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In today's Daily Pitch, you'll find:
- Investors are divided over how to respond to Silicon Valley Bank's sudden liquidity crisis.
- Our latest analyst note explores opportunities and challenges in venture debt dealmaking.
- Our Q4 2022 Clean Energy Report dives into the major trends and emerging opportunities in the sector.
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Silicon Valley Bank's liquidity crisis rocks the tech world
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SVB Financial CEO Greg Becker
(Marla Aufmuth/Getty Images) |
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The startup industry is reeling in the fallout of a financial squeeze at Silicon Valley Bank, which is selling bonds and raising cash to cover deposits. This restructuring has spurred withdrawals that risk devolving into a full-blown panic.
The bank's crisis points to spreading turmoil throughout the venture ecosystem, and raises questions about the ability of many startups to weather the current economic downturn.
Investors are divided over how to respond—some are urging patience, others telling startups to pull money out. |
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Startups turn to venture debt as a major lender stumbles
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The struggles of Silicon Valley Bank shook the venture market yesterday with the news of the bank's share sale to cover large losses to its bond portfolio. The bank is one of the largest participants in the venture debt space, providing loans to many startups within the tech and life sciences sectors.
Venture debt has grown significantly in recent years, building alongside the growth of the VC market as lenders were able to offer a relatively cheap, nondilutive source of growth capital to startups due to low interest rates. Though the market shifted quickly in 2022, more than $30 billion in loans were provided to US-based VC-backed companies, which showed an appetite for debt despite rising interest rates.
Our latest analyst note explores trends in venture debt dealmaking amid a difficult market and highlights the unique opportunities and challenges of nondilutive capital. |
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SVB's liquidity crunch may be unique
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| (Sundry Photography/Shutterstock) |
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One open question coming out of the SVB Financial crisis will be assessing how much risk other banks have taken on in their exposure to the startup ecosystem.
- For the moment, at least, the fallout appears limited to SVB, according to Morningstar analyst Eric Compton.
- "SVB scores materially worse than any bank we cover on a number of liquidity and unrealized loss metrics," Compton wrote in a new research note.
- He added that the cash crunch at SVB does point to higher risks for other banks, but he doesn't expect others to follow in SVB's footsteps to cover lower deposits.
- "Aside from crypto-related meltdowns, this is one of the first banks we've seen that has really suffered a liquidity crunch that has forced it to restructure the balance sheet and realize losses on its securities portfolios."
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PitchBook's 2023 Media Kit released
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With uncertainty across the private and public markets likely to continue, strong and insightful thought leadership is critical to your clients and prospects.
By partnering with PitchBook Media, you will have daily opportunities to reach 1.5M+ industry professionals in our newsletter, and you can broaden exposure of your brand through our core industry reports. We also help clients create custom research to share data-driven insights on the market.
Our brand-new 2023 Media Kit contains all the details to help your firm position itself in front of a VC or PE audience.
Click here to download it today or to speak to someone on the media team. |
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VCs spend record-breaking $16.2B on clean energy in 2022
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Investors were bullish on clean energy in 2022, raising $16.2 billion to beat 2021's deal value record of $16 billion even as other sectors got swept away by the bear market tide. However, VC deal value and count both dipped year-over-year in Q4. Our Q4 2022 Clean Energy Report dives into the major trends and emerging opportunities in the sector.
- Total VC dollars raised in clean energy fell 46.5% YoY in Q4 as the market calmed and fuel prices dropped.
- Renewable-powered batteries are poised for a takeoff. Grid-scale battery development picked up steam in Q4 with two huge deals, a $450 million Series E for TPG-backed Form Energy and $280.5 million Series B for Hithium, backed by ABCI Securities and CCBT Private Equity.
- Investors are increasingly confident that green hydrogen could be a viable and scalable alternative to fossil fuels, as 2022's energy crisis caused a reckoning for natural gas.
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New year, same slump for female founders
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| (Julia Midkiff/PitchBook News) |
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As the first quarter of 2023 draws to a close, there is no sign that the dealmaking slump will abate. Startups with female founders continue to see declines in the number of deals completed and capital raised, according to data from PitchBook's US VC Female Founders Dashboard.
- Two months into 2023, such startups have completed 408 deals worth $3.2 billion, a decline of 51% and 66%, respectively, from the same timespan last year.
- However, companies with both male and female founders are doing better relative to the overall US VC market, as they have the highest share of capital on record at 18.5%. For comparison, startups with only female founders have raised 2.2% of all US VC capital so far this year.
- In February, pharmacy and bio companies raised the most money among startups with at least one female founder, garnering $311 million over 18 deals, led by a $77.3 million Series B for synthetic biology platform designer Hexagon Bio.
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More deals, less funds: Nordic PE trends in 6 charts
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| (dimbar76/Shutterstock) |
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Even as dealmaking took a hit elsewhere in Europe, private equity investment remained steadfast in the Nordics last year.
We take a look at six charts that summarize the state of the Nordic region's PE industry and how it compares with others on the continent. |
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America's $52 billion plan to make chips at home faces a labor shortage. [Bloomberg]
One startup is taking on the science of infant nutrition. [The New Yorker]
Cathie Wood's flagship Ark fund has continued to rake in fees from loyal investors despite its losses. [Financial Times] |
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Since yesterday, the PitchBook Platform added:
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10
VC valuations
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1845
People
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522
Companies
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13
Funds
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The Daily Benchmark: 2013 Vintage North American VC Funds
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Generative AI startup Anthropic is raising a $300 million round led by Spark Capital at a $4.1 billion pre-money valuation, The Information reported.
