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The Daily Pitch: VC

March 30, 2020

Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A

Today's Top Stories

Gig workers take back power amid unprecedented challenges

A man delivers groceries in New York City on March 20 as the coronavirus continues to spread across the US.
(Cindy Ord/Getty Images North America)

Even as US gig economy workers face lost wages and high-risk assignments, they are notching early wins in negotiations with politicians and employers.

The $2 trillion aid package that was signed into law on Friday grants unemployment benefits to freelance workers who normally wouldn't qualify. Meanwhile, Instacart shoppers are planning to strike Monday, testing the power of collective action for gig workers.

As the balance of power shifts, it could have long-term consequences for tech companies whose businesses rely on pools of self-employed workers:

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Casualties of an economic tempest

A hurricane has made landfall, and already it has wiped out wealth belonging to people working at startups in Silicon Valley and beyond. Soon, many more could see a similar fate.

Last week brought unprecedented news of more than 3.2 million Americans joining the ranks of the unemployed. Behind those headlines are millions of stories of lives turned upside-down as people from all walks of life confront health and financial turmoil caused by the spreading coronavirus.

A stunning storyline playing out is the large number of layoffs rapidly hitting the tech sector, including at formerly flush unicorn startups like scooter companies and hospitality platforms.

Against that backdrop, more than 75% of US startup employees holding stock options were already unable or unwilling to exercise those shares, largely because of financing burdens or fear of making a costly mistake, according to Secfi, a startup that offers equity advising for employees.

That number seems likely to rise as layoffs climb, Secfi founder and CEO Wouter Witvoet told me, adding that employees typically are allowed only 90 days from separation from the company to complete the exercise of options. The company says founders and employees own an estimated $200 billion in private company equity in the US.

And the job cuts may just be getting started. By Witvoet estimate, some $350 billion in market value has vanished for unicorn companies during the crisis, which is disproportionately affecting mobility, fintech and ecommerce segments.

—Alexander Davis, executive editor
alec.davis@pitchbook.com

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A message from Abacus Finance

COVID-19's impact on the lower middle market

Heading into 2020, PE deal activity was poised for a strong year in the lower middle market. The outbreak of the coronavirus and the economic impact of its containment has changed the market's calculus going forward. In partnership with PitchBook Data, Abacus Finance has released The State of the Lower Middle Market and the Recent Impact from COVID-19. Abacus, a direct lender that works extensively with the private equity market, shares its views on the financial implications that are coming into view, including risk assessment, and pricing and leverage changes across private credit.

Click here to download the report, which also includes deal and fundraising data focused exclusively on the lower middle market.

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Layoffs across Silicon Valley hit mobility sector

(Justin Sullivan/Getty Images News)

In the latest round of coronavirus-related job cuts, two more startups have let go of employees. Scooter company Bird reportedly shed about 30% of its staff Friday. CEO Travis VanderZanden said the layoffs were needed to ensure the business stays solvent until the end of 2021, according to a memo obtained by TechCrunch.

Car-sharing unicorn Getaround has laid off around 100 employees in the US, according to The Information. The San Francisco-based company announced its first wave of job cuts in January in an effort to reduce costs and has now reportedly slashed nearly half of its workforce in 2020.

While the ongoing layoffs mark a grim reality for the mobility sector, the industry could ultimately emerge from the pandemic in a strong position as the economy recovers, according to PitchBook's analyst note on the ripple effects of COVID-19 on emerging technologies.

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Food fight: How meat and dairy giants are striking back in the plant-based market

(Cindy Ord/Getty Images Entertainment)

More and more, US consumers are rejecting animal products in favor of their plant-based equivalents. Driven by concerns over health, climate change and animal welfare, the market for products including nut milks and meatless meats is quickly growing.

VCs have more than doubled the amount of money they're plowing into plant-based food startups over the past five years, hitting $659 million in 2019. The world's largest producers of eggs, dairy and meat have taken notice—and they're already fighting back:

Recommended Reads

Some 25 years after their reintroduction to Yellowstone, about 400 wolves are once again flourishing in the park. Some call it the world's greatest wildlife experiment. [The New York Times]

Some corporations are redesigning their logos for the social distancing era. [CNN]

What factors affect the severity of COVID-19 cases? [The New Yorker]

New Orleans' legendary Mardi Gras celebrations may have been a breeding ground for the coronavirus. [The Washington Post]

Four possible timelines for a return to normal life. [The Atlantic]

While a bailout may save airlines, furloughed airport workers might not see the same assistance. [Houston Chronicle]

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Today's Headlines


	The Daily Benchmark
	2005 Vintage Global Funds-of-Funds
	VC Deals
	MiningLamp picks up $300M
	SutroVax secures $110M
	ReCode Therapeutics bags $80M
	Pyramid Analytics pockets $25M

The Daily Benchmark

2005 Vintage Global Funds-of-Funds

Median IRR

7.40%

Top Quartile IRR Hurdle Rate

8.42%

1.44x

Median TVPI

Select top performers

Horsley Bridge VIII

Pacific Street Fund I

Greenspring Global Partners II

*IRR: net of fees

17 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

MiningLamp picks up $300M

MiningLamp has raised a $300 million Series E co-led by Temasek and Tencent, according to reports. The Beijing-based company offers data mining and business intelligence solutions via its big data platform.

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SutroVax secures $110M

SutroVax has raised a $110 million Series D co-led by RA Capital Management and Janus Henderson. The biopharma company develops vaccines intended to prevent or treat infectious diseases such as pneumonia and meningitis.

Select Additional Investors:

CTI Life Sciences Fund, Foresite Capital Management, Frazier Healthcare Partners, Longitude Capital, Medicxi, TPG Growth

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View 29 competitors »

ReCode Therapeutics bags $80M

ReCode Therapeutics has raised an $80 million Series A co-led by OrbiMed and Colt Ventures. The Menlo Park-based company is developing medicines to treat pulmonary diseases.

Additional Investors:

Hunt Technology Ventures, MPM Capital, Osage University Partners, Vida Ventures

View round

View similar company »

Pyramid Analytics pockets $25M

Pyramid Analytics, which offers a business intelligence platform, has raised $25 million in a round led by Jerusalem Venture Partners. The funds will be used for international expansion. The Amsterdam-based company reportedly secured a $30 million investment in 2015.

Additional Investors:

Maor Investments, Sequoia Israel, Viola Growth

View round

View 118 competitors »

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