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Rollback of 'Volcker' rule allows banks to invest in VC
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US regulators have finalized a rule change that will allow large banks to invest in venture capital funds, altering the enforcement of an Obama-era regulation meant to curb risky investments following the 2008 global financial crisis.
The amendment means that qualified VC funds, credit funds and family wealth management vehicles are no longer prohibited under the so-called Volcker rule. Large banks including Goldman Sachs and Credit Suisse, as well as the National Venture Capital Association, supported the change on the grounds that VC-backed startups are important drivers of economic growth and job creation.
Banks could play a role in increasing investment in smaller regional VC funds, which have difficulty attracting money from large limited partners, said Justin Field, senior vice president of government affairs at the NVCA.
After the rule change, shares of large banks such as JP Morgan Chase, Goldman Sachs, Wells Fargo, Morgan Stanley ended higher. The rule change takes effect in October, along with eased restrictions on derivatives trading.
More coronavirus news: Continuing coverage from PitchBook |
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David Beckham-backed Guild Esports kicks off
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| (Dave Reginek/Getty Images) |
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Guild Esports has been rolled out, co-owned by soccer legend David Beckham and based in London. The company runs esports teams and player academies in various esports arenas including "Fortnite" and "FIFA."
The business is looking to raise £25 million (about $31 million) at a £100 million valuation, according to the Financial Times. Beckham is reportedly taking a significant minority stake via his personal investment vehicle DB Ventures. The company is also backed by Blue Star Capital.
Esports have been relatively unscathed by the COVID-19 crisis as traditional live sports have had to shut down under lockdown rules. The global esports market is expected to grow 42% in the next three years to be worth $1.56 billion. The number of fans is estimated to reach 646 million by 2023, up from the current 495 million. |
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How mature companies can get their IPOs back on track
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Economic turmoil stemming from the pandemic may still grip the world, but markets remain puzzlingly contrary. Consequently, the prospects for an initial public offering remain tricky, as companies hoping to go public must assess a broader host of variables than ever before.
In the second installment of the Road to Next series, Deloitte experts explore the IPO environment for expansion-stage companies—a new segment of private markets defined by maturity, massive sums of private funding and scale unseen before the 2010s. Drawing on a variety of PitchBook datasets, the report examines:
- What companies should be prioritizing as they continue with IPO preparations begun before the pandemic
- Key traits of the companies exhibiting the most resilience in the current environment
- How investors are assisting their portfolio companies
The full report also features a spotlight on the role that private equity fund managers can claim in this highly opportunistic climate: Read it now. |
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As growth equity matures, LPs invest as stand-alone strategy
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A record $41 billion was raised for growth equity-focused funds in 2019, as the private markets have seen a wave of these vehicles, which share similarities with both traditional private equity and venture funds.
Yet LPs are increasingly finding attractive risk-return profiles that justify growth equity as a stand-alone strategy, PitchBook analysts write in our latest research note. Why? It offers less leverage than PE buyouts and lower risk of loss than VC investments—but a similar return profile: |
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In case you missed it:
• At the beginning of the month, Loud Capital launched a $10 million VC fund that will focus on the LGBTQ community. We spoke to CEO Densil Porteous and others about what they hope the vehicle will accomplish.
• Amid a rapid rise in demand for online food delivery, DoorDash has raised fresh funding at a valuation of almost $16 billion.
• Last year, rising NBA star Spencer Dinwiddie partnered with a longtime friend to form a venture firm and startup studio. Now the two are working to turn their dreams into a reality. |
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| Spencer Dinwiddie is a rising star in the NBA, but his aspirations extend far beyond the basketball court. (Al Bello/Getty Images) |
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• Juneteenth has gone largely unnoticed by the corporate world since it became a tradition 155 years ago. Some venture firms are working to change that.
• Graphic design company Canva's valuation nearly doubled with its latest round of funding. |
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Wondering how the economy reopening will affect your segment of the private markets? Looking for insight into which industries are likely to bounce back faster than others? Curious about what's driving a new trend you've noticed?
