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Data & Tools: We've launched a new homepage for our interactive data visualizations and dashboards, including our PitchBook Indexes, VC Dealmaking Indicator, and PE Barometer. Check it out.
Digital health's new age? Weight loss drugs have exploded onto the scene, but what risks lie behind the glossy ads? Our new Digital Health Report dives into this trend and more. Read a free preview.
Talking PE: Despite elevated stress in the banking system and tightening credit conditions, PE dealmaking has remained resilient. On Wednesday, our analysts will discuss where the PE landscape stands. Register here.
The most active PE lenders: Our Lending League Tables were updated this week. See the new rankings. |
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A message from the American Investment Council
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Advancing private equity & private credit across America
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The American Investment Council strengthens the private equity and private credit industries by defending its license to operate in every community across the nation. The American Investment Council is committed to promoting how investment supports jobs, small businesses, and retirees across the United States.
Learn more about this mission here and join the American Investment Council |
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Quantifying the success of YC and the largest accelerators
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Startup accelerator programs have experienced remarkable growth, popularity, and influence within the venture ecosystem over the past two decades.
They've helped numerous startups find success by supplying them with capital, mentorship, and access to coveted investor networks.
Renowned accelerators like Y Combinator, Techstars, 500 Global, MassChallenge, and SOSV have made substantial impacts on startup culture and continue to expand their reach globally, as evidenced by a significant increase in participation from non-US-based businesses.
YC leads the pack in successful exits, having backed the likes of Airbnb, Coinbase, Dropbox, and GitLab. Other accelerators have also seen notable exits, highlighting the impact and importance of program quality, founder selection, and geographic presence.
Capital raised is another key metric, and, on average, 50% to 70% of cohort companies raise rounds within three years of completing an accelerator program. While YC leads its peers in cumulative capital raised—followed by Techstars—the figures for 500 Global, SOSV, and MassChallenge are likely 10%-30% higher than estimated.
Our data found that unicorn creation rates of startups from 2010 to 2015 cohorts ranged from 0.3% (SOSV) to 5.4% (YC), and we also found that follow-on investments from accelerators tend to be more successful, particularly at Techstars and YC.
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| We surveyed founders in addition to our quantitative analysis. |
While quantitative data is great, we believe it only tells one part of the story. We surveyed 43 founders who attended these accelerators to better understand their biggest takeaways from each respective program.
Founders highlighted many aspects of the accelerator programs, including access to quality advisers, mentors, and corporations, the strength of the program's network, and the benefits of an environment that encourages deep thinking and iteration. They also appreciated education on fundraising and warm connections to investors and potential customers.
On the other hand, founders expressed the need for more education on running a company.
Now more than ever, accelerators will continue to play a pivotal role for early-stage startups looking to find success during the current economic storm.
For a deeper look into the success of the largest accelerators, download our free report: Quantifying the Success of YC and the Largest Accelerators
Questions or comments? Reach out to the report's authors via LinkedIn or Twitter: James Ulan ( @JamesUlan100) and Vincent Harrison ( @VinceMHarrison)!
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US PE middle market benefits from megafund fatigue
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It is confirmed: The US PE middle market is finally having its moment.
Middle-market funds, which we define as between $100 million and $5 billion in size, have outperformed megafunds for three consecutive quarters, with the gap widening to 917 basis points as measured by median one-year horizon returns.
This is the widest gap in favor of the middle market since 2016, and it is in stark contrast to Q4 2021 when megafunds were trouncing all other funds by an even wider margin. Equally encouraging is the middle market's share of all PE buyouts, which is north of 75% for back-to-back quarters, the highest level in five years.
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| The middle market's share of PE funds is its highest in years. |
Despite this relative strength, dealmaking in middle markets dropped dramatically in Q1 from the late-2021 peak, just less so than the overall decline in PE market volumes. Middle-market dealmaking is still keeping its head above pre-pandemic activity, but that margin is fading with every passing quarter.
Diminished access to debt packages for big leveraged buyouts and cheaper multiples for smaller deals are encouraging PE firms to reach down market for deals that are more easily financed and satisfy return objectives.
Public-to-private deals, which have usually been confined to the largest end of the deal spectrum, are also shifting down into the middle market as public valuations have diverged significantly above and below the $1 billion mark.
