Some SVB borrowers get best of both worlds

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The Daily Pitch: VC

March 20, 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:

Our latest Emerging Tech Research update explores VC opportunities in carbon capture.

How SVB borrowers are now getting the best of both worlds.

Why mezzanine financing is making a comeback.

Banks in crisis, the latest

(Justin Sullivan/Getty Images)

To catch up on new developments impacting the banking sector:

Switzerland's UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.2 billion) in stock, in a hastily arranged deal on Sunday. The Swiss government and central bank backed the transaction by providing liquidity in addition to protecting UBS from potential losses. The combined entity will oversee $5 trillion in invested assets.

The assets of New York-based Signature Bank, which regulators seized last week, will be acquired by a unit of New York Community Bancorp. The subsidiary, Flagstar Bank, is assuming customer deposits and some loan portfolios.

The Federal Reserve and five other central banks joined forces to improve dollar liquidity globally by increasing the frequency of a currency exchange mechanism. The so-called swap lines maturity moved to a daily frequency, instead of weekly.

The FDIC's latest auction for Silicon Valley Bank has failed, regulators reportedly may move ahead with a plan to break up the bank and sell its remnants separately to new owners.

Today's Top Stories

Some SVB borrowers get the best of both worlds following bank's collapse

(Anadolu Agency/Getty Images)

Startups long sacrificed having diverse banking partners in exchange for access to cheaper debt. Now, those old rules are relaxing, and the industry may never be the same.

The Silicon Valley Bridge Bank, as the entity is now known, is luring customers back by lowering deposit requirements for borrowers. The effort seems to be working, and some investors think the crisis will put an end to arcane rules that locked borrowers into a single bank.

Recommended Reads

A historical look at why the Willow Arctic oil drilling project on Alaska's North Slope was approved. [The Conversation]

The turmoil on the streets of Paris illustrates the enduring power of the garbage strike. [Bloomberg]

How a University of Chicago research project protects art from prying AIs. [TechCrunch]

Since yesterday, the PitchBook Platform added:

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People

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Companies

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The Daily Benchmark:
2017 Vintage US PE Funds

Median IRR

23.37%

Top Quartile IRR

33.64%

1.62x

Median TVPI

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Falfurrias Capital Partners Fund III

SSC Partners Cantium

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VC Deals

PhonePe, an Indian fintech platform, raised $200 million from Walmart at a pre-money valuation of $12 billion. The deal is part of the startup’s ongoing fundraise of up to $1 billion for which it has currently secured $650 million from investors including General Atlantic and Ribbit Capital.

Perspectum, a UK-based provider of medical imaging and diagnostic technology, raised a $55 million Series C led by Oppenheimer & Co.

Fairmatic, a New York-based AI powered auto insurance startup, raised a $46 million Series B led by Battery Ventures with participation from Bridge Bank.

Cast AI, a cloud startup based in Miami, secured a $20 million investment led by Creandum.

Wingspan, a New York-based platform for managing freelancer payroll, raised a $14 million Series A led by Andreessen Horowitz with backing from Ludlow Ventures and Long Journey Ventures.

Engrain, a map technology and data company based in Denver, raised a $12 million Series A led by RET Ventures.

The Ayurveda Co, an Indian lifestyle brand startup, raised a $12.2 million Series A led by Sixth Sense Ventures.

Blinto, a Swedish online auction platform for used heavy machinery, raised €10.6 million (around $11.3 million) from Verdane.

Fenix24, a cyber disaster recovery specialist based in Tennessee, secured a $5 million investment from Eos Venture Partners.

RiseKit, a Chicago-based talent-sourcing platform, raised a $4.75 million round from investors including Stand Together Ventures Lab and Prota Ventures.

Klimato raised €4.2 million in a round led by Global Cleantech Capital. The Stockholm-based startup’s platform is designed to help restaurants and food service providers calculate and report their carbon footprint per dish.

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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.

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PE Deals

WeWork has reached a $1.5 billion debt-to-equity deal with an ad hoc group that includes SoftBank's Vision Fund II and funds managed by King Street Capital Management, BlackRock and Brigade Capital Management, among others. The deal will inject $540 million in new funding as the company attempts to turn a profit.

Owners of London-based Global Switch have continued negotiations to sell the data center company to EQT, Reuters reported, months after bids topping at $8 billion first came in. Global Switch's owners include Chinese companies Jiangsu Shagang Group and Avic Trust.

Motive Partners, a specialist fintech private equity firm, is in negotiations to acquire NASDAQ-listed payments software company ACI Worldwide, Bloomberg reported.

Court Square Capital Partners has invested in entertainment company Five Star Parks & Attractions, which is also backed by investors including Fruition Partners.

Exit & IPOs

AnaCap has agreed to sell Danish health insurance provider Oona Health to local insurance group Topdanmark.

Beijing-based DCP Capital is looking to sell MFS Technology, a Singaporean flexible circuit board manufacturer, Reuters reported. DCP acquired a controlling stake in the tech company in 2018 from Navis Capital Partners and Novo Tellus Capital Partners.

Fundraising

JMI Equity, a software-focused growth equity firm, closed on commitments of $2.4 billion across two new funds, including its flagship JMI Equity Fund XI.

Petronas, the Malaysian state-owned oil company, plans to raise an additional $200 million for its corporate venture capital arm, according to reports.

Chart of the Day

Source: 2022 Annual Global Private Market Fundraising Report

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Some SVB borrowers get best of both worlds

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What comes after SVB?

How SVB fallout will hit VC

SVB's path forward

Swooping in on SVB's wreckage

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