PitchBook News - VC valuations soar in Europe in 2020

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The Daily Pitch: VC

August 27, 2020

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Today's Top Stories

VC valuations soar, unicorns proliferate in Europe during 2020

In the early years of the 2010s, one could count the number of European unicorns on two hands. But as the region's venture ecosystem has matured, its population of companies carrying $1 billion valuations has spiked. There were 53 unicorns in Europe as of the end of June, with a combined valuation approaching €100 billion.

PitchBook's Q2 2020 European VC Valuations Report explores this and several other key trends across Europe's burgeoning venture scene, including:

The average pre-money valuation for European venture deals has skyrocketed in 2020

Nontraditional investors have remained committed to European VC amid the pandemic

Median exit values have slumped from last year's figures

read it now

More coronavirus news: Continuing coverage from PitchBook

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New era for who's an 'accredited investor'

SEC chairman Jay Clayton (Rod Lamkey/Getty Images)

The SEC has initiated a new era for investor access to the private markets.

For decades, regulations have generally barred individual investors from participating in the nation's private markets unless they were wealthy enough to take on the risks of such opaque investments.

The new rules, championed by SEC chairman Jay Clayton, come out of a years-long debate about ways to help more Americans tap into the vast wealth creation spawned by the booming private markets at a time of dwindling opportunities in publicly traded stocks.

In redefining what it means to be an accredited investor, the SEC now says that should be based on a person's "financial sophistication," not just net worth. How investors meet that test isn't totally clear or limited to specific criteria. Other details include:

Under the rules unveiled Wednesday, one new definition for an accredited investor would be individuals who hold relevant finance industry certifications like Series 7, Series 65 or Series 82 licenses. The SEC said that list could evolve over time.

For purposes of investing in a private equity or venture capital fund, "knowledgeable employees" of that vehicle—such as an executive officer, a partner or a board member—would meet the new standard.

Other rule changes further open the pool of accredited investors:
- "Spousal equivalent" was added to the new definition to allow investors and their spouses (or equivalent partners) to pool their finances for the purpose of combining their net worth to qualify as accredited investors.
- Family offices with assets of at least $5 million will now qualify, as will family clients of those offices.

Even so, the SEC said the changes aren't expected to add significantly to the pool of existing accredited investors, and that the amount of capital from newly eligible investors would have "minimal effects" on the private capital markets.

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A message from Altvia

How emerging & niche fund managers leverage tech to thrive in the pandemic era

Across private financial markets, more money is going to fewer and larger funds, per the latest PitchBook Q2 2020 Private Fund Strategies Report, sponsored by Altvia. As noted in the report by Jeff Williams, VP of Industry Solutions at Altvia, 2020 has seen an intensification of this trend: "There is no question there has been a shift toward top-tier brands with consistent top-quartile performance."

But that does not mean only the largest fund managers thrive in this environment. Utilization of new technological tools eases the flow of communications during the fundraising process, now conducted from a distance, and also enables newer fund managers to debut niche strategies that can capitalize on the unique attributes of the COVID-19 era.

Read the full Q&A at Altvia by clicking here

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Desktop Metal becomes latest unicorn to line up SPAC deal

(Image courtesy of Desktop Metal)

3D printing specialist Desktop Metal has agreed to conduct a reverse merger with a special-purpose acquisition company backed by former media tycoon Leo Hindery, becoming the latest highly valued startup to eschew a traditional IPO in favor of combining with a SPAC.

The deal will give Desktop Metal an equity valuation of about $2.5 billion. The SPAC, called Trine Acquisition, will contribute $300 million it currently holds in a trust, and a group of other backers including HPS Investment Partners and Chamath Palihapitiya will invest a further $275 million through a PIPE transaction.

Founded in 2015 and based near Boston, Desktop Metal emerged in recent years as one of the leaders of the modern 3D printing space, raising well over $400 million in total venture backing and reaching a valuation of $1.5 billion in 2019, according to PitchBook data. Its backers include major corporations such as Ford and Panasonic, as well as Silicon Valley luminaries including GV, Kleiner Perkins and NEA. Desktop Metal's existing investors will combine to retain about 74% of the newly combined company's shares upon the merger's completion.

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Femtech VC space poised for growth

(Jamie Grill/Getty Images)

Rising awareness of women's health issues could help drive new growth in the femtech industry: The space is expected to be worth at least $3 billion by the end of 2030. While an estimated $500 billion in yearly medical expenses are attributed to women, R&D focused specifically on their health has lagged, creating a large market opportunity for venture capital investment.

