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Before we get to our 2023 recap, we want to thank you for helping us achieve another record year.
Our research volume grew by 76% this year, and we're excited to bring you even more in 2024—whether through new coverage launches or new types of reports.
For this newsletter, we asked our analysts to highlight their favorite research from the past year.
Please enjoy and have a happy new year! |
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A message from Dropbox DocSend
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2023 seed round report with latest fundraising & VC interest trends
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Seed funding has continued to drop off in 2023 and VCs are now spending less than 2 minutes on average for each pitch deck. Learn where investors are focusing within a pitch deck and what they are responding positively to in these highly competitive times.
DocSend's research-backed seed round report dives into the latest fundraising trends and the keys to success based on data from over 170 seed companies.
Download the seed report now |
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Global VC Ecosystem Rankings
We collaborated with our data analysts and quantitative research team to develop a methodology to score VC ecosystems based on their growth and development.
The rankings score cities based on the size, maturity, and growth rates of their VC hubs to help stakeholders identify areas of interest—including lesser-known clusters.
While 65% of the hubs with the highest growth rates are in Europe, only one European city landed among the top 20 most developed VC ecosystems. You may be surprised to see which city holds the top spot for the fastest growth:
Read the free research
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Introducing the Pre-Seed Dataset
Typically representing the first "yes" from VC investors to budding startups, pre-seed has grown rapidly in popularity over the past decade.
Despite familiarity with the term, there is a lack of consensus among investors as to how the earliest phase of venture is defined—and a lack of clear-cut data around this stage called for clarification and standardization.
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This year, we launched a new methodology to more accurately and comprehensively capture deals from the pre-seed universe:
Read the free research
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Gaining an Edge in VC Investment Selection
Which startups have the best potential for an exit?
In this piece, we provide an empirical justification of a core use case for the PitchBook VC Exit Predictor—a new tool released in 2023 that provides objective insights into startups' prospects of a successful liquidity event.
The tool can be used to improve the efficiency and effectiveness of VC investment selection workflows, which have become increasingly time-consuming as the universe of startups has grown rapidly over the past 10 years:
Read the free research
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The Overcapitalization of VC
Our capital demand-to-supply model generates a simple output measuring how much more (or less) capital is being supplied to the US VC market than is theoretically being demanded by startups.
With the environment very different than it was just a couple of years ago, our midyear estimates showed five straight quarters of excess demand.
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The deficit was especially bad at the late stage, where companies needed about three times more capital than was available.
Our note examines the new normal for the VC market following years of overcapitalization:
Read the free research
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The Role of Placement Agents in Fundraising
The GP fundraising environment remains tough right now—across all private market strategies, funds within the slowest capital-raising quartile have taken around 21 months to reach a final close this year.
Given these challenges, it may do GPs well to retain the services of a placement agent to assist in their efforts, including finding the right investors and preparing marketing and due diligence documents.
Our note explains how placement agents' guidance can help level the playing field between established managers and first-time or emerging managers:
Read the free research
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Our note lays out the next steps for unicorns, as about 220 VC-backed companies should have listed since early 2022; these businesses will likely rush to file for IPOs when the market improves.
We also examine the balance between innovation, growth, and profitability that many IPO hopefuls need to strike.
Read the free research
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An LP's Guide to Manager Selection
For limited partners active in private markets, there are almost too many GPs to choose from.
Because looking at firms' prior fund performance is not a foolproof method for picking future top performers, allocators need to pay close attention to other details.
Asking the right questions is important, but knowing what to listen for in the answers is key.
In this note, our senior strategist—a former LP—shares strategies to sort through GP fundraising pitches and help identify managers that can deliver on their promises:
Read the free research
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Are 'ESG Investors' Underperforming?
Skepticism of ESG and the ability of 'ESG investors' to generate financial returns similar to their counterparts has been growing, with controversy on this topic hitting a fever pitch in 2023.
Simultaneously, the prevalence of ESG in private markets has increased, raising the question of whether GPs aligning portfolios to ESG principles are sacrificing returns.
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| We analyzed data for PRI signatory and non-signatory funds. |
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There is a dearth of private market data on ESG fund performance, but our research helps to address that data gap, analyzing the dispersion of performance for funds raised by PRI signatory asset managers compared to those of non-signatory GPs.
See the results and how they can inform discourse around the merits of ESG:
Read the free research
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Allocator Solutions: Evaluating Persistence in Fund Performance
"Past performance is not an indication of future returns."
