PitchBook News - VCs betting on German startups

SoftBank leads flurry of deals; Swiggy brings in $800M; Byju's to buy education company for $1B; DraftKings scores iGaming company
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The Daily Pitch: VC
April 6, 2021
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Today's Top Stories
How foreign investors are tapping into Germany's late-stage VC boom
Berlin accounted for the majority of German VC investment in 2020. (Sven Hansche/Getty Images)
Germany has emerged as one of Europe's leading venture capital hubs, but when it comes to late-stage deals, the country's investors are largely sitting on the sidelines.
  • VC funding in Germany during 2020 saw a 20% increase year-over-year, according to PitchBook data, with two-thirds of the capital raised going to late-stage transactions.

  • Last year, US investors participated in a record 150 deals worth €4 billion (about $4.7 billion), PitchBook data found.

  • There is concern that the startups raising capital from foreign VCs will end up moving their operations abroad. 

  • Explore our datagraphic for a closer look at where the money is going and which domestic VCs are betting on German startups.
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On the podcast: PE's fast rebound, rising valuations and surging SPACs
To kick off the new season of "In Visible Capital," reporter Adam Lewis takes a closer look at the current state of private equity, and PitchBook analysts Dylan Cox and Wylie Fernyhough discuss its future. The episode covers:
  • Forecasts for SPAC deal activity and private equity fundraising in 2021.

  • The possibility of government regulations for private equity.

  • Why corporate carveouts continue to be a reliable strategy for investors and a much-needed source of cash for companies.
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A message from Deloitte
Incorporating ESG across investment portfolios may open access to capital
Deloitte
Private equity investors (PEIs) need to consider stakeholders' needs and be transparent about how their investments, structure and operations drive value. In recent years, integrating environmental, social, and governance (ESG) considerations into PEI strategies has become a "table stake" for accessing capital. To accomplish this, PEIs are integrating ESG into broader investment analysis throughout the investment lifecycle, in turn impacting strategy, investing activities, ownership, reporting and the exit.

Overall, the ESG landscape is evolving rapidly on a global scale, and no industry is immune. Establishing a clear ESG policy and structure to drive systematic implementation across a portfolio can position PEIs for greater investment success.
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SoftBank participates in trio of deals
SoftBank got its week off to a busy start, conducting a flurry of deals across a variety of industries and locations.
  • The Japanese conglomerate led a $300 million unicorn round for Indian ecommerce startup Meesho, which develops tech to help entrepreneurs sell their products through social media platforms. Facebook, Prosus Ventures, Knollwood Investment, Shunwei Capital and Venture Highway also backed the investment. Meesho was valued at $2.1 billion with the funding.

  • SoftBank also agreed to pay $2.8 billion for a 40% stake in Norwegian warehouse automation specialist AutoStore. The proposed deal would value the company at $7.7 billion, including debt, The Wall Street Journal reported. Thomas H. Lee Partners will retain its majority stake in AutoStore, which is also backed by Sweden's EQT.

  • And finally, a SoftBank subsidiary led a $1.15 billion investment in Invitae, a San Francisco-based genetic testing company. The funding consists of convertible debt due in 2028. Invitae has traded on the NYSE since 2015 and currently commands a market cap of more than $7.9 billion.
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Venture debt growth reaching all areas of VC market
(siraanamwong/Getty Images)
Equity financing is among the most expensive forms of capital. Selling an early stake for a few hundred thousand dollars can cost a company millions when it exits.

Debt, on the other hand, can be cheap. And the venture debt market has boomed, with VC-backed companies taking on more than $80 billion in loans and other debt products over the past three years, according to a recent analyst note. Key takeaways include:
  • Debt is growing faster than the broader VC market, reaching a record value of $28.2 billion in 2019 and nearly matching that in 2020.

  • Last year, venture-backed companies used debt products nearly 3,000 times, often in tandem with equity funding.

