PitchBook News - Don't miss our 2021 predictions

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The Daily Pitch: Research Edition

December 31, 2020

Our analysts look back at the past year and give predictions for 2021

As we close out a tumultuous 2020, our analyst teams have been focused on understanding the nuances that came into play this year and cutting through the noise to identify the narratives that will drive the global private markets going forward.

With that said, our final newsletter of the year has a special focus on our Institutional Research Group's 2021 predictions.

Below, you'll find our US Private Equity and Venture Capital Outlooks, as well as our global Emerging Technology Outlook. In a couple of weeks, we'll follow up with our European Private Market Outlook.

We hope you find these pieces helpful in your practice. As always, feel free to contact me directly, reach out to our analysts individually, or email the group at analystresearch@pitchbook.com.

Happy New Year!

Nizar Tarhuni
Director of Institutional Research

PE fundraising to continue unabated

(PM Images/Getty Images)

Despite deal flow grounding to a halt in March, the private equity industry went on to exhibit incredible resilience the rest of the year.

Investment activity rebounded significantly.

Fundraising had another banner year.

But as the global economy experienced significant pain, similar to public markets, valuations remained stubbornly high, and GPs were met with fierce competition for quality assets. And while new managers found challenges raising debut funds, enough groundwork has been laid for them to experience more success in 2021.

Our PE analysts took stock of the year and offer their predictions for what to expect with SPACs, GP stakes, carveouts, EBITDA multiples and more in our 2021 Private Equity Outlook:

see what our team is forecasting

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Massive innovation in the venture asset class underpins sustained growth

This maybe isn't completely unexpected given the role that VC plays in the innovation economy, but the industry itself experienced marked innovation in 2020.

While deal flow fell slightly, venture investors deployed more capital than ever despite a global pandemic and a faltering economy.

Managers at the top end only increased their clout, at times raising multiple vehicles across different sectors or investment stages to adapt to the quickly changing nature of company needs. Early in the pandemic, we saw companies learn to work with non-dilutive capital at a scale we haven't seen previously, and we also saw the significant rise of companies finding creative ways to reach public markets via SPACs.

While the macro environment remains uncertain, our analysts believe the changes brought on by 2020 only provide enhanced clarity to the asset class. Institutional investors remain under-allocated to VC and the pandemic only accelerated the role that technology and healthcare—the two main sectors for venture investment—play in our global environment.

In our 2021 Venture Capital Outlook, our analysts provide a recap of 2020 and offer their forecast for what we'll see next year in Bay Area activity, venture debt, $1 billion+ exits and more:

see all of our VC predictions

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Emerging technology stands out in pandemic environment

Starship's self-driving pods making last-mile deliveries.
(Leon Neal/Getty Images)

While the founding of upstart emerging technology companies and their subsequent capital raising processes can be impacted by a slowing macro backdrop, many such companies can also find success given their nascent place in the venture lifecycle.

2020 was a year where emerging tech really flourished across the board. Challenges certainly remain, and many such sectors are moving through consolidation phases, as outperformers and resilient business models prevail, but the pandemic also introduced a necessity for many such technologies or services that may have previously been "nice-to-haves."

Our emerging technology team covers nearly 70 industries and recently published its 2021 Emerging Technology Outlook:

We continue to see opportunity in the IPO markets for supply chain technology companies focused on last-mile delivery.

On the healthcare front, we're seeing a shift in the venture appetite to raise bets in the digital therapeutics space.

DevOps and cloudtech providers should benefit from a broad shift to sustained remote work.

We give our list of information security companies poised to transition from the private markets to the public atmosphere.

see our full forecast

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PitchBook News - Don't miss our 2021 predictions

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