Corporate M&A vs. PE: Corporate-led deals have claimed a growing share of global M&A dealmaking as PE has struggled to regain its position. We dive into this changing trend in our new research. Read it here.
Commercial space launch: The need for satellites to support wider internet access and enhance geospatial monitoring is growing rapidly. Our brief offers an overview and highlights startups ready to take off. Read it here.
Join our team! We're hiring an analyst in our Singapore office to cover PE and VC in Asia-Pacific. Check out the job description and share it with your networks! Click here. |
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Should private credit fit into a company’s strategy for growth?
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Learn what businesses should consider when choosing between private credit and other financing options. Read the article |
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VC market reckons with the side effects of 2021's boom
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The near-three-year slowdown has focused the market's ire on the mechanics of VC that have shifted over the past decade.
Prices paid are higher. Time spent private, longer. Ability to convert those factors into strong returns, more difficult.
The fact is that US venture basically 10x'd in a decade. During the GFC, annual deal value was $30 billion to $40 billion—$350 billion was invested in 2021.
That took the number of VC-backed companies from around 10,000 to more than 57,000, and the number of active investors moved from single-digit thousands to more than 25,000.
Growing pains were a natural side effect.
Companies that previously raised in the high-priced market of 2021 are raising again. Outside of high-performing companies in select industries, valuation growth has been at decade lows, however, which adds further dilution to existing investors and dampens return expectations.
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| Later-stage companies have experienced slower growth. |
What the high prices paid haven't done is turn into high returns over the past couple of years, and now the market is dealing with the fallout. Exits have been incredibly slow, whether due to high prices, broader economic conditions, or an amalgamation of factors.
As the market has grown, so has the remaining value in VC portfolios, some of it aging beyond the standard 10-year fund cycle.
For many LPs, this leaves them overweight to VC, or without the liquid capital they expected to recycle into VC or other strategies. For some, the question becomes, "How long do I hold?"
Secondaries provide an enticing option, but selling at a discount now could be timing the bottom of the market.
Optimistic lights still shine from an AI dealmaking perspective, and if expected interest rate cuts help spur an exit market in 2025, the horizon seems brighter.
Some firms have been able to generate returns in the slow market and kept the support of their LPs. Those firms have been able to fundraise and will be ready for a dealmaking rebound.
It may be a natural cycle for venture to see a pullback, but it doesn't make the challenges any less difficult. In some cases, those challenges may push the market to evolve.
For more data and analysis, read our free VC research:
Evolving Economics of 10-Year VC Funds
Q3 2024 US VC Valuations Report
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A new frontier in our PE industry research: Food & Beverage CPG
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The food and beverage consumer packaged goods sector has been at the forefront of economic discussions for the past four years, driven by unprecedented food price inflation and significant industry reshuffling, such as Mars' acquisition of Kellogg's spin-off Kellanova.
Industry Dynamics
The food & beverage CPG industry is characterized by its relentless innovation, constantly evolving to meet shifting consumer preferences.
Post-COVID-19 investment trends have pivoted toward "better for you" products, functional foods & beverages, and nutrition. This dynamic landscape presents a smorgasbord of opportunities for investors to capitalize on emerging trends.
Key Investment Drivers
Resilience in Economic Turbulence
The sector has demonstrated remarkable stability even in challenging economic conditions. Q3 witnessed a record-breaking 149 private equity deals, following a robust Q2 with 138 deals.
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| Click to access a preview of our Food & Beverage CPG Report. |
Celebrity Endorsements
The influx of celebrity-backed product lines is reshaping marketing strategies, significantly boosting product appeal and opening new avenues for brand enhancement.
Shift to Smaller Deals
The market is gravitating toward smaller deals and growth rounds. PE firms are increasingly targeting VC-backed companies, co-packers, and manufacturers, diversifying opportunities and potentially lowering entry barriers.
Sustainability and Health Focus
Consumer demand for sustainable packaging and healthier options aligns with broader societal trends, offering the potential for long-term growth that benefits both the environment and profitability.
Technological Integration
From supply chain optimization to direct-to-consumer sales, technology is becoming integral to the industry, presenting opportunities for value creation and efficiency improvements.
Market Diversity and Growth Potential
The food & beverage CPG sector offers a diverse portfolio of subsegments, including beverages, shelf-stable foods, fresh foods, and even cannabis-infused products. This diversity allows investors to spread risk while tapping into various market trends.
Some subsegments, particularly functional beverages and plant-based alternatives, are showing signs of explosive growth. The global cannabis market, for instance, is projected to grow from $57 billion in 2023 to an impressive $444 billion by 2030.
The food & beverage CPG sector presents a compelling investment landscape, offering a unique blend of stability, innovation, and alignment with consumer trends. It's an industry ripe with opportunities for those ready to take a bite.
Click to access a free preview of our Industry & Tech Research team's new report:
Launch Report: Food & Beverage CPG
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Private Capital Indexes
When looking at private capital returns by strategy, private debt has been the best performer over the last year.
Private equity and real assets have also shown relative strength compared to venture capital and real estate.
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| Click to access 50+ more charts on fund returns. |
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Our Indexes illustrate returns across active, closed-end funds, covering data on a combined $4 trillion in fund NAV:
Read the free report
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Healthcare Services PE Update
While the PE healthcare services market turned a corner midyear, Q3's dealmaking came in mild.
Demand is still high in areas like medspa and outpatient mental health, yet platform-scale opportunities are scarce.
Our new research identifies trends to watch in healthcare delivery, even as sponsors continue to prioritize healthcare IT and pharma services investments:
Read the free research
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Agtech Report
VC funding in agtech is on the rise, with Q3 deal value up 15% on a quarterly basis.
Some of the sector's biggest deals were in the autonomous agricultural space, led by tractor provider Monarch and robotic weeding startup Carbon Robotics.
The report also highlights companies specializing in technologies like biochar and enhanced rock weathering:
Read a free preview
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Gaming Report
VC dealmaking in the gaming sector is leveling out after investment hype during the pandemic.
But one opportunity to keep an eye on is web gaming.
With several startups taking steps to rejuvenate browser-based entertainment, our research highlights how developers are capitalizing on the reach of the internet:
Read a free preview
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A couple of upcoming events:
Nov. 19: European CLOs are on track to end the year with record issuance, which has boosted loan demand and set off 2024's third repricing wave. We'll discuss this and more in our European leveraged finance outlook. Register here.
Nov. 21: Our next Tech Talk webinar will be a deep dive into deep tech. We'll be joined by three VC investors to discuss cutting-edge developments in AI, computing, robotics, and more. Register here.
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Our insights and data featured in the press:
- Nearly 40% of unicorns have been held in a portfolio for at least nine years. [Axios Pro]
- Why regulatory scrutiny has deterred PE investment in healthcare providers. [Modern Healthcare]
- APAC-based fintech startups raised $2.3 billion in VC funding during H1. [Crowdfund Insider]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.
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More of our recent research (* - report preview):
Market updates
Thematic research
Industry & tech research
Coming next week (subject to change)
- Global League Tables
- Global Fund Performance Report
- Quantitative Perspectives: Private Equity
- Pharma Services: PE Update
- Healthcare IT: PE & VC Updates
- Infrastructure SaaS Report*
- Supply Chain Tech Report*
- Crypto Report*
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Since yesterday, the PitchBook Platform added:
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1733
People
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737
Companies
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24
Funds
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