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The Daily Pitch: VC

November 24, 2020

Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A

Today's Top Stories

US VC down rounds pull back to pre-pandemic levels

The proportion of down rounds across US venture deals rose to 13.6% in the second quarter, as the sudden and sweeping effects of the pandemic squeezed the economy. That was the highest percentage of deals done at lowered valuations since late 2017. Many felt that the pressure on founders to acquiesce on deal terms might be sustained—if not increase—throughout 2020.

The data shows that hasn't been the case. Our Q3 US VC Valuations Report examines the return of founder-friendly terms and the measures that startups have taken to extend their capital runways. Other highlights from the report include:

Nontraditional investors continue to drive huge late-stage valuations

Median IPO valuations have flourished, while acquisition valuations were mixed

A spotlight on trends within enterprise tech, consumer tech, biotech and more:

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HelloFresh inks $277M deal for meal delivery startup

(Image courtesy of HelloFresh)

Berlin's HelloFresh has agreed to buy Illinois-based meal delivery business Factor75 for up to $277 million, as European food companies turn their attention to the US to fuel growth.

The deal comes just a few weeks after Nestlé completed its $1.5 billion acquisition of New York-based meal delivery startup Freshly. In June, Just Eat Takeaway.com fought off a rival bid from Uber to buy Grubhub in an all-stock transaction worth about $7.3 billion.

HelloFresh's US portfolio includes EveryPlate and Green Chef, which it bought in 2018. The new deal will give HelloFresh its first office in Chicago, as well as four production and fulfillment facilities.

HelloFresh is the largest meal-kit provider in the US in terms of market share, reportedly surpassing Blue Apron in 2018. It logged 2.5 million active customers in the US during Q3 2020, a near 70% increase year-over-year. The pandemic has created a surge in demand for meal kits as shoppers seek alternatives to grocery stores. The meal-kit market is expected to reach $14.8 billion by 2025, representing a 10.6% compound annual growth rate, according to PitchBook's Q3 2020 foodtech report.

Founded in 2013, Factor75 specializes in healthy ready-to-eat meals. It secured $12.5 million in May in a round led by Marcy Venture Partners. Factor75 is expected to generate revenue of around $100 million in 2020.

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A message from Twin Brook Capital Partners

Lending through the pandemic: The value of deep relationships

Twin Brook Capital Partners' Rich Christensen discusses working hand-in-hand with private equity sponsors and their portfolio companies through the COVID-19 pandemic as well as middle-market deal and lending activity in the most recent episode of Middle Market Growth's "Conversations" podcast.

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Merck to buy coronavirus drug developer for $425M

(howtogoto/Getty Images)

Pharmaceutical giant Merck has agreed to pay $425 million in cash upfront to acquire OncoImmune, the developer of a COVID-19 therapeutic that has shown promising results in a Phase III study. The deal adds to Merck's coronavirus treatment efforts, which include an antiviral therapeutic and a pair of vaccines that are still under evaluation.

OncoImmune was valued at $281 million following a $56 million round in September, according to PitchBook data. Its backers include 3E Bioventures Capital, Kaitai Capital and GBA Capital.

As part of the latest deal, the Maryland-based company's shareholders will be eligible for certain milestone- and sales-based payments. OncoImmune will also spin off assets and rights unrelated to the coronavirus into a new entity that will be owned by its current shareholders. Merck will invest $50 million in the entity and become a minority stakeholder.

OncoImmune's lead drug candidate is being studied for use in coronavirus patients with severe symptoms. Interim data showed that the drug reduced risk of death or respiratory failure by more than 50%. Prior to the pandemic, the treatment was being developed for graft-versus-host disease.

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On the podcast: The rapid rise of telehealth during COVID-19

In the latest episode of "In Visible Capital"—our final installment in a series focusing on health and wellness tech—we examine recent telehealth advancements brought on by COVID-19. Joined by Dr. Janine Knudsen, a primary care provider at Bellevue Hospital in New York City, and Activant Capital founder Steve Sarracino, we cover topics including:

How the drastic uptick in telehealth has changed the job of healthcare providers

Potential cost-savings for patients who use telehealth models

Telehealth accessibility issues and the resulting impact on vulnerable populations

What the future might hold for this space

Subscribe to "In Visible Capital" wherever you listen to podcasts and look for new episodes every Tuesday:

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Recommended Reads

It's no secret that tech workers are relocating away from Silicon Valley and other tech hubs. But many of those workers are changing their jobs in addition to their locations. [The Wall Street Journal]

Editors of The New York Times Book Review reveal their favorite fiction and nonfiction picks from 2020. [The New York Times]

