Delivery deals drive foodtech boom in Q2

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The Daily Pitch: VC

August 11, 2020

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Delivery drives foodtech growth in Q2

Estonian startup Starship, which operates a fleet of delivery robots, is among those seeing increased demand during the pandemic. (Darren Staples/Getty Images)

Venture investors poured $3.7 billion into foodtech startups in Q2, an increase of roughly 28% year-over-year at a time when dealmaking has sharply dropped elsewhere. Foodtech is one of the sectors most profoundly affected by the pandemic, which has revealed the weaknesses in the traditional supply chain and accelerated adoption timelines for new technologies.

Demand for food delivery is booming, driving a rise in investment in the ecosystem and likely permanently expanding the grocery delivery space, according to our Q2 Emerging Tech Research on foodtech. Other key takeaways from the report include:

Median pre-money valuations rose to nearly $46 million in the first half of 2020, up more than 140% YoY

Supplier startups drove significant deal activity as they expanded online grocery services in response to skyrocketing demand

Ghost kitchens are reshaping restaurant delivery, despite short-term headwinds due to COVID-related health restrictions

If you have any questions or feedback about the research, we'd love to hear from you: analystresearch@pitchbook.com

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On the podcast: Discussing COVID-19's impact on private equity

For US private equity firms, the pandemic caused a clear slowdown in Q2. There were fewer investments and fewer exits, and those that did take place tended to be smaller. Some of the time that would usually be devoted to dealmaking was instead spent determining how best to adapt to a new global shock.

In the latest episode of "In Visible Capital," senior private equity analyst Wylie Fernyhough discusses those adaptations and other industry changes highlighted in PitchBook's Q2 2020 US PE Breakdown.

Topics discussed include:

How investors are deciding which portfolio companies to support

Changes to limited partner agreements

Which funds are finding success in a tight fundraising environment

Trends in the LP-GP relationship for GP stakes investing

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More coronavirus news: Continuing coverage from PitchBook

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A message from Corporate Resolutions

Cautious excitement is the right speed for dealmaking

By Joelle Scott, COO, Corporate Resolutions

PE and VC dealmaking is back! With a backlog of pre-COVID opportunities and countless companies in need of capital, investors need to proceed with caution. Not all deals are created equal. An eager owner is not necessarily an earnest one, and a reticent CEO is not necessarily shady. The blueprint for a successful investment is knowing the difference between the two by prioritizing exhaustive due diligence even in a competitive and time-sensitive environment.

In the current politically and socially charged climate, avoiding companies and business partners with a history of illegal or unethical activity is a must. A comprehensive background investigation will alert investors to an owner's illicit role in securing government contracts for an essential business; highlight social media posts that are insensitive, inflammatory or immoral; and also uncover a key executive who has been hiding a history of discrimination. These are just a few examples we identified in the last couple of months as transaction volume has significantly increased.

No one has the appetite for bad deals. Knowing more before expending time and resources will result in considerable savings, both financial and reputational. When it comes to due diligence, cautious excitement is the right speed.

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Recommended Reads

Jio Platforms has spent the pandemic raising jaw-dropping sums of new funding. Is it enough to turn the Indian company into the world's next tech colossus? [Fortune]

The coronavirus crisis continues to wreak havoc around the globe. But in Silicon Valley, the startup apocalypse that many expected when the pandemic arrived has failed to materialize. [The New York Times]

For millions of shoppers, Amazon has replaced department stores as the go-to vendor for a wide array of wares. Soon, the ecommerce giant could literally replace such stores, too. [The Wall Street Journal]

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Quick Takes


	The Daily Benchmark
	2009 Vintage US PE Funds
	VC Deals
	Skillshare books $66M
	Mux closes $37M Series C
	Oomnitza secures $12.5M Series B
	Routable snags $12M to scale payments platform
	Exits & IPOs
	CureVac hoping for $213M US IPO
	Canoo in talks to go public via Hennessy SPAC merger
	AmEx considers Kabbage acquisition
	Fundraising
	Industry Ventures logs $180M for latest fund
	Investors
	Flipkart announces accelerator program

The Daily Benchmark

2009 Vintage US PE Funds

Median IRR

17.38%

Top Quartile IRR Hurdle Rate

23.56%

1.77x

Median TVPI

Select top performers

Sentinel Capital Partners IV

Vista Foundation Fund 1

Odyssey Investment Partners Fund IV

*IRR: net of fees

32 Funds in Benchmark »

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VC Deals

Skillshare books $66M

Skillshare, which offers an online learning community for design, photography and other creative subjects, has raised a $66 million Series D led by OMERS Growth Equity. The New York-based company was valued at $80 million in 2018, according to PitchBook data.

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Mux closes $37M Series C

Mux, the maker of a video platform for developers, has raised $37 million in a Series C led by Andreessen Horowitz, with Cobalt and Accel participating. The San Francisco-based company's software allows users to build live and on-demand videos and also features streaming analytics. Mux counts SoulCycle, Equinox, Robinhood and others as customers.

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Oomnitza secures $12.5M Series B

Oomnitza has raised $12.5 million in a round co-led by Shasta Ventures and Riverside Acceleration Capital. Founded in 2012, the San Francisco-based company is a developer of IT asset management software.

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Routable snags $12M to scale payments platform

Routable has secured $12 million in Series A financing from investors including Founders' Co-op, Box Group, Y Combinator and Liquid 2 Ventures. The San Francisco-based company plans to use the funds to scale its platform, which automates B2B payments. Founded in 2017, Routable was valued at $47 million earlier this year, according to PitchBook data.

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Exits & IPOs

CureVac hoping for $213M US IPO

CureVac, a German biotech company that is developing a COVID-19 vaccine, is planning to raise up to $213 million in a US public listing. The company expects to sell 13.3 million shares at between $14 and $16 each. CureVac is set to debut on the Nasdaq this Friday, according to Reuters.

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Canoo in talks to go public via Hennessy SPAC merger

Electric vehicle subscription provider Canoo is weighing a merger with a special-purpose acquisition company, according to Bloomberg. The SPAC, Hennessy Capital Acquisition Corp. IV, is also reportedly in talks to raise $300 million for the deal, which would value the combined business at over $2 billion. Canoo, based in Torrance, Calif., is planning a US launch of its services in 2021. In June, co-founder and former CEO Stefan Krause reportedly left the company.

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AmEx considers Kabbage acquisition

American Express is in late-stage talks to acquire Kabbage in an all-cash deal that could value the Atlanta-based fintech startup at up to $850 million, Bloomberg reported. Kabbage is the developer of a small-business lending platform that has raised nearly $500 million in venture backing from the likes of BlueRun Ventures, SoftBank and Reverence Capital Partners, according to PitchBook data. It was valued at nearly $1.2 billion in 2017.

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Fundraising

Industry Ventures logs $180M for latest fund

Industry Ventures has wrapped its latest direct venture fund on a total of $180 million; the vehicle will be used to make direct investments in early- to mid-stage tech companies. With $3.6 billion in assets under management, San Francisco-based Industry Ventures has backed more than 250 companies, including Uber, Datadog and LifeLock.

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Investors

Flipkart announces accelerator program

Indian ecommerce company Flipkart has launched a startup accelerator to support new companies in its home country. Those chosen will undergo a 16-week virtual mentorship program and receive a $25,000 equity-free grant. The program was designed and will be managed by Flipkart's product strategy and deployment team.

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View 29 investments »