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Agtech investment tops $2B in Q2 despite pandemic headwinds
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The coronavirus outbreak has created significant obstacles for the agtech industry, exposing vulnerabilities in supply chains and driving down demand for major commodities like cotton and corn. Yet in Q2, VC investment in agtech companies totaled $2.1 billion, up more than 170% from Q1.
At the moment, investors are focused on sustaining their existing portfolio companies—but that may change. The pandemic is likely to accelerate trends toward automation and robotics, and new opportunities are expected to arise as growers seek out solutions in their new environment, according to our inaugural Emerging Tech Research report on agtech. Other key takeaways include:
- Venture funding in agtech had a CAGR of nearly 33% from 2010 to 2019, driven primarily by climate change and global population growth
- The ag biotech sector carried the bulk of VC activity last quarter, with $1 billion raised across 20 deals
- Agtech exit activity has remained remarkably low over the past decade, in part because of agriculture's long development times
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Private equity plays a starring role in 2020's SPAC boom
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Apollo Global Management co-founder Josh Harris, middle, has watched his PE shop join the SPAC frenzy.
(Bruce Bennett/Getty Images) |
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Special-purpose acquisition companies have become some of the hottest investment vehicles on Wall Street, offering businesses an alternative to a traditional IPO and opening up fertile new ground for dealmakers.
Entrepreneurs, business executives, hedge fund founders, politicians and sports executives have all gotten in on the act, launching new SPACs—also called blank-check companies—that are now hunting for acquisition targets. But few segments of the financial world have been as closely intertwined with the SPAC boom as private equity.
What's behind the connection? |
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A message from Xen Capital
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Democratizing diversification for the next generation of investors
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In the wake of massive dislocations in public markets around the world and bond yields at record lows, accredited investors today have an increasing appetite for alternative investments. Digital asset & wealth management platforms are able to offer these investors increased access, transparency and control in private market opportunities. This rising class of digital wealth platforms are disrupting various aspects of finance by making the transfer of value more efficient and accessible for the next generation of investors.
This industry brief, featuring a Q&A with Katrina Cokeng, Co-founder & CEO of Xen Capital, draws on PitchBook datasets to capture the outperformance of alternative investments over the past decade and to spotlight the disruptive business models of VC-backed wealthtech platforms such as Xen Capital.
Download here |
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ByteDance, US government reach tentative agreement on terms of TikTok deal
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TikTok owner ByteDance and Oracle have agreed in principle to changes made by the US Treasury Department to Oracle's bid for the video-sharing app, according to reports. The alterations would reportedly address the Trump administration's national security concerns.
One potential plan could include Oracle and Walmart taking a significant stake in a new TikTok entity, alongside existing ByteDance investors such as Sequoia, General Atlantic and Coatue Management, according to The Wall Street Journal. Such an arrangement would reportedly push US investor ownership to over 50%.
Another iteration of the plan, reported by Bloomberg, would have Oracle acquiring a minority stake in the new TikTok company, with an independent board composed entirely of US citizens approved by the US government. That board would also have a national security committee chaired by an American data security expert. Oracle would have complete access to TikTok's source code and updates to ensure ByteDance is prevented from accessing the data of the 100 million US users on the app, the report said.
A separate CNBC report indicated that if Trump were to approve a deal with Oracle and Walmart, ByteDance would take TikTok's global business public on a US exchange.
And in the midst of racing to get a deal done in the US, TikTok has been looking for a replacement for former CEO Kevin Mayer, according to The New York Times. Instagram co-founder Kevin Systrom is reportedly among the individuals TikTok has approached. |
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Can PE follow VC's footsteps in Israel?
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Annual venture deal activity in Israel more than tripled over the course of the past decade, as investors sought to increase their exposure to startups in a nation known for its high-end talent and cybersecurity expertise. Israel's private equity industry experienced growth of its own, but nothing compared to the venture space.
Is that set to change in the decade to come? Thanks to a spate of tech deals, Israel's private equity sector is coming off its best first-half deal figures in more than a decade, according to PitchBook's 2020 Israel Private Capital Breakdown. That's just one of several notable trends emerging across the country's private market ecosystem, with others including:
- Government initiatives continue to help many Israeli startups achieve early growth
- During H1 alone, private equity firms struck more IT deals in Israel than any full year between 2014 and 2018
- Intel's $900 million acquisition of Moovit represents the latest major VC exit in Israel's mobility sector
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AmWell, Sumo Logic start trading after pricing above IPO ranges
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The IPO parade marched on as telehealth provider AmWell and cloud company Sumo Logic made their public debuts.
AmWell raised around $742 million after selling 41 million shares at $18 per share, north of the expected $14 to $16 range. The stock ended Thursday at $23.07 per share for a 28% gain. The telehealth provider's last known private market valuation was $972 million in 2018, according to PitchBook data. It now has a fully diluted market capitalization of around $5.16 billion.
Sumo Logic priced at $22 per share, above an expected $17 to $21 range, and raised $325.6 million. By the end of Thursday's trading, the stock had climbed 22% to close at $28.88 per share. Redwood City, Calif.-based Sumo Logic's current market cap is $2.85 billion; it was valued at $1.2 billion by private investors last year, according to PitchBook data. |
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The coronavirus is, of course, still rampaging around the world. But coffee farmers across Latin America—not to mention coffee consumers—also have another blight to deal with. [The Atlantic]
New research argues that scientists may be foregoing a tool that could reveal new insights into animal psychology and intelligence: the magic trick. [Gizmodo]
Many US hospitals and their financially focused owners have spent years prioritizing efficiency above all else. Over the past six months, we've seen the results. [The Wall Street Journal] |
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Since yesterday, the PitchBook Platform added:
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10
VC valuations
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1324
People
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329
Companies
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13
Funds
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2014 Vintage Global Secondaries Funds
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2020 VC Human Capital Survey
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PitchBook is supporting NVCA, Venture Forward and Deloitte, in their shared mission to shed light on the current state of diversity, equity and inclusion (DE&I) in the venture capital ecosystem.