In our latest analyst note, we focus on companies devoted to creating female health products and services. Among the findings:

VC funding in femtech has steadily increased since 2011, topping $620 million in 2018
New approaches could open the door to new products and services beyond the traditional focus of fertility and pregnancy

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Recommended Reads

Private equity and venture capital firms have spent recent years amassing huge stockpiles of cash in Southeast Asia. Now, it's time to start spending it. [South China Morning Post]

Teenagers on TikTok banded together to battle Life360, an app that helps parents track their kids' locations. At first, the company's CEO was worried. Then, he sensed an opportunity. [The Wall Street Journal]

A dive into the data shows phantom companies banked well over $1 billion in grants from the US government's coronavirus aid program. [Bloomberg]

Since yesterday, the PitchBook Platform added:

9

VC valuations

1363

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333

Companies

12

Funds

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Quick Takes


	The Daily Benchmark
	2011 Vintage Global Venture Funds
	VC Deals
	Freenome secures $270M Series C
	iSpace picks up $173M Series B
	Kinnate Biopharma lands $98M
	ReViral rounds up $44M
	Clene Nanomedicine takes in $42.5M
	Juni Learning books $10.5M
	Investors
	Venture firms embrace 'diversity rider'

The Daily Benchmark

2011 Vintage Global Venture Funds

Median IRR

15.41%

Top Quartile IRR Hurdle Rate

21.20%

1.89x

Median TVPI

Select top performers

Sante Health Ventures II

Union Square Ventures 2012 Fund

Khosla Ventures IV

*IRR: net of fees

27 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Freenome secures $270M Series C

Biotech startup Freenome has raised $270 million in a Series C led by Bain Capital Life Sciences and Perceptive Advisors, with participation from Rock Springs Capital, Farallon Capital Management and many others. The South San Francisco-based company is a developer of routine blood tests intended to detect early-stage cancer. The new funds will be used in part to support a clinical trial for colorectal cancer screening. Freenome raised $160 million in June 2019.

Select Additional Investors:

T. Rowe Price, Andreessen Horowitz, BrightEdge Ventures, GV, Polaris Partners, Roche Venture Fund, Sands Capital

View round

View 24 competitors »

iSpace picks up $173M Series B

Chinese rocket startup iSpace has taken in 1.2 billion yuan (about $173 million) in financing led by the Beijing Financial Street Capital Operation Center, with CICC Alpha, Taizhonghe Capital and others also investing. The money will go in part toward further developing the company's launch vehicles and reusable liquid oxygen methane engines. iSpace reportedly became the first private Chinese company to successfully launch satellites into orbit last year.

Select Additional Investors:

CDH Investments, CITIC Securities, Ganquan Capital, China Merchants Securities, Kailian Capital, Sequoia China, Shanghai Science and Technology Fund

View round

View 9 competitors »

Kinnate Biopharma lands $98M

San Diego-based Kinnate Biopharma has raised $98 million in Series C funding led by RA Capital Management, with participation from Viking Global Investors, Venrock, Boxer Capital and others. The startup develops small-molecule kinase inhibitors to treat genomically defined cancers, especially those that are resistant to existing therapies. Kinnate plans to pursue clinical testing of at least one of its lead drug candidates in 2021.

Select Additional investors:

Janus Henderson Investors, Logos Capital, SVB Leerink, Foresite Capital, OrbiMed, Nextech Invest, Vida Ventures

View round

View similar company »

ReViral rounds up $44M

Clinical-stage biopharma company ReViral has raised a $44 million Series C led by CR-CP Life Science Fund, the joint VC vehicle of Charoen Pokphand Group and China Resources Capital Management. Andera Partners, Brace Pharma Capital and others also supported the round. Founded in 2011 and based in the UK, ReViral is the developer of a treatment for respiratory syncytial virus, which is particularly dangerous for children, older adults and those who are immunocompromised. The startup raised a $55 million Series B in 2018.

Additional Investors:

Green Sands Equity, New Leaf Venture Partners, Novo Holdings, OrbiMed Advisors, Perceptive Advisors

View round

View 9 competitors »

Clene Nanomedicine takes in $42.5M

Clene Nanomedicine has raised a $42.5 million Series D led by SymBiosis. Founded in 2013, the Salt Lake City-based company will use the funds to advance clinical trials for its neurodegenerative disease treatments.

View round

View similar company »

Juni Learning books $10.5M

Edtech startup Juni Learning has announced a $10.5 million Series A led by Forerunner Ventures, with participation from AME Cloud Ventures, Index Ventures and Pear VC. The round closed prior to the COVID-19 pandemic. The San Francisco-based company is the operator of a live distance-learning platform that offers computer science, math and English courses for students aged eight to 18 years old.

View round

View similar company »

Investors

Venture firms embrace 'diversity rider'

Ten venture capital firms have committed to using a "diversity term sheet rider" to make startup deals more accessible to investors from underrepresented groups. The rider reportedly calls for firms to "make every attempt" to include at least one check-writer who is Black or from another underrepresented group as a co-investor in their deals. The effort was launched by Act One Ventures and joined by Greycroft Partners, First Round Capital, Maveron, SVB Capital, Harlem Capital Partners, Fifth Wall, Plexo Capital, Precursor Ventures and Equal Ventures.

View details

View 27 investments »

Chart of the Day

"As a means to generate capital from existing assets to offset weaker revenue streams, companies have opted to conduct carveouts or divestitures in recent years. However, since peaking in 2015, deal value generated from carveouts has steadily fallen and only reached €50.4 billion in H1 2020."

Source: PitchBook's Q2 2020 European M&A Report

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