Witness: Bankman-Fried resisted oversight

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The Daily Pitch: VC

October 6, 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:

FTX founder Sam Bankman-Fried told VCs he "didn't think investors had much to add" on a board, Paradigm founder says

Our Q3 valuations data for public companies in the foodtech and mobility-tech sectors

VC deal activity for Europe's female founders rebounded in Q3

Today's Top Stories

Witness: Bankman-Fried resisted investor oversight

Paradigm co-founder Matt Huang
(Michael M. Santiago/Getty Images)

FTX founder Sam Bankman-Fried demonstrated wide latitude to resist investors' calls for a more traditional governance structure, going so far as to disparage the role of investors on boards, according to Matt Huang, co-founder and managing partner of crypto firm Paradigm.

Huang, who testified in Manhattan federal court Thursday, said Paradigm was concerned about the lack of governance as well as the relationship between FTX and Bankman-Fried's trading firm, Alameda Research. Paradigm invested $278 million in FTX.

The details shed new light on the extent to which highly desirable startups could set the terms when raising from VCs during crypto's heyday in 2021.

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Instacart stands out as foodtech stocks go hungry

Foodtech stocks underperformed the overall market in Q3, with median prices down between 37% and 91% from Q2. Online grocers dropped the hardest, while food delivery marketplaces held a nearly flat 4% decrease. Newly public Instacart showed resilience among grocers, with a recent valuation of $12 billion at an estimated 4.7x revenue. Delivery provider DoorDash's enterprise value, by contrast, is $26.8 billion at 3.8x revenue.

Our Q3 2023 Foodtech Public Comp Sheet and Valuation Guide tracks stock performance, valuations and market caps—as well as forecasts for revenue, EBITDA and earnings per share—for key publicly traded companies.

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A message from Engine Ventures

2023 Tough Tech Landscape Report

Investing into Tough Tech sectors across climate, human health and advanced systems is becoming mainstream. The resilience of funding into private Tough Tech companies signals promise towards a future where markets and returns align with what is best for the planet, health, and future generations. An increase in corporate dollars invested into the category underscores the viability of garnering venture scale returns and the need for breakthrough innovation. With private capital also being matched with other modes of financing and new programs at the federal US level, billions of dollars are unlocked that will derisk the scaleup of Tough Tech industries and accelerate their path to market even faster.

Is the Tough Tech asset class more resilient? Click here to download the report.

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Household names lead stock gains in mobility tech

Some notable public mobility-tech companies led with big gains in Q3. Automaker Rivian's stock shot up 46% from Q2, and big-name peer Toyota also stood out with a 12% increase. In a major comeback, Carvana's shares climbed 62%, now hitting a 786% gain in 2023 for the used-car ecommerce specialist.

Our Q3 2023 Mobility Tech Public Comp Sheet and Valuation Guide shows that for recently public companies in the sector, however, valuations remain volatile.

see the data

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Europe's female founders finish Q3 with a flurry

VC deal activity for Europe's female founders rebounded in Q3, with companies founded by women garnering €2.4 billion (roughly $2.5 billion) over 361 deals, according to our European VC female founders dashboard. This is €300 million more than last quarter and the first quarterly increase in capital raised since Q2 2022.

September saw a flurry of activity as companies with at least one female founder raised €1.3 billion over 120 deals, more than double the amount raised over the first two months of Q3.

Notable deals in September included network security company Cato Networks' $238 million round and Traceless Materials' €36.6 Series A.

explore the dashboard

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Volatility continues to cloud the venture market

Inflation rates are stabilizing, and recent IPOs have brought hope that a pickup in the exit market may be around the corner, raising the possibility that the VC industry is headed for a softer landing than pessimists predicted. But that's not to say the skies are clear: Our recession model still pegs the probability of a recession at 73%, and high interest rates still make less-risky alternatives to venture more attractive to asset managers.

With over 30 charts, our VC-focused Q3 2023 Quantitative Perspectives: Turbulence on the Approach peers into the state of the industry and what the future could hold as the IPO window slowly reopens.

read the report

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Recommended Reads

Are data centers running out of capacity? [Financial Times]

The world's biggest sovereign wealth fund is helping fuel the recovery of US IPOs. [Bloomberg]

A look at the most popular unique reasons to start a business in every US state. [Visual Capitalist]

Since yesterday, the PitchBook Platform added:

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28

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The Daily Benchmark:
2019 Vintage North American PE Funds

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20.34%

Top Quartile IRR

30.69%

0.13x

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Bertram Growth Capital III Annex Fund

Tower Arch Partners II

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VC Deals

Los Angeles-based brand accelerator SuperOrdinary raised a $58 million Series B from investors including Manzanita, Puig and Demira Gate.

Habyt, a Berlin-based flexible housing specialist, raised €40 million in a Series C led by Korelya Capital and Deutsche Invest.

Diana Health, a New York-based women's healthcare startup, raised a $34 million Series B led by Norwest Venture Partners.

Los Angeles-based manufacturing technology startup Machina Labs raised a $32 million Series B co-led by Nvidia's NVentures and Innovation Endeavors.

Vibrant Planet, a climate-tech startup based in Nevada, raised a $15 million Series A led by the Ecosystem Integrity Fund.

Saleo, the San Francisco-based provider of a demo automation platform, secured $13 million from Emergence Capital and Tech Square Ventures.

Hypra invested $10 million in digital product development specialist Trinetix.

German payment platform provider GetPaid raised €6 million in a seed round led by Inventure.

PE Deals

Veritas Capital and Platinum Equity plan to make all-cash offers for the government consulting division of Dallas-based Jacobs Solutions, joining current bidders Lindsay Goldberg and American Securities-backed Amentum, Reuters reported. The business unit could be valued at more than $4 billion.

Vestar Capital Partners has invested in HCI Equity Partners-backed Tech24, a South Carolina-based commercial foodservice repair and maintenance company.

Berkshire Partners has acquired TowerNorth, a Massachusetts-based wireless infrastructure developer and operator in the US and Europe.

Inflexion Private Equity has acquired a majority interest in newly founded Celnor, a specialist testing, inspection, certification and compliance platform based in the UK.

General Atlantic and France's Carmignac bought minority stakes in London-based secondaries firm Clipway, the Financial Times reported.

Exit & IPOs

General Atlantic may offload its 54% stake in EngageSmart, a payments software vendor based in Massachusetts that's valued at around $3.3 billion, Reuters reported. The firm could choose a buyer or sell off its shares over time.

Fundraising

New York-based AEA Investors closed its fifth small-businesses PE fund on $1.3 billion. The vehicle will target the industrial, consumer and services sectors.

BlackRock has launched its Climate Transition-Oriented Private Debt Fund, which will provide exposure to middle-market companies mostly in Europe and the US.

California-based Section 32 has closed Fund 5 on $525 million, with plans to invest in AI, cybersecurity, gaming. software and more.

Sienna Investment Managers has launched a €200 million middle-market European buyout fund, Citywire reported.

KFund has closed its early growth vehicle, Leadwind, on $250 million, above its initial fundraising target.

South Africa-based Alterra Capital Partners, which spun off from The Carlyle Group in 2020, has raised $140 million so far out of a target of $500 million for a new Africa-focused fund, Bloomberg reported.

Baobab Network, an early-stage investor and accelerator focused on African technology startups, intends to invest in 1,000 companies by 2033.

Chart of the Day

Source: Q2 2023 US VC Valuations Report

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Witness: Bankman-Fried resisted oversight

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