PitchBook News - SoftBank's Vision Funds hemorrhage $39B

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The Daily Pitch: VC

May 12, 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:

After posting a record $39 billion loss for its Vision Funds, SoftBank is prioritizing exits.

Our Q1 2023 Crypto Report covers where the vertical is growing the most now that valuations have stabilized.

Vista Equity Partners and other PE firms see long-term opportunities in enterprise software even as exits wane.

Today's Top Stories

SoftBank is still on the run

SoftBank CEO Masayoshi Son
(Tomohiro Ohsumi/Getty Images)

SoftBank's Vision Funds have been on the run, playing defense after four quarters of consecutive losses—a streak that has just extended to five quarters of declines after the segment posted a roughly $39 billion loss.

Once known for its aggressive and large bets, the firm has slowed down new investments to prioritize exits, with CFO Yoshimitsu Goto saying they now want "to take steps one by one." Read more about how the Japanese investment giant is looking to exit key assets amid plunging valuations.

Or check out our SoftBank Vision Fund Dashboard, now updated with the latest portfolio returns and earnings data.

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Unpacking crypto's potential

After the collapse of FTX and a wobbly few months of fluctuating valuations, crypto has stabilized. Our Q1 2023 Crypto Report covers where the vertical has been and where it's growing the most. Key takeaways include:

Q1 marked the fourth consecutive quarter of declining investment activity, with startups raising $2.6 billion across 353 deals—down 78% and more than 64%, respectively, from the same period last year.

Late-stage valuations were up a whopping 209%, but that number may be skewed due to a lack of disclosure on down rounds.

Emerging opportunities include startups working on privacy, data management and security for Web3 protocols.

read the preview

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A message from Ontra

What’s keeping the private markets industry up at night?

Ontra surveyed 400 private markets professionals and combined the results with proprietary data on the number of NDAs a subset of private equity firms negotiated to identify trends from 2022, expectations for 2023, and legal process pain points firms struggle with.

Findings include:

Employees spend so much time negotiating NDAs that it impacts other work.

65% of respondents—including investment professionals, in-house lawyers, compliance professionals, investor relations professionals, and finance professionals—said they spend more than six hours per week negotiating NDAs. 61% said NDA negotiations were detracting from other strategic work.
Obligation compliance is a pain point for firms.

77% of survey respondents said they worried at least once in the past year about not complying with investor obligations.

Download the guide

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Survey: Have recent disruptions changed VC investors' expectations?

As March stormed in with a roar, the venture capital industry experienced significant events that left enduring, untamable impacts. From ChatGPT's evolution from a novelty to a disruptor raking in serious VC dollars, to the collapse of Silicon Valley Bank—the month shook the already strained funding environment. So, how were VC investors feeling during this hectic time?

In March, we conducted an Emerging Tech Research survey of 58 VC firm insiders on technology, fundraising and more.

The VC community expects even more innovation and growth from AI over the next 12 months.

The crash of tech stocks in 2022 left mixed impressions: Respondents were evenly split on how the "tech wreck" affected technological development.

VC funding for tech startups is expected to decrease, but many investors are forging ahead with their planned fundraising, even after the banking crisis.

read it now

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PE firms stick with enterprise software bets

(Sahara Prince/Shutterstock)

Sales of PE-owned enterprise software companies got tangled up at the start of 2023.

PE firms exited only 23 US-based enterprise software companies at a combined value of $4.2 billion in Q1 2023, the lowest level since Q2 2020—when PE exits recorded $3.3 billion across 16 deals.

The market downturn, however, presents opportunities for investors like Vista Equity Partners, which see long-term tailwinds for corporate software spending.

Recommended Reads

Even the PE giants are struggling to fundraise as pension funds hold back. [The Wall Street Journal]

The companies trying to make live shopping a thing in the US. [The New York Times]

What's behind the miraculous turnaround of India's once-troubled banks? [The Economist]

Since yesterday, the PitchBook Platform added:

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VC valuations

2060

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621

Companies

20

Funds

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The Daily Benchmark:
2020 Vintage Global Real Assets Funds

Median IRR

12.65%

Top Quartile IRR

31.50%

0.07x

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Five Point Energy Fund III

NGP Royalty Partners

Blackstone Energy Partners III

*IRR: net of fees

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VC Deals

Amino Health, a digital healthcare startup, has secured an $80 million equity and debt investment led by Transformation Capital and Oxford Finance.

Everseen, an Irish startup that develops visual AI technology for retailers, has raised a €65 million Series A led by Crosspoint Capital Partners.

Energy startup Modern Hydrogen has raised a $32.8 million Series B2 led by NextEra Energy.

Wellthy, which offers a care platform for children and older adults, has secured $25.5 million from investors including Citi Impact Fund, Cercano Management and Stardust Equity.

UK-based AccelerComm has closed a £21.5 million Series B from investors including Parkwalk, Swisscom and Bloc Ventures. AccelerComm's technology optimizes 5G radio access network performance.

Climate-tech company Cloverly has raised a $19 million Series A led by Grotech Ventures with additional backing from SoftBank and other investors.

Cable, which automates the testing of financial crime controls, has raised an $11 million Series A from Stage 2 Capital, Jump Capital and CRV.

Ceecat Capital has led a $10 million Series A in Luxembourg-based space-tech startup EnduroSat.

Copenhagen-based quantum technology specialist Sparrow Quantum has raised 31 million Danish kroner (around $4.5 million) in a round led by 2xN.

PE Deals

Crosspoint Capital Partners has agreed to take Canadian cybersecurity company Absolute Software private for $657 million.

Arctos Sports Partners is among those interested in buying a stake in French soccer club Paris Saint-Germain, Bloomberg reported.

KKR has agreed to acquire B2B materials company Industrial Physics from Union Park Capital.

Avista Capital Partners-backed Probo Medical, a medical imaging equipment provider, has acquired ultrasound distributor National Ultrasound.

The deadline by which EQT must make a firm offer for Dechra Pharmaceuticals has been extended to June 2, the company said in a statement.

Fundraising

Swedish climate tech-focused VC firm Pale Blue Dot has closed its second fund on €93 million, Tech.eu reported. The vehicle will target pre-seed and seed investments in sectors including agtech, mobility and fintech.

Investors

Apollo Global Management and Blackstone were among the unsuccessful bidders for select assets of Silicon Valley Bank after its collapse, the FDIC said.

Bessemer Venture Partners has committed $1 billion in capital from its current funds to support startups building AI-native products.

Chart of the Day

Source: PitchBook's Q1 2023 European Venture Report

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PitchBook News - SoftBank's Vision Funds hemorrhage $39B

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