Why founders' mental health matters to VCs

Plus: The next wave of IPOs, the hottest sectors in tech, UK private markets keep a stiff upper lip & more
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The Weekend Pitch
September 10, 2023
Presented by Hedonova
(Joey Schaffer/PitchBook News)
Mental health has rarely been discussed in the venture capital community but the issue has garnered more attention recently, particularly among startup founders finding themselves under increased pressure in the current downturn.

The pressures of raising funds, meeting performance targets and coping with a stressful work-life balance are taking their toll on many entrepreneurs' mental well-being. According to a survey by data-sharing platform Startup Snapshot, some 72% of founders reported that launching their own business had a negative impact on their mental health.

As a result, more venture capitalists are putting resources towards supporting founders' mental health. But many in the industry believe more needs to be done.

This is the Weekend Pitch, and I'm Leah Hodgson. You can reach me at leah.hodgson@pitchbook.com or @LeahFHodgson.
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Trivia

This past week, PitchBook reported on a startup named Butternut Box that landed the largest-ever deal in its category, a $351.5 million raise. What category does Butternut Box operate in?

A) Ski equipment
B) Pet tech
C) Space tech
D) Generative AI

Find your answer at the bottom of The Weekend Pitch!
 

Is a wave of IPOs on the horizon?

(PictureLake/Getty Images)
The IPO market has been nearly dead for a while now, thanks to rising interest rates and falling tech stock valuations. But the recent IPO filings by Instacart and Klaviyo could revive it.

According to our new analyst note, "Analyzing the IPO Market Outlook," about 220 venture-backed companies should have gone public since early 2022. These businesses will likely rush to file their IPOs when conditions improve. Whether this environment materializes soon depends on how Wall Street welcomes Instacart and Klaviyo, and on VC-backed companies' willingness to accept lower valuations than they got in their last private round.
 

AI & ML, ecommerce continue to enthrall investors

(Andriy Onufriyenko/Getty Images)
PitchBook's latest Emerging Tech Indicator, which tracks angel, seed and early-stage investments at the world's 15 most successful VC firms to determine the most promising areas of tech, has revealed the top sectors attracting investors' money in Q2: AI and machine learning ($646 million) and ecommerce ($533 million).

The ETI reflects a reduction in Web3 and decentralized finance investments ($159 million across five deals) from the previous quarter, reflecting recent regulatory scrutiny and increased interest rates.
 

UK private markets show stiff upper lip in tough times

(shomos uddin/Getty Images)
Despite the Bank of England raising interest rates 14 times to a 15-year high of 5.25%, the country's private markets have been steadfast in their resolve and, in some cases, outdone their European neighbors.

Our 2023 UK Private Capital Breakdown looks at how UK private equity—by far the largest market in Europe—has been on a sustained run of improving activity this year despite managers having to reign in their ambitions over deal sizes. Conversely, venture capital has seen a drop in exit values and a significant decline in fundraising.
 

Quote/Unquote

"It was a buzzy thing to do in the bull market, but I don't think it worked out well for the majority of companies."

—Jeremy Abelson, a portfolio manager at Irving Investors, talking to PitchBook News about direct listings as alternatives to IPOs
 

Recommended Reads

The world Is going blind. Taiwan offers a warning, and a cure. [Wired]

Disney-Charter fight marks cable TV’s last stand. [The Wall Street Journal]

The kingdom of golf carts. Is this Atlanta suburb a role model for sustainability? [Bloomberg Businessweek]
 

Stay tuned

Keep an eye out for these insights and research reports coming out this week:
  • Q2 2023 Enterprise SaaS Report
  • Q2 2023 Healthcare IT Report
  • Q2 2023 Digital Health Report
  • Q2 2023 US PE Lending League Tables
 

Trivia

Answer: B)

Earlier this week, Butternut Box landed the largest-ever VC pet tech deal with a $351.5 million raise. You can read more about that raise here.

This edition of The Weekend Pitch was written by Leah Hodgson, Jacob Robbins, Laural Hobbes, David Stevenson and Marina Temkin. It was edited by Andrew Woodman and Ron Prichard.

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