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The Research Pitch |
September 23, 2023 
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Presented by G-P |
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Trending tech: As opposed to our deep dives, Emerging Space Briefs offer quick introductions to nascent technologies. Don't miss our latest two releases on Postquantum Cryptography and Deep-Sea Mining.
Sneak peek: Retail media networks and group buying applications are a pair of opportunities for e-commerce investors. Our E-Commerce Report is set for a wide release Monday, but you can get a preview here.
AI Tech Talk: Nation-state-led cyberattacks have been leaving enterprise defenders on the back foot. On Tuesday, we're speaking with Citadel Control Services CEO Josh Knighton about how AI can help. Register here.
The Credit Pitch: A quick reminder that we've launched a new weekly newsletter focused on leveraged loans, high-yield bonds, private credit, distressed debt, and more. Last week's debut was very popular. Subscribe here. |
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Retain top talent while increasing employee productivity and satisfaction
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Employee retention has become a focal point for businesses today. The cost of replacing an employee can be up to two times their annual salary, including recruiting, onboarding, and training expenses. Employee happiness is directly linked to productivity, and common reasons for job changes include better pay, career progression, and job fulfillment. There are solutions to improve retention and increase productivity, including four-day work weeks, setting focus time, and providing a clear path for professional growth. Overall, investing in employee well-being and career development not only saves costs but also enhances productivity and job satisfaction.
Check out G-P’s blog 3 Keys to Retaining Top Talent and Driving Workplace Productivity for an in-depth guide on improving the employee experience. |
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Bringing clarity and data to the 'pre-seed' discussion
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In an effort to provide the most comprehensive analysis of the venture market, we are introducing a pre-seed dataset to our VC stage methodologies.
Despite popular use of the term "pre-seed," investors interpret this stage in widely different ways. To address a lack of market consensus, our methodology incorporates company age and current backing status while factoring in variances across different geographical locations.
The goal is to produce reliable and timely deal analysis spotlighting the earliest phase of venture.
The global pre-seed universe grew consistently during the past decade, particularly in the US and Europe. This increased popularity can be attributed to a variety of factors, most prominently a quest for greater alpha and the goal of developing regional entrepreneurial ecosystems.
Typically representing the first "yes" from VC investors to nascent startups, pre-seed deals peaked at 2,650 in 2021. But this investing is "high risk, high return," as only 13.5% of companies that raised a pre-seed round between 2010 and 2016 eventually exited.
With the introductions of venture growth and now pre-seed, PitchBook's stage methodologies fully cover the VC lifecycle. Going forward, we will sunset "angel" as a specified stage of venture, and pre-seed will be represented in all of our venture-focused reports.
For more data and analysis, download our research: Introducing the Pre-Seed Dataset
Please feel free to reach out with any feedback.
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Best,
Kaidi Gao
Associate Analyst, Venture Capital |
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Finding emerging opportunities in sustainable investing
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VC is uniquely positioned to invest with positive social and environmental impact in mind.
As incubators of emerging technologies, VCs can foster the businesses with the greatest potential for impact and returns, using their expertise and resources to improve those companies' chances of success.
However, the landscape of potential opportunities is vast and rapidly changing, making it difficult to keep apprised of which might be the most fruitful.
With this in mind, I'm excited to announce the launch of PitchBook's Emerging Sustainable Investing Opportunities analyst note series, in which we explore opportunities across emerging technology verticals such as foodtech, mobility tech, and carbon & emissions tech that we believe are poised to perform well in the next decade, both from financial-return and impact-return perspectives.
Looking beyond the investment areas commonly associated with sustainability, such as solar energy or electric vehicles, this series examines lesser-known technologies and more niche investment opportunities developing within the familiar themes. The first two notes in the series, both published within the last two weeks, focus on cultivated proteins and transit tech.
For each of these reports, I collaborated with our tech research team to develop insights around the return potential of the opportunity and its major drivers as well as the investment risks and obstacles it faces.
We also explore its social and environmental impact potential, how the opportunity fits into IRIS+ Impact themes, and metrics to help quantify those impacts.
Ultimately, the aim of this series is to give VCs and their LPs more context around how these opportunities align with their return and sustainability goals and to provide companies operating in these spaces a sense of how they can optimize and communicate their positive social and environmental impacts.
In doing so, we hope to guide those pursuing the "double bottom line" through the complex landscape to the most worthwhile opportunities.
For more analysis, read our first two reports on Cultivated Protein and Transit Tech.
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An LP's Guide to Manager Selection
For LPs, there are plenty of fish in the sea of alternative investing: almost too many GPs to choose from.
