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Performance tracking: How have the markets been trending through the first two months of the year? Our new Global Markets Snapshot breaks down the latest returns data and other metrics across the equity, debt, and commodities markets. Read it here.
Sneak peek! We'll give our enterprise fintech coverage launch a wide release in Monday's newsletter, but you can get an early look at the new research. Check it out.
VC Dealmaking Indicator: The venture environment continues to grow increasingly investor friendly. Demand for capital in the later stages, in particular, is still outpacing what's being supplied. See the new data. |
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The promise and peril of healthcare IT
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It has been estimated that of the $4 trillion spent on healthcare in the US, approximately $265 billion is potentially attributable to administrative waste.
Enter healthcare IT. Both venture capital and private equity investors see immense opportunities to improve operational efficiency, care delivery, and ultimately patient outcomes through technology.
The revenue cycle—in which claims can take months to adjudicate and payments are regularly remitted via paper check—is ripe for automation. Using natural language processing, ambient clinical documentation can alleviate the burden of after-hours charting for burned-out physicians.
New interoperability standards are transforming the electronic medical record, allowing population health analytics and point-of-care decision support that account for a patient's full health history.
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| PitchBook clients get access to a healthcare IT market map. |
Despite this promise, there are significant headwinds. PE deal activity was resilient throughout 2022, although deal financing remains difficult.
However, VC funding in the vertical plummeted in Q4. Hospitals and health systems are under severe financial stress, having posted negative margins on average for over a year. The resulting vendor fatigue and risk aversion—coupled with the broader slowdown in VC funding—have made commercialization difficult for many startups.
Although there is a rocky road ahead for healthcare IT companies, there are bright spots.
Vendors that can demonstrate an immediate ROI through increased revenue, decreased costs, or workforce augmentation—and that have a clear path to positive cash flow themselves—will catch health systems' attention. And the ambulatory and payer end markets are broadly showing resilience.
Our new quarterly healthcare IT report covers VC and PE deal activity and emerging technologies in provider and payer software.
Download a free preview of our Healthcare IT Report. PitchBook clients can access the full version here.
In less than two weeks, we're launching our first quarterly report on digital health, which focuses on patient-centric health and wellness apps—so stay tuned.
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Four of the six big, publicly traded US private equity firms raised more in 2022 than the prior year.
Altogether, the GPs amassed $87 billion for PE funds—and that's despite efforts to diversify away from PE as falling asset values depressed investment and exit activity.
Amid those challenges to closing buyouts and other typical PE deals, many firms looked to expand into more profitable strategies like secondaries, private credit, real assets, real estate, and insurance.
Amid this complex backdrop, our US Public PE Roundup dives into the latest earnings reports and commentary from firm leadership to explore where these PE giants are eyeing growth opportunities: |
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Where did top-performing VCs make their early-stage investments in Q4?
Our Emerging Tech Indicator gives a unique look into the sectors garnering investor interest, tracking key deals and trends across a proprietary dataset:
- Biotech and AI & machine learning were the two verticals that led ETI funding.
- Web3 & DeFi, which led past editions of this report, still attracted interest amid the crypto winter.
- Deal count and value dropped across the ETI dataset in Q4, with $100 million rounds also in decline.
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VC investment in IoT declined sharply in the second half of 2022—and our outlook for 2023 calls for more of the same.
While we see some pockets of resilience, the struggles show that this sector is more sensitive to macroeconomic risk. Retail and healthcare IoT startups have been among those hit hardest.
Our latest Internet of Things Report covers the latest VC trends and highlights notable companies by segment, active investors and acquirers, and more.
The research also highlights emerging opportunities within video surveillance and tech giants investing in digital twin creation technology: |
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A handful of upcoming events this month:
- Tuesday: Female-founded companies raised more capital in 2022 than any year prior to 2021, but challenges still remain. We're hosting a webinar to discuss key issues for female-led companies, highlighting VC trends and more. Register here.
- March 10-13: We're sponsoring the Inc. Founders House during SXSW in Austin and our lead VC analyst will participate in a panel discussion on the future of fundraising. Request an invite to secure your spot.
- March 15: How has compensation at investment firms changed over the years? Our webinar with J.Thelander Consulting will examine the latest data and what to expect going forward. Register here.
- March 21: We're hosting our Private Credit Forum in London, where you can learn about the latest trends in private credit and network with peers and experts. More details here.
- March 22: How much capital is really available to startups? Our analysts will review the macroeconomic landscape and its impact on VC dealmaking. Register here.
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Senior tech analyst Brendan Burke weighs in on cloud security company Wiz raising a $300 million Series D round at a $10 billion valuation:
"This round demonstrates that potential category winners can attract high revenue multiples in a compressed valuation environment.
"Wiz disclosed reaching $100 million ARR in Q3 2022 at a growth rate we believe exceeds 150%, suggesting that the ARR multiple for this deal resembles the multiples granted before the market downturn.
"We have tracked similar revenue multiples for innovative AI companies yet other information security unicorns have resorted to debt financing and down rounds to extend their runways.
"Wiz stands out in the cloud security market for its agentless cloud scanning approach, offering security and IT operations teams visibility into cloud resources that have amplified in complexity during the rapid digital transformation of the past three years.
"The cloud security market grew over 20% in end-user spending in 2022, enabling high growth for numerous vendors. We expect further valuation growth to occur in the near term for companies securing cloud-native applications."
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Brendan Burke
Senior Emerging Technology Analyst
Information Security |
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Our insights and data featured in the press:
- Tech-heavy farms often need many years to achieve profitability. And raising capital to fund operations has become much more challenging. [Fast Company]
- In the second half of 2022, the number of deals struck by Sequoia and Andreessen Horowitz fell by a combined 47%. [The Economist]
- Both VC and PE dealmaking in healthcare IT are on the decline. [Institutional Investor]
- Why VC flow into blockchain projects will continue to fall throughout the first quarter of 2023. [Forbes]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team. |
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Highlights from our other recent research:
Market updates
Thematic research
Industry & tech research
Coming next week (subject to change)
- Nordic Private Capital Breakdown
- ETR: Foodtech
- ETR: Clean Energy Tech
- Key concerns about and criticisms of ESG
- Venture debt trends as the market turns
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A message from The Barrett Group
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Clients are 7x more likely to land their dream jobs
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For 31 years The Barrett Group has helped executive clients realize their professional dreams. Via its unique process they land as Presidents, Chairpeople, C-level officers, Vice Presidents, Directors, and senior managers at leading firms, including PE portfolio companies. Read more.
The Barrett Group’s approach opens the entire executive market (not just the 10% offered through executive recruiters)—increasing your opportunities more than seven-fold. It is the leading international career management firm. It has helped hundreds of executives every year in virtually all industries across the US, Canada, Europe, the UK and the Middle East. Forbes rates it regularly as one of the most effective in the business. It also unlocks powerful insights into the executive market through its periodic Industry Updates.
Learn more at The Barrett Group |
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Since yesterday, the PitchBook Platform added:
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6
VC valuations
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2294
People
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676
Companies
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19
Funds
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