.

Startups with patents and patent applications in progress raise larger VC rounds on average. They also raise capital at much higher valuations than startups without such protection on their ideas, especially when it comes to angel investors, and achieve higher exit values down the line.

That's according to PitchBook's latest analyst note, which introduces our growing patent data collection and takes a quantitative approach in detailing how patents impact startups.
read it now
 
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Private market investor sentiment holds strong, LP survey shows
(oatawa/Shutterstock)
Inflation anxieties, rising interest rates and underperforming assets dragging on portfolios may be putting pressure on investors, but that doesn't mean they're giving up on the private markets.

If history tells us anything, some of the strongest funds arise from periods of recession, and a recent State Street survey shows that institutional investors are putting this to the test as they continue to allocate to private market asset classes—and in particular, private equity.
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A message from DealCloud, by Intapp  
Understanding and preparing for each stage of a CRE transaction
The most fruitful corporate real estate transactions are always a mix of science and art, hard calculations, and human creativity—which can, at times, make them unpredictable and difficult to prepare for. When a CRE team better understands each unique stage of a transaction and equips itself with the most advanced technology to support its pipeline, firms can work smarter and faster to close successful deals.

Download the guide
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Even startups with runway probably can't grow into sky-high valuations
(heychli/Shutterstock)
Valuation multiples may have fallen too far from their 2021 peaks for many late-stage companies to catch up to their last price as quickly as investors initially hoped, according to Pitchbook calculations using data from VC firm IVP.

The median valuation for late-stage SaaS deals has expanded more than seven times between 2017 and 2021, IVP data shows. But in recent months, that multiple seems to be reverting back to 2017 levels.

Our analysis finds that even startups that are growing healthily and have a couple of years of runway left are likely on course for a down round.
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Carlyle refreshes succession plan with Schwartz appointment
(Jenna O'Malley/PitchBook News)
The Carlyle Group's CEO appointment marks a new phase in its sometimes bumpy succession planning. On Monday, the private equity giant named former Goldman Sachs banker Harvey Schwartz as its new CEO, replacing interim CEO and co-founder Bill Conway.

Schwartz's appointment comes in the wake of friction at the C-suite level, which ended with former CEO Kewsong Lee's swift departure from the firm in August.
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Consumer discretionary investors find opportunities despite inflation
(Yuriy Golub/Shutterstock)
Inflation, reduced discretionary income and less available capital led to tough times for consumer discretionary companies in Europe last year. But lucrative entry points remain.

In a recent report, Morningstar analysts encourage long-term investors to consider competitive companies in industries such as online clothing, luxury items and food delivery—and offer their top picks in these segments.
read the report
 
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Recommended Reads
VC firms have slowed dealmaking, which poses a dilemma for investors looking to make a name for themselves. [The Wall Street Journal]

One stock, Alpha Dhabi parent International Holding Company, has driven the meteoric rise of Abu Dhabi's stock market. [Financial Times]

The climate crisis is threatening Spain's saffron crop. [Wired]
 
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Quick Takes  
  The Daily Benchmark  
  2015 Vintage Global Secondaries Funds  
  People  
  Eurazeo CEO departs after reshuffle  
  Exits & IPOs  
  TPG-backed pet specialist files for bankruptcy protection  
  Fundraising  
  Greenbriar raises $3.4B+ fund  
  Ovni holds first close on $54M vehicle  
  Nex Cubed launches $40M HBCU founders fund  
  Investors  
  Seraphim Space accelerator kicks off with $150M  
  Waud Capital commits $100M to healthcare services  
  Rothschild family aims to take control of investment bank  
  Corporate M&A  
  Public Storage bids $11B for competitor  
 
 
The Daily Benchmark  
2015 Vintage Global Secondaries Funds
Median IRR
15.12%
Top Quartile IRR
25.54%
1.39x
Median TVPI
Select top performers
Siguler Guff Secondary Opportunities Fund
SG/NMERB Secondary Fund I
Mantra Secondary Opportunities I
*IRR: net of fees
12 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
People  
Eurazeo CEO departs after reshuffle
Virginie Morgon has stepped down as CEO of Paris-based private equity firm Eurazeo. William Kadouch-Chassaing has been named the new CEO and co-chair of the executive board.
View details
 
 
 
VC Deals  
Nurse staffing platform provider ShiftMed has raised a $200 million round led by Panoramic Ventures.

Voyager Space has raised $80.2 million to continue developing its commercial space station, TechCrunch reported. Backers included Midway Venture Partners, NewSpace Capital and Industrious Ventures.

IgGenix, a startup developing therapeutics for severe allergies, has raised a $40 million Series B led by Alexandria Venture Investments. Eli Lilly and Khosla Ventures also participated, among others.

Code-completion startup Magic.dev has raised a $23 million Series A led by Alphabet's CapitalG.

Liminal, which provides data and analytics for electric vehicle battery manufacturing, has raised a $17.5 million Series A2 led by ArcTern Ventures.
 