Elsewhere, exit activity slowed again in Q1, and it was a fairly steep decline from the prior quarter. Even though the middle market is less dependent on new public listings as an exit route, quarterly volumes collapsed by two-thirds from the peak.
Against this backdrop, fundraising for US middle-market PE was surprisingly strong. Big-fund fatigue seems to have set in with LPs, which are taking a shine to smaller buyout funds designed to buy up smaller companies.
Overall, middle-market fundraising has nearly doubled from a year ago and the segment is now on track for its best fundraising year since the peak in 2019.
Of course, this could all unravel quickly. An unexpected lurch downward in interest rates and upward in public markets would dispatch the denominator effect and big buyout funds would regain their appeal. Barring that, conditions favor the middle market, and it will no doubt continue to enjoy its moment.
For more data and analysis, download our free US PE Middle Market Report.
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Enjoy the read!
Tim Clarke
Lead Analyst, Private Equity |
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On Tuesday, PitchBook analyst Aaron DeGagne will host Zane Burke of Quantum Health for a fireside chat to discuss evolving dynamics in the care and benefits navigation market. Quantum, a PE-backed healthcare navigation company, is a likely candidate for an IPO once the window reopens.
Key topics will include care navigation's role in fending off healthcare cost inflation, the path to a $20B+ addressable market, and what makes Quantum Health's approach different than that of its peers: Register now.
Other events this month:
- June 28: As a result of a slow exits market, LP- and GP-led secondaries opportunities abound in private markets. Our webinar will dive into these increasingly creative liquidity solutions. Register here.
- June 28: VC analyst Kyle Stanford will be speaking to venture trends in turbulent times at the Collision Conference in Toronto. More details here.
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Through Q1, six real assets vehicles—all infrastructure funds—raised a collective $2 billion, the lowest quarterly figure in a decade.
The latest performance data, however, suggests infrastructure funds are living up to their low-volatility, countercyclical reputation. Fundraising may be down, but infrastructure investing is far from dormant.
Our Global Real Assets Report breaks down the data on strategies including core, opportunistic, generalist, and debt, plus a spotlight on sustainable infrastructure: |
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Sodium Batteries
Supply chain shortages could halt the electric vehicle revolution before it even takes flight.
The cost of lithium-ion batteries has plummeted 97% over the past 30 years, but now manufacturers are staring down the barrel of multiple materials constraints.
New tech offers a promising solution: sodium-ion batteries.
Our note investigates the alternative made from more abundant materials and offers a glimpse into the storage needed to power the ambitious energy transition: |
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Gaming VC Trends Deep Dive
VCs in the gaming space are investing heavily in content startups, looking for studios to create the next big hit.
Attention and cash are also being directed toward startups that aid developers with new tools.
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While content startups have dominated deal count, development companies have led the way in terms of deal value as investors pursue outsized returns.
We dig into the segment and category data in our latest analyst note: |
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The e-commerce boom is here to stay, but in the world of dealmaking, supply chain tech companies are struggling just to hold on.
The freight tech industry, in particular, experienced an 82% year-over-year decline in VC deal value in Q1.
Our Supply Chain Tech Overview offers an updated taxonomy of the vertical and features all the latest VC data: |
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After a series of blockbuster insurtech acquisitions, we believe there are still plenty of consolidation targets within the vertical.
Our latest Insurtech Report covers the key deals, trends, and companies that could be the next M&A targets.
A major bright spot for the vertical was the explosion in deal value for commercial insurtech startups—increasing more than 137% over the previous quarter: |
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Our insights and data featured in the press:
- Binance and Coinbase for been gearing up for their legal battles with the SEC: "The legal resources required for these companies is significant." [Bloomberg Law]
- There were 18 debt defaults in the US loan market between January 1 and the end of May, totaling $21 billion—greater in number and total value than the whole of 2021 and 2022 combined. [FT]
- VC funding to startups last year was down 31% from 2021. But what about funding to the firms themselves? That number was the highest it's been in 10 years. [Insider]
- Y Combinator leads other startup accelerators in most metrics, including exit value and unicorn creation rate. [Institutional Investor]
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)
- PitchBook Private Capital Indexes
- Quant Perspectives: PE
- European Private Capital Outlook: H1 Follow-Up
- Information Security Overview
- Foodtech Report
- VC investment in climate tech
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Since yesterday, the PitchBook Platform added:
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4
VC valuations
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1797
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591
Companies
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18
Funds
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