Because looking at a firm's prior fund performance is not a foolproof method for picking future top performers, allocators need to pay close attention to other details.
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| Performance is one of the six Ps of GP selection. |
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Asking the right questions is important, but knowing what to listen for in the answers is key.
Our analyst note shares strategies for LPs to sort through fundraising pitches: |
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Seeing the Future State of Eyecare
Eyeglasses and contacts might not be the most expensive part of consumer healthcare, but the ubiquity of poor vision makes eyecare ripe for VC-backed disruption.
Innovations in intraocular lenses and in childhood treatments for myopia may improve quality of life. And if federal regulations ease, more patients could get vision prescriptions without an annual visit to the optometrist.
Our analyst note gives a clear view into the sector's next decades and its opportunities for investors: |
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Inflation rates are stabilizing, and new IPOs have brought hope that a pickup in the exit market may be coming.
That's not to say the skies are clear: Our recession model still pegs the probability of a recession at 73%, and interest rates still make less-risky alternatives more attractive.
With over 30 charts, our VC-focused Quantitative Perspectives report peers into the state of the industry and what the future could hold: |
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Venture investment in China continued to retrench in H1 2023 as startups and investors grappled with socioeconomic and geopolitical headwinds.
The difficult fundraising climate, a decline in exits, and dwindling capital availability have caused GPs to slow their pace of capital deployment, according to our Greater China Venture Report.
In addition, foreign investors have continued to waver—partly due to questions about the Chinese government: |
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PE dealmaking in France remained resilient in the second quarter, while VC activity continued to fall.
The French economy showed signs of strength, according to our new France Market Snapshot, with higher-than-expected GDP growth and an easing of inflation.
More on this tale of two markets in the full report: |
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Despite Q2's decline in VC activity, insurtech startups still found a bright spot by collaborating with IoT makers
And while VC investment during H1 was the lowest it has been since 2017, opportunities continue to emerge in areas like startups working on hastening insurance payouts, according to our Insurtech Report: |
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VC funding for mobility tech companies flattened out in Q2 after activity had declined substantially in Q1.
The electric vehicle segment, in particular, has driven renewed interest in the sector, according to our Mobility Tech Report: |
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Some events to add to your calendar:
Oct. 4: We're hosting a conversation with co-founders from YC alumni Cascading AI, JustPaid.io, and AlphaWatch AI on how AI is changing fintech and financial services—and who the winners and losers will be. Register here.
Oct. 19: We're speaking with crypto experts from Goldman Sachs and Rosenblatt Securities about industry trends within traditional financial institutions, today's opportunity set, and the challenges at hand. Register here.
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Lead healthcare analyst Rebecca Springer weighs in on Walmart and Walgreens making moves in the value-based care space:
"Recent weeks saw two headlines from major retail healthcare players that could significantly reshape the value-based primary care landscape.
"On September 9, Bloomberg reported that Walmart is in talks to buy a majority stake in Medicare Advantage (MA)-focused primary care group ChenMed.
"If a deal were to materialize, it would launch Walmart—which has laid the groundwork for a care delivery play but eschewed making a large bet—into the center of a value-based care turf war that has been intensifying among Optum, Humana, CVS, Walgreens, and (to a lesser extent) Amazon over the past year.
"On September 12, Walgreens announced a strategic partnership with Andreessen Horowitz and Viking Global-backed value-based care enabler Pearl Health.
"This deal marks the first major strategic deal between a VBC enabler and a retail healthcare player—a combination we expect to see more of in the future."
Read more about the significance of these developments and what to watch going forward: Walmart and Walgreens Place New Value-Based Care Bets
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Rebecca Springer, Ph.D.
Lead Analyst,
Healthcare
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Our insights and data featured in the press:
- IPOs are back, but a serious reckoning still awaits companies that cannot meet the criteria to successfully go public. [CNBC]
- What to take away from Instacart's IPO and what to watch going forward. [Yahoo Finance]
- "Given this economic backdrop … it makes sense that a lot of these companies coming back to the public market are private-equity backed." [The Business of Fashion]
- China VC deals plunge, on track for worst pace in more than seven years. [CNBC]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.
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More of our other recent research:
Market updates
Thematic research
Industry & tech research
Credit research
Coming next week (subject to change)
- Global Private Debt Report
- Real Estate Report
- Internet of Things: Annual Taxonomy
- Enterprise SaaS Report
- Allocator Solutions: Cash Flow Timing Scores
- VC City Ecosystem Index
- Analyst Note: EV Charging
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Since yesterday, the PitchBook Platform added:
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9
VC valuations
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3563
People
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594
Companies
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24
Funds
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