If you are a US-based VC firm, please consider completing the 2020 VC Human Capital Survey by the end of the day Friday. The survey aims to advance DE&I in VC by highlighting demographic and talent management details.
Take the survey |
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Personal fitness platform Tonal secures $110M
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| Fitness startup Tonal has raised $110 million in funding from investors including L Catterton, Shasta Ventures, the Amazon Alexa Fund, and professional athletes Stephen Curry and Michelle Wie. The San Francisco-based company is the maker of an AI-based strength training device for in-home use. The company's personal training approach resembles Peloton, which has seen accelerated growth during the pandemic, as well as Mirror, which Lululemon agreed to acquire for $500 million earlier this summer. |
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| Healthcare startup Olive has raised $106 million in financing led by General Catalyst and Drive Capital. Olive makes AI-powered software for hospital systems that helps reduce costs and automate tasks; its platform is used in more than 600 hospitals. The Columbus, Ohio-based startup has raised more than $220 million to date, reaching a valuation of nearly $201 million in March, according to PitchBook data. |
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Finch Therapeutics flies away with $90M
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| Finch Therapeutics, a clinical-stage developer of microbiome drugs, has raised a $90 million Series D from investors including OCV Partners, OMX Ventures, Shumway Capital, TPTF, Willett Advisors and Baupost Group. The Massachusetts-based startup will use the funding in part to advance a lead drug candidate designed to treat recurrent C. difficile infection; it will also use the round to support treatments for autism spectrum disorder and chronic Hepatitis B. |
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Cytokine therapeutics startup launches with $82M
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| Synthekine has raised $82 million in a Series A co-led by Canaan Partners, Samsara BioCapital and The Column Group, with support from other backers. The California-based company is a developer of cytokine therapeutics intended to treat cancer and autoimmune disorders. The new funding will help Synthekine advance its lead therapeutic programs into clinical studies. |
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Bunch lands $20M from major gaming companies and other investors
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Unity Software prices IPO above range
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| Unity Software has priced its IPO of 25 million shares at $52 apiece, raising $1.3 billion at an initial market cap of $13.7 billion. On Wednesday, the company lifted its expected price range to between $44 and $48 per share, up from an initial range of $34 to $42. The video game software developer's stock will begin trading on the NYSE today. Unity's backers include Sequoia (24.1% pre-IPO stake) and Silver Lake (18.2%). |
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ByteDance competitor explores Hong Kong IPO
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| Tencent-backed Kuaishou is mulling a 2021 public offering in Hong Kong that could reportedly raise as much as $5 billion and value the business at some $50 billion. The Beijing-based rival of Douyin, ByteDance's Chinese version of TikTok, is currently trading at a valuation of around $29 billion on the secondary market, according to Bloomberg. |
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JD Health plans Hong Kong IPO
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| The online healthcare unit of Chinese ecommerce giant JD.com is eyeing a Hong Kong public listing and could raise about $1 billion, according to Bloomberg. The filing for the listing could reportedly come this month. JD Health raised $830 million from Hillhouse Capital last month and could be worth $7 billion, according to reports. |
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Oscar eyes possible 2021 IPO
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Richard Branson backs $400M SPAC offering
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| A new special-purpose acquisition company founded by Richard Branson and led by executives at Virgin Group has filed for an IPO on the NYSE, with plans to raise $400 million. Called VG Acquisition, the SPAC will seek to combine with a consumer-facing company from one of a number of potential industries related to Virgin's existing operations, including travel, financial services, music and media. |
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Kobalt explores possible sale
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| Music publishing company Kobalt is looking at a potential sale that could value it at over $1 billion, according to Bloomberg. Recording companies such as Sony Music, Warner Music and Universal Music could reportedly be interested in a deal for Kobalt. In 2017, it was valued at $734 million after raising funds from backers including Balderton Capital and Hearst Communications, according to PitchBook data. |
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Questa collects $348M for Fund II
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| Questa Capital has closed its second flagship fund on $348 million, with plans to devote the capital to late-stage deals in the healthcare services, tech and medical device sectors. Questa is a venture and growth firm with offices in Washington, DC, and San Francisco that closed its debut vehicle on $199 million in 2018. |
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Atlassian creates $50M venture fund
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| Australian enterprise software company Atlassian has announced the creation of Atlassian Ventures, a $50 million fund. The new vehicle will invest in early-stage companies developing apps for Atlassian's cloud products, larger companies that use Atlassian's ecosystem and want to scale, and members of the Atlassian Partner Program. Startups Hipporello and Meetical have already received backing from the new fund. |
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Lightspeed expands to Southeast Asia
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| Lightspeed has launched operations in Singapore for its Southeast Asia team. Grab, Ula and Shipper are among the companies based in the region that the firm has invested in. In April, Lightspeed said it had raised $4 billion for three new funds to invest in early- and growth-stage companies. |
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"[W]e expect corporate divestitures across multiple industries going forward, as COVID-19 continues to wreak havoc upon companies, many of which may were in dire straits even before lockdown. This already plays out in the data, with corporate divestitures in H1 comprising 13.8% of MM deal flow, up from 10.7% full-year 2019. If this dynamic holds throughout the rest of the year, it would make for the highest annual proportion of corporate divestitures in six years."
Source: PitchBook's Q2 2020 US PE Middle Market Report |
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