The evolution of private fund strategies

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PitchBook

The Daily Pitch: VC

May 20, 2020

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Today's Top Stories

How private fund managers and allocators are adapting and evolving

(CHUNYIP WONG/Getty Images)

Fund managers across the private markets are working intensely to reconsider their strategies in the face of the coronavirus outbreak—adjusting expectations and capitalizing on current opportunities, while still looking ahead to the post-pandemic era.

Our latest Private Fund Strategies Report explores significant trends in fundraising across PE, VC, debt and other private asset classes through March 31, breaking down the data based on activity by region, distributions by quartile, fundraising by size and more. While trends stemming from the pandemic aren't yet reflected in the data, PitchBook analysts discuss the first quarter and their post-Q1 expectations for the private capital environment. Key takeaways include:

Bigger funds are still able to close with impressive commitment totals

Many LPs are electing to slow down their commitment pacing

Opportunistic plays are attracting interest, among them a flurry of mega-funds targeting distressed and special situations

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More coronavirus news: Continuing coverage from PitchBook

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Vroom files for IPO, reveals furlough of about a third of its staff

(Feodora Chiosea/Getty Images)

Vroom, the operator of an ecommerce platform for used cars, has filed for an initial public offering. In the first quarter of this year, the startup's revenue rose to $375.8 million from $235.1 million a year ago, according to an SEC filing. For the same period, Vroom reported a net loss of $41.1 million, compared with $27.1 million last year.

The company said that between March 11 and March 31, it experienced about a 15% decrease in ecommerce revenue due to a pandemic-fueled drop in consumer demand compared with the previous 20-day period. As a result, it cut vehicle prices to drive sales and reduce inventory.

About a third of the company's workforce was furloughed as of May 3 and the remaining workers received pay cuts, with CEO Paul Hennessy forgoing 30% of his salary.

Vroom's average monthly visitors more than doubled in the first quarter to 947,014, up from 411,489 year-over-year. The number of vehicles for sale on the platform was 5,107.

Backed by investors including General Catalyst, L Catterton and T. Rowe Price, the company has collected more than $720 million in total VC financing, according to PitchBook data. Founded in 2013 and based in New York, Vroom most recently raised a $254 million Series H led by Durable Capital Partners in December.

The company plans to trade on the Nasdaq under the symbol VRM.

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A message from BMO

PE-backed businesses prove nimble in reacting to COVID-19

The COVID-19 outbreak has shifted the focus to liquidity as middle-market private equity-backed businesses adapt to the uncertain economic environment. The current issue of BMO Sponsor Finance's Transaction Trends assesses the implications of the pandemic by industry sector and provides an M&A outlook post-COVID-19.

To learn more, download the full issue of Transaction Trends. You can also contact Stephen R. Isaacs, Managing Director and Head of BMO Sponsor Finance, at stephen.isaacs@bmo.com.

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Recommended Reads

The brain is a useful model for artificial intelligence—but only up to a certain point. [Wired]

The World Wildlife Fund is known for its animal-focused conservation efforts. Now the group is turning attention to a farming revolution. [Fast Company]

Devastation from the coronavirus epidemic has been particularly acute for the Navajo Nation. [High Country News]

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Quick Takes


	The Daily Benchmark
	2008 Vintage Global PE Funds
	VC Deals
	Brex snags another $150M
	Rallybio raises $145M Series B
	Speech therapy startup banks $27M

The Daily Benchmark

2008 Vintage Global PE Funds

Median IRR

10.15%

Top Quartile IRR Hurdle Rate

16.25%

1.51x

Median TVPI

Select top performers

Thoma Bravo Fund IX

Water Street Capital Partners II

Altaris Health Partners II

*IRR: net of fees

110 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Brex snags another $150M

Fintech startup Brex, which offers a corporate credit card and other B2B financial products for tech companies, has raised an additional $150 million from investors including DST Global and Lone Pine Capital. After a $100 million funding round last June, the San Francisco-based company was valued at $2.6 billion, according to PitchBook data. Brex has now raised more than $400 million in total private financing.

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View 39 competitors »

Rallybio raises $145M Series B

Rallybio, which is developing therapeutics to treat rare diseases, has raised $145 million in a round led by Pivotal Bioventure Partners. Launched in 2018, the company plans to use the funding in part for clinical studies of its lead product candidate.

Select Additional Investors:

5AM Ventures, Canaan Partners, F-Prime Capital, New Leaf Venture, The Rise Fund, Viking Global Investors

View round

View 38 competitors »

Speech therapy startup banks $27M

PresenceLearning, the operator of an edtech platform designed to connect speech therapy professionals, occupational therapists and behavioral specialists with K-12 students, has raised a $27 million Series D led by Bain Capital Double Impact. The New York-based company raised $25 million in 2015 at an $82.6 million valuation, according to PitchBook data.

Additional Investors:

Catalyst Investors, Catamount Ventures, New Markets Venture Partners

View round

View 11 competitors »

Chart of the Day

"Prior to the coronavirus crisis, PE exit value in the UK & Ireland had been on a downward trend since 2015. Exit count had also been in free fall since 2017, as GPs held onto portfolio companies longer. ... Q1 2020 saw a break from the norm, with 60 liquidity events worth €13.8 billion, representing YoY increases of 5.3% and 72.7% respectively. The uptick in Q1 2020 exit value can largely be attributed to three exits priced above €1.0 billion, which contributed nearly €5 billion to the quarter's total."

Source: PitchBook's 2020 UK & Ireland Private Capital Breakdown