PitchBook webinar: Fueling success in the Medicare Advantage market
Private equity firms have become leading consolidators of primary care practices focused on Medicare Advantage. However, the market is extremely competitive, so firms must enable providers to improve patient outcomes and lower costs while also partnering effectively with payers.

In our upcoming webinar, PitchBook's lead healthcare analyst, Rebecca Springer, and senior Optum strategists will explore how PE firms can evaluate opportunities, navigate risk and win in the Medicare Advantage market. Key topics include:
  • How payer competition and macro trends are shaping unique geographic markets.

  • An actuary's perspective on financial risks and opportunities.

  • A model for provider success in progressively more sophisticated value-based contracts within a typical PE investment cycle.
Register now to secure your spot.
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PE Deals  
Sixth Street is preparing a bid for a stake in the media and commercial rights of the Bundesliga, Germany's top-flight soccer league, the Financial Times reported. The deal could be worth up to €18 billion.

CVC Capital Partners has invested in Denmark-based transport company Scan Global Logistics.

Ara Partners has invested growth equity in UK- and Czech Republic-based automated carbon reduction provider Wattstor.

Vistria Group has invested in Really Great Reading, which provides literacy curriculums for pre-K through high school students.

Snow Peak Capital-backed Sandy Alexander has acquired printing management company Abbott Communications Group.

Thompson Street Capital Partners has made a growth equity investment in Sabai Global, a biosafety and regulatory review consultancy that serves pharmaceutical researchers.
 
Exits & IPOs  
TPG-backed pet specialist files for bankruptcy protection
TPG-backed Independent Pet Partners, the owner of a series of pet care stores, has filed for Chapter 11 bankruptcy protection and plans to sell roughly one-third of its stores. IPP's chains include Natural Pawz and Kriser's Natural Pet.
View details
 
View similar company »
 
 
Fundraising  
Greenbriar raises $3.4B+ fund
Greenbriar Equity Group has closed its Greenbriar Equity Fund VI on $3.475 billion, marking the firm's largest vehicle to date. The fund targets investments in the supply chain, business services and advanced manufacturing sectors.
View fund
 
View 164 investments »
 
Ovni holds first close on $54M vehicle
French VC Ovni Capital has held a first close for its €50 million (around $54 million) fund, TechCrunch reported. The vehicle will be used to back early-stage European startups in areas including fintech, climate tech, foodtech and cybersecurity.
View details
 
View 1 investments »
 
Nex Cubed launches $40M HBCU founders fund
Nex Cubed has launched a $40 million fund to support founders from historically black colleges and universities, known as HBCUs, TechCrunch reported.
View details
 
View 75 investments »
 
 
Investors  
Seraphim Space accelerator kicks off with $150M
British VC firm Seraphim Space has launched a $150 million accelerator program, Reuters reported. The firm will target 12 US-based early-stage startups in sectors including climate and defense.
View details
 
View 62 investments »
 
Waud Capital commits $100M to healthcare services
Waud Capital Partners has committed to investing $100 million or more in the home healthcare services and post-acute healthcare services markets, in partnership with Steve Jakubcanin, who served as CEO of Cornerstone Healthcare Group until its sale to ScionHealth.
View details
 
View 366 investments »
 
Rothschild family aims to take control of investment bank
The Rothschild family's holding company Concordia has announced it intends to take control of the Paris-listed investment bank Rothschild & Co. Concordia holds a 38.9% share in Rothschild & Co.
View details
 
View 2,725 serviced firms »
 
 
Corporate M&A  
Public Storage bids $11B for competitor
Public Storage has bid $129 per share, unsolicited, for competitor Life Storage, The Wall Street Journal reported. The bid marks Public Storage's third attempt to buy the company in recent months.
View details
 
View 3 competitors »
 
 
Chart of the Day  
"Large amounts of committed capital among fewer funds mean large fund sizes. After a pandemic-induced dip, step-ups were higher than ever, at 66.7% for funds that closed in 2021."

Source: PitchBook's Q3 2022 Global Real Assets Report
 
Who's in the newsletter today?
People
Virginie Morgon
William Kadouch-Chassaing
Investors
Alexandria Venture Investments
Alphabet
Ara Partners
ArcTern Ventures
CVC Capital Partners
CapitalG
Eli Lilly
Eurazeo
Industrious Ventures
Khosla Ventures
Midway Venture Partners
NewSpace Capital
Nex Cubed
Ovni Capital
Panoramic Ventures
Public Storage
Sandy Alexander
ScionHealth
Seraphim Space
Sixth Street
Snow Peak Capital
TPG
Thompson Street Capital Partners
Vistria Group
Waud Capital Partners
Companies
Abbott Communications Group
Bundesliga
Cornerstone Healthcare Group
Greenbriar Equity Group
IgGenix
Independent Pet Partners
Kriser's Natural Pet
Life Storage
Liminal
Magic.dev
Natural Pawz
Really Great Reading
Rothschild & Co.
Sabai Global
Scan Global Logistics
ShiftMed
Voyager Space
Wattstor
 
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