Startups increasingly want investors who don't interfere or ask questions. In their desire to be "founder-friendly," are those investors deforming capitalism? [The New Yorker]

Since yesterday, the PitchBook Platform added:

6

VC valuations

1181

People

358

Companies

20

Funds

See what our data software can do

Quick Takes


	The Daily Benchmark
	2011 Vintage Global Debt Funds
	VC Deals
	Byju's eyes $12B valuation
	Biopharma startup reveals $800M+ in financing
	Catamaran Bio launches with $42M
	Australian marketing startup lands new funding
	Exits & IPOs
	SPAC GigCapital2 to merge with digital healthcare companies
	Homesnap gets picked up by CoStar for $250M
	Fundraising
	Ibex wraps $100M fund

The Daily Benchmark

2011 Vintage Global Debt Funds

Median IRR

8.00%

Top Quartile IRR Hurdle Rate

9.55%

1.37x

Median TVPI

Select top performers

ABRY Advanced Securities Fund II

Carlyle Strategic Partners III

Providence TMT Debt Opportunity Fund II

*IRR: net of fees

20 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

PitchBook Capital Perspectives

Join us on Dec. 10 at 8 a.m. PST/11 a.m. EST for the PitchBook Capital Perspectives conference, where we'll be covering the state of the private markets in the context of COVID-19, the 2020 election and how to adapt to a digital workflow.

The PitchBook Capital Perspectives conference combines the latest market data, institutional research and expert analysis from industry professionals for a virtual event unlike any other.

For the conference, you'll automatically get limited access to PitchBook, and be able to explore detailed data on companies, investors, transactions and more on your own.

Already a client? You'll get early access to a new, highly anticipated feature called Workspaces.

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VC Deals

Byju's eyes $12B valuation

Indian edtech company Byju's is raising $200 million from investors including BlackRock and T. Rowe Price at a $12 billion valuation, according to Bloomberg. Backed by investors including Silver Lake and Tiger Global, Byju's was valued at $11.1 billion in September, according to a PitchBook estimate. The Bengaluru-based company operates an online learning platform.

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Biopharma startup reveals $800M+ in financing

Resilience, a provider of biopharma manufacturing tech, has launched with more than $800 million in total funding. The financing includes a $750 million Series B led by Arch Venture Partners and 8VC, with participation from GV, NEA and others. Based near San Diego and founded earlier this year, Resilience is focused on improving manufacturing supply chains and increasing access to complex medicines.

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Catamaran Bio launches with $42M

Catamaran Bio has raised $42 million in a Series A co-led by Sofinnova Partners and Lightstone Ventures. Based in the Boston area, the company is a developer of cell therapies intended to treat solid tumors.

Additional Investors:

SV Health Investors, Takeda Ventures, Astellas Venture Management

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Australian marketing startup lands new funding

Sydney-based Metigy has reportedly raised a A$20 million (around $14.6 million) round led by existing backer Cygnet Capital, with participation from investors including Regal Funds Management, OC Funds, Five V Venture Capital and Thorney. Founded in 2015, the company is a developer of AI-based marketing tools for small and medium-sized businesses.

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Exits & IPOs

SPAC GigCapital2 to merge with digital healthcare companies

Blank-check company GigCapital2 has agreed to merge with digital healthcare provider UpHealth and Cloudbreak Health, a telemedicine platform provider. The deal values the combined company at $1.35 billion and includes around $300 million in new funding from the GigGapital2 trust and a PIPE investment. The combined company, which will take UpHealth's name, aims to provide health systems and providers with a care management platform, along with telehealth, digital pharmacy and behavioral health services.

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Homesnap gets picked up by CoStar for $250M

CoStar, a commercial real estate information provider, has agreed to buy Homesnap for $250 million in cash. Homesnap operates an online and mobile real estate platform used by more than 300,000 real estate agents across the US. Founded in 2012, the Bethesda, Md.-based company is backed by investors including Revolution and Moderne Ventures.

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Fundraising

Ibex wraps $100M fund

Ibex Investors has closed its second Israel-focused fund on $100 million. Founded in 2003, Ibex has backed companies including electric vehicle developer Revel and cybersecurity company Cynet. The firm is based in Denver, with offices in New York and Tel Aviv.

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View 23 investments »

Chart of the Day

"Over the past decade, the funds to close in the DACH region have generally been lower-middle-market funds, or those sized between €100 million and €250 million. We attribute this dynamic in part to the finite number of large-cap buyout targets and a mass of SMEs. However, through Q3 2020, most of the region's funds have been sized between €1.0 billion and €5.0 billion."

Source: PitchBook's 2020 DACH Private Capital Breakdown