QurAlis, a clinical-stage biotech startup, has secured an $88 million Series B led by EQT Life Sciences.
Envisics, a provider of holographic tech, has raised over $50 million for its Series C led by Hyundai Mobis.
Electric vehicle charging startup Indra has secured more than £20 million in a Series B led by Gulf Oil International.
Cado Security, a cloud forensics and incident response platform, has raised $20 million in a round led by Eurazeo.
Fintech startup Synctera has raised $15 million led by NAventures, the National Bank of Canada's corporate venture arm.
AI drug discovery company Iktos has secured a €15.5 million Series A led by M Ventures and Debiopharm Innovation Fund.
AI chip startup Mythic has raised $13 million from investors including Atreides Management, DCVC and Lux Capital.
Lloyds Banking Group has invested £10 million in London-based digital identity platform Yoti.
Cowboy, a Brussels-based maker of electric bikes, has raised €10 million, Tech.eu reported.
ZenHub, which offers a project management platform for software development teams, has raised a $10 million Series A led by Yaletown Partners.
Group travel planning app Bach has secured a $9 million Series A led by Pritzker Group Venture Capital, TechCrunch reported.
Estonia-based Roofit.Solar has raised €6.45 million in a round led by BayWa r.e. Energy Ventures and Edge Capital Partners. The startup builds metal solar roofs for homeowners.
QuantWare, a provider of large-scale superconducting quantum processors, has raised €6 million in a round led by Forward.one. |
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Don't miss our upcoming webinar
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Join us for a webinar examining how developments in the venture capital landscape could shape the year ahead. PitchBook analysts will explore emerging long-term opportunities and risks associated with varying outcomes in the macroeconomic environment. Key topics include:
- Tough financial market conditions have caused our estimate for the IPO backlog to soar to record levels. Our analysis of public comps suggests the window is still closed for most unicorns.
- A record $42.8 billion of unmet demand for new capital could result in further layoffs and structured financing to extend runways.
- Our VC Dealmaking Indicator suggests a much more investor-friendly environment this year compared to 2022. We explore what that means for company valuations and VC returns.
Register now to secure your spot. |
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Abu Dhabi Investment Authority is in talks to purchase a $500 million stake in Indian eyewear D2C company Lenskart, which is backed by KKR, SoftBank, Temasek and Premji Invest, Bloomberg reported. The deal would value Lenskart at over $4 billion.
KKR, MBK Partners, Brookfield Asset Management, BlackRock and Stonepeak are among possible buyers for a $1 billion minority stake in IMM Private Equity-backed industrial gas company AirFirst, Reuters reported. IMM is targeting a $3 billion valuation for South Korea-based AirFirst.
Epiris has acquired UK-based fastener manufacturer LoneStar Group, whose customers include industrial and energy companies. LoneStar was previously acquired by AEA Investors in 2010.
Healthcare-focused growth equity firm Cypress Ridge Capital has invested in custom software designer Semaphore Solutions. Founded in 2010, Victoria, British Columbia-based Semaphore serves life science organizations working on disease research, drug discovery and molecular diagnostics.
OceanSound Partners-backed RMA Companies has acquired PRI Group, which provides testing and evaluation services to companies in the asphalt, building materials and transportation markets.
Wealthtech company Masttro has secured a $43 million growth equity investment from FTV Capital and Citi Ventures, providing the firms with a minority stake. Masttro provides software designed for ultra-high-net-worth families.
Solingen PE-backed Sano Physiotherapy has acquired specialist occupational health physiotherapy provider Back in Action UK. Sano Physiotherapy provides onsite occupational services and ergonomic assessments.
Temasek-backed SeaTown Holdings has invested an undisclosed amount in Singapore-based Foundation Healthcare via its SeaTown Private Capital Master Fund.
LDC has invested in talent analytics specialist Horsefly, providing an exit for Mercia. |
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BlackRock is expecting to raise about €1 billion across two new PE funds that will secure commitments from ultra-high net worth individuals in Europe, Bloomberg reported. Both vehicles will target buyout, venture capital and growth equity investments in Asia, North America and Europe.
IMM Investment Global is aiming to raise $300 million for its second fund focused on energy transition, Infrastructure Investor reported.
MUUS Climate Partners, an affiliate of MUUS, has closed its $50 million MUUS Convergence Fund II, which targets climate-focused companies that are nearing commercialization. |
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"It is worth noting that the 2022 debt deal count across all VC stages fell below figures from the previous year, with the caveat of a natural lag in reporting for private debt deals. There are multiple underlying factors that could have contributed to this visible dip. To start with, quarterly deal counts in 2022 reveal a QoQ decline. ... The QoQ drop likely resulted from the private market grappling with strong headwinds during the second half of the year. Companies, investors, and lenders all took a step back to reposition themselves and re-evaluate their next steps amid prolonged market volatility."
Source: PitchBook Analyst Note: Venture Debt as the Market Turns |
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