  • The largest proportion of venture debt goes to tech companies, who borrowed nearly $18 billion in 2020.
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Recommended Reads
Pakistan has one of the fastest-rising rates of HIV infection in the Asia-Pacific region. And in the remote city of Ratodero, an astonishing number of children are testing HIV-positive. [The New York Times]

From financial constraints to family responsibilities, the pandemic has made it nearly impossible for many students to apply to college. [Time]

To support AI technology such as self-driving cars, researchers are mapping out every neuron and synapse of a fly's brain. [Psychology Today]
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Quick Takes
  The Daily Benchmark  
  2015 Vintage Global Buyout Funds  
  A message from Sentient Jet  
  Getting back to business  
  VC Deals  
  Swiggy brings in $800M  
  Ribbit Capital leads Series A for Cora  
  Data lake engineering specialist Upsolver raises $25M  
  Portfolio Companies  
  Byju's to buy education company for $1B  
  Exits & IPOs  
  DraftKings picks up VC-backed iGaming company  
 
 
The Daily Benchmark
2015 Vintage Global Buyout Funds
Median IRR
10.53%
Top Quartile IRR Hurdle Rate
17.68%
1.26x
Median TVPI
Select top performers
Gridiron Capital Fund III
Francisco Partners IV
Linden Capital Partners III
*IRR: net of fees
100 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
A message from Sentient Jet
Getting back to business
Sentient Jet
It's no secret that personal connections and face-to-face conversation have always been at the cornerstone of a successful business relationship—some in-person tasks can make all the difference when it comes to closing a deal. But how to make those in-person meetings work in the context of 2021?

With a Sentient Jet Card, you can make the connections you need to maximize performance and minimize risk—whether that means reviewing time-sensitive documents at 30,000 feet or heading out and back within a day to close a deal.

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VC Deals
Swiggy brings in $800M
Delivery company Swiggy has raised $800 million in funding from investors including Falcon Edge Capital, Goldman Sachs, Accel and Prosus Ventures, according to reports. The round is said to have raised the Indian company's valuation to nearly $5 billion, up from a reported valuation of about $3.7 billion in early 2020. Swiggy rival Zomato is expected to go public this year and was reportedly valued at $5.4 billion this past February.
View round
 
View 53 competitors »
 
Ribbit Capital leads Series A for Cora
Cora, a Brazil-based fintech company, has raised $26.7 million in a round led by Ribbit Capital, according to TechCrunch. Cora offers a platform to help small and medium-sized companies manage online payments.
Additional Investors:
Kaszek, QED Investors, Greenoaks Capital Partners
View round
 
View 1 competitors »
 
Data lake engineering specialist Upsolver raises $25M
Upsolver, the developer of a no-code data lake engineering platform, has closed a $25 million Series B led by Scale Venture Partners and joined by existing investors JVP, Vertex Ventures US and Wing Venture Capital. The startup tripled its revenue in 2020 as enterprises increasingly migrated organizational data into cost-effective cloud data lakes. The round brings Upsolver's total private funding to $42 million.
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View similar company »
 
Portfolio Companies
Byju's to buy education company for $1B
India-based edtech startup Byju's has agreed to acquire Aakash Educational Services, according to reports. The deal is worth $1 billion and consists of some $600 million in cash and the remainder in stock, Bloomberg reported. Private equity giant Blackstone has backed Aakash since 2019, while Byju's has received venture funding from investors including Sequoia and General Atlantic.
View details
 
View 4 competitors »
 
Exits & IPOs
DraftKings picks up VC-backed iGaming company
Sports betting company DraftKings has acquired Tel Aviv-based Blue Ribbon Software, an iGaming company that provides real-time gamification tools for customizable jackpot promotions. DraftKings went public in 2020 through a reverse merger and currently holds a market cap of some $25 billion. Blue Ribbon had received prior backing from Velo Partners, Atooro Fund and Oryzn Capital.
View details
View 10 investments »
Chart of the Day
Source: PitchBook's 2020 Annual North American M&A Report
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