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The Daily Pitch: VC

December 11, 2020

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

Today's Top Stories

Silicon Valley's banner year on Wall Street reshapes IPO landscape

(Spencer Platt/Getty Images)

Highly valued tech companies have used their clout to rewrite the rules of IPOs, a shift underscored by this week's lineup of multibillion-dollar offerings.

The value of VC-backed IPOs hit a decade high, but their most lasting impact will be on the structure of traditional IPOs and the creation of alternative paths to public markets that have been blazed by intrepid startups:

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A message from DFIN

Optimism, urgency driving a resilient year in M&A

The encouraging news about a trio of COVID-19 vaccines has injected dealmakers with a sense of optimism coming into the close of the year—a feeling many have not experienced since COVID-19 upended day-to-day life earlier this year. Although far from over, the pandemic could only suppress M&A activity for so long.

DFIN's latest market report identifies the key trends driving dealmaking to a resilient finish for the year, from how financial sponsors have helped buoy deal sizes through the pandemic to cyclical factors behind aggregate M&A figures. In addition, the report features insights from DFIN about navigating this environment and challenges on the horizon.

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The lenders that paved the way for US PE in Q3

Goldman Sachs is a famed financial colossus that supervises more than $2 trillion in assets. Antares Capital is a private equity specialist with less than $30 billion under management and administration.

They are two very different investors. But both were among the five most-active lenders to PE-backed companies in the US during the third quarter of the year, with Antares and its 30 deals finishing at the top of the quarterly rankings.

You can find the rest of the list in our Q3 2020 US PE Lending League Tables, plus a host of other rankings of the most-active lenders broken down across various deal types, geographies and sectors:

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Insurtech soars to its best quarterly total since 2017

The insurtech sector raised $1.9 billion in VC funding during Q3 2020, a 69% increase over Q2 and its biggest quarterly total since Q4 2017. Health and life insurtech companies continued to drive a significant share of deal value, accounting for roughly half of the total invested capital.

Several startups hit unicorn status as the pandemic accelerated a shift to digital insurance sales, according to our Q3 installment of Emerging Tech Research on the insurtech sector. Yet 2020 is on pace to fall well below 2019's dealmaking activity, and deal sizes have decreased markedly. Other takeaways from the report:

Late-stage pre-money valuations through Q3 stand at $70 million, down from a decade high of $235 million in 2019

Cyber insurance has proved highly attractive to investors, notching multiple major deals in 2020

Reinsurance and underwriting technology are in early stages, but have potential for significant growth as the world emerges from the pandemic

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Assessing the pandemic-driven rise in insider-led VC deals

(Malte Mueller/Getty Images)

When the pandemic hit, VCs pursuing potential new investments were forced to do so without meeting startup founders in person. One impact of that new reality has been a shift in focus to existing portfolio companies. Through the end of Q3, the proportion of insider-led investor teams had reached a decade high of 8.3%.

However, that increase alone appears unlikely to dampen the prospects of the venture ecosystem, according to our latest analyst note. Among the other takeaways:

Despite some variation in exit returns for new and existing investors, insider-led deals haven't led to significant company underperformance

Multiple of invested capital (MOIC) data arranged by lead investor status shows no serious outperformance for either group

While valuation step-ups for insider-led transactions outperformed in 2019 and 2020, new and existing investors have historically shown little difference in that area

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Recommended Reads

After investigators discovered a nine-man outfit of UK investors had made $660 million off the April plunge of oil-future prices into negative territory, they had to decide: Was it a scandal? Or was it one of the greatest trades in history? [Bloomberg]

Emboldened by the success of centralized authority in combating the coronavirus, the Chinese government is taking a more hands-on approach to private business. [The Wall Street Journal]

What happens when your go-to restaurant shuts down? It's a question far too many people have been grappling with in 2020. [Curbed]

Since yesterday, the PitchBook Platform added:

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Quick Takes


	The Daily Benchmark
	2008 Vintage Global PE Funds
	VC Deals
	General Catalyst leads $160M Series C for Cityblock
	LeanTaaS banks $130M Series D
	Cannabis startup LeafLink rolls up $40M in new funding
	Fairmarkit boxes up $30M for supply chain platform
	App intelligence startup banks $17M
	Exits & IPOs
	AbCellera boosts IPO price range
	Fundraising
	PruVen Capital gets going with $300M fund

The Daily Benchmark

2008 Vintage Global PE Funds

Median IRR

10.00%

Top Quartile IRR Hurdle Rate

16.16%

1.50x

Median TVPI

Select top performers

Thoma Bravo Fund IX

Water Street Capital Partners II

Altaris Health Partners II

*IRR: net of fees

142 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

General Catalyst leads $160M Series C for Cityblock

Cityblock Health has raised $160 million in a round led by General Catalyst, propelling the company's valuation to north of $1 billion. Founded in 2017, the New York-based startup operates a healthcare platform for lower-income communities in New York, Connecticut, Massachusetts and Washington, DC. Cityblock was valued at $328.3 million with a $53.3 million round in July, according to PitchBook data.

Additional Investors:

Wellington Management, Kinnevik, Maverick Ventures, Thrive Capital, Redpoint Ventures

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LeanTaaS banks $130M Series D

Insight Partners has led a $130 million round for LeanTaaS, a creator of analytics software that helps healthcare organizations provide care at lower costs. Based in Santa Clara and Charlotte, LeanTaaS raised $40 million at a $390 million valuation in December 2019, according to PitchBook data.

Additional Investor:

Goldman Sachs

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Cannabis startup LeafLink rolls up $40M in new funding

LeafLink has collected a $40 million Series C led by Founders Fund, TechCrunch reported. The New York-based company operates a wholesale cannabis marketplace that currently connects more than 5,700 retailers with over 1,800 brands and distributors. Founded in 2015, LeafLink was valued at $255 million in August 2019, according to PitchBook data. It has raised more than $90 in total private funding, the report said.

Additional Investors:

Thrive Capital, Nosara Capital, Lerer Hippeau

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View 8 competitors »

Fairmarkit boxes up $30M for supply chain platform

Fairmarkit has raised a $30 million Series B co-led by GGV Capital and Insight Partners. The Boston-based company is the creator of an AI-based procurement and supply chain platform that helps organizations purchase goods and services more efficiently. GGV partner Jeff Richards has joined Fairmarkit's board. The startup was valued at $36 million in October 2019, according to PitchBook data.

Additional Investors:

1984 VC, New Stack, NewFund

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App intelligence startup banks $17M

Bionic has emerged from stealth with a $17 million Series A led by Battery Ventures. Founded in 2019, the Palo Alto-based company is the developer of an analytics platform that helps companies manage, operate and protect apps. Bionic has received prior funding from Cyberstarts and several angel investors.

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Exits & IPOs

AbCellera boosts IPO price range

Biotech startup AbCellera has increased the anticipated price range for its IPO to between $17 and $18 per share, up from $14 to $17 per share. The company, which is developing coronavirus antibody therapies with Eli Lilly, could raise more than $400 million at the midpoint price of $17.50 per share. The Food and Drug Administration previously approved one of the therapies, Bamlanivimab, for emergency use. Peter Thiel, DCVC Bio and Viking Global are among AbCellera's backers.

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Fundraising

PruVen Capital gets going with $300M fund

Prudential Financial-backed VC firm PruVen Capital has launched its first fund with $300 million. The firm is led by Ramneek Gupta, an investor in Square and DocuSign who helped start and lead Citigroup's venture efforts. PruVen Capital plans to make investments of between $5 million and $30 million in tech startups throughout a range of global markets. It has already backed insurance brokerage Newfront Insurance and machine learning company DataRobot.

View details

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Chart of the Day

"The divergent impacts on sectors from the COVID-19 pandemic persisted in Q3, as companies that attracted attention and proved strong growth at the start of the pandemic sustained momentum. In 2020 through Q3, software startups remained dominant and underpinned deal value with nearly €10 billion invested. In addition, pharma & biotech investment has been thrust into the limelight as the international race for a COVID-19 vaccine heats up."

Source: PitchBook's Q3 2020 European Venture Report