The oft-mentioned disclaimer is well known in investing circles, but at times it is accompanied by a wink-wink. That is especially true in private markets, where performance persistence theory has been supported by practitioners and academics alike.
A GP receiving the moniker "top quartile" provides a signal that they are in the crème-de-la-crème. But is there an edge found in looking at past returns?
In this report, we leverage our new Manager Scoring framework to put the theory to the test. The results have implications for allocators diligencing GPs' track records—and they may surprise some readers:
Read the free research
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Launch Report: Enterprise SaaS
Our debut report on enterprise SaaS features a detailed taxonomy of the vertical, segmentation of over 5,000 companies, and deep exploration of relevant topics across many dimensions of these enterprise solutions.
Indeed, it was one of our larger launches of 2023.
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| PitchBook clients can access the full market map. |
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Within the vertical, enterprise resource planning startups, customer relationship management companies, and business analytic platform startups rank among the most active segments.
The report also features the top VC-backed companies and most active investors in the space.
Read a preview of the premium research
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Prime Time for Software
Software is at the epicenter of tech and PE. Where it goes, so goes PE.
And while we're far from the heydays of the pandemic lockdown-induced software boom, conditions are ripe for another strong run by PE-backed software companies.
Software providers' margins are up, tech deal counts are better than pre-pandemic levels, and SaaS business models remain compelling.
With the right firm at the helm, software companies can get the biggest bang for the buck in terms of operational improvements and value creation:
Read the free research
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Food as Medicine: An Overhyped Concept or the Next Frontier?
Food-as-medicine has been a hot theme over the past year driven by public and private investment and numerous industry partnerships. Nutrition is becoming an emerging treatment modality.
Few sources have attempted to provide a comprehensive, consistent definition of food-as-medicine.
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| Click to access a larger version of the diagram. |
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In our note, we provide a framework for market participants to analyze the space and define food-as-medicine as "nutrition programs that aim to prevent, manage, or reverse specific health conditions."
Read the free research
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Vertical Snapshot: Defense Tech
With rising geopolitical tensions and government acquisition reforms, investment in defense tech is on track to surge to nearly $185 billion by 2027.
Our research dives into the industry drivers and startups poised for liftoff, as renewable energy and biotech rank as the top segments by deal flow.
We also explore the various challenges, including the "valley of death" funding gap, government bureaucracy, and specialized talent shortages:
Read a preview of the premium research
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| Click to access the full chart. |
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In our definitive guide to the VBC enablement market, we discuss business drivers, risks, and points of differentiation for VBC enablers and map the current geographic reach of key players. We also provide detailed profiles of 11 privately held and publicly traded VBC enablers.
This note would be great to review ahead of J.P. Morgan Healthcare. And stay tuned for an updated edition in the new year, with fresh analysis, current financials and geographic mapping, and more companies highlighted.
Read the free research
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Market Snapshots: UK, France, Germany
This year, our EMEA team launched a new research product: country snapshots.
The format provides a one-stop-shop for the need-to-know stats on a specific country, covering macroeconomic and microeconomic data across public and private markets.
It puts our proprietary private data into context of what is happening in the wider economy.
Unlike in previous regional reports, we also cover the many nuances within various country-specific trends, including developments in regulation and relevant industry news:
Read our UK Market Snapshot
Read our France Market Snapshot
Read our Germany Market Snapshot
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Private Capital in European Football
More than one-third of European football clubs in the "Big Five" leagues have private capital backing—a trend that has only gotten stronger since we published this research.
Financial distress caused by COVID-19 and the growing AUM of PE firms has increased deal appetite for football ownership, notably from US investors.
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| We analyze all aspects of the multiclub ownership model. |
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Our first note on the topic delves into the rationale behind the boom in European football dealmaking and its complex ownership structures.
Our second note dives deeper into the popular multiclub ownership model, by which a sponsor owns many clubs around the world:
Read our research: part one and part two
Bonus: An interactive dashboard on every PE connection to Europe's top football clubs
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PE Exits and the Impending Maturity Wall
Exit activity is a critical link in the PE chain of capital formation, fund performance, and industry growth.
US PE exits have plummeted since 2022 and are expected to remain slow, posing a challenge for PE funds grappling with a growing backlog of maturing investments.
New liquidity solutions and exit offramps are needed to avert a pileup of assets reaching the end of their term life.
Our note illustrates the scope of the exit shortfall and the creative measures some GPs will need to take:
Read the free research
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Since yesterday, the PitchBook Platform added:
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3
VC valuations
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890
People
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445
Companies
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20
Funds
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