Email us at ask@pitchbook.com, and the news team will choose a question and track down the answer. |
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Credit limits have traditionally been based on things like your personal income and credit score. A fintech startup called Karat is considering a new factor: social-media clout. [Wired]
At Tesla, the question of how (and whether) its plants should operate during a pandemic continues to spark controversy. [The Washington Post]
Few investors in history have won as dedicated a fan base as Warren Buffett. But as our current crisis reveals, not even the Oracle of Omaha is perfect. [Bloomberg] |
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Since yesterday, the PitchBook Platform added:
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4
VC valuations
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1253
People
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348
Companies
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16
Funds
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2013 Vintage Global Real Assets Funds
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Masayoshi Son steps down from Alibaba board
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| After 15 years in the position, SoftBank's Masayoshi Son reportedly announced his departure from Alibaba's board of directors in a shareholder meeting on Thursday. The news comes after reports last month that Alibaba co-founder Jack Ma was leaving SoftBank's board, though Son has denied any ill feelings between the two. |
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Tanium's valuation jumps to $9B
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| Cybersecurity provider Tanium has raised new funding from Salesforce Ventures that values the company at $9 billion. Tanium offers security technology for large companies and the US government, including the military. It raised $200 million at a reported valuation of $6.7 billion in 2018. |
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| Providence Strategic Growth, the growth arm of Providence Equity Partners, has led a $50 million Series B for SevenRooms, the developer of a platform that allows businesses in the hospitality industry to manage reservations, orders, payments, delivery, marketing and other operations. Founded in 2011, the New York-based company has received prior funding from backers including Comcast Ventures, BoxGroup and Amazon. |
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Virtual events startup takes in $40M
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| Hopin, the London-based provider of a live online events platform, has raised $40 million in a round led by IVP, with participation from Salesforce Ventures, Accel, Northzone, Seedcamp and Slack Fund. Launched in 2019, Hopin has helped more than 16,000 organizations host events ranging from weddings to international conferences. The startup was valued at more than $30 million with a $5 million round in February, according to PitchBook data. |
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Investment platform CMG gets $25M from big banks
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Valence launches initiative for Black entrepreneurs
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| Valence, a social network for Black professionals, has launched a new initiative dubbed the Valence Funding Network that will aim to link Black entrepreneurs with venture capitalists from 25 firms, including Sequoia, Accel and Bessemer Venture Partners. Valence, which launched last November with $2.5 million in funding, also named Guy Primus as its new CEO. |
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Lemonade sets IPO terms below previous valuation
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| Property and casualty insurance startup Lemonade has revealed terms for its public debut, indicating that it will offer 11 million shares on the NYSE at a price range of between $23 and $26 apiece. A midpoint pricing would raise $269.5 million and establish an initial market cap of $1.3 billion for the New York-based company. That valuation would fall well below the $2.1 billion valuation Lemonade received after a funding round in April 2019, according to PitchBook data. The company's backers include SoftBank, which owns about a 27% pre-IPO stake. |
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Fitness startup F45 readies reverse merger
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| F45 Training has agreed to go public by merging with a special-purpose acquisition company called Crescent Acquisition, confirming reports from earlier in the week that a deal was imminent. The combined company is expected to have an initial market cap of $845 million. F45 has over 1,900 franchise locations across more than 50 countries. Last year, an investment group led by the actor Mark Wahlberg acquired a minority stake in the company, which was founded in Australia and is now based near Los Angeles. |
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East Ventures eyes $88M for post-pandemic deals
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| East Ventures has raised $57 million toward an $88 million target for a new seed vehicle that will back startups coming out of the coronavirus crisis, according to Bloomberg. With offices in Jakarta, Singapore and Tokyo, East Ventures pursues early-stage deals across Southeast Asia and Japan. |
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"Over the last decade, exit activity has been dominated by secondary buyouts (SBOs) while IPOs have lagged considerably. The growth in PE fund sizes over the last 10 years has created a new pool of PE buyers for existing portfolio companies, and we expect SBOs will account for an outsized proportion of exit value in the coming quarters as managers seek to deploy their mounting level of dry powder, which stands at €39.0 billion as of Q3 2019."
Source: PitchBook's 2020 France & Benelux Private Capital Report |
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