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PitchBook News - AI will eat the world

How AI is solving palate share and tracking the drifting of PE manager strategies
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The Research Pitch
April 10, 2021
Mark your calendars: Our quarterly flagship reports for US private equity (Monday) and venture capital (Wednesday) are arriving next week!
AI will eat the world
If the era of globalization was about expanding markets and making more products available to consumers, the budding era of artificial intelligence seems to be about helping consumers deal with the problem of having too many products and services to choose from.

Mass production, global trade and sophisticated supply chains have solved one problem—keeping shelves stocked; which has yielded a new problem—how to choose what to buy among so many options?

This problem is perhaps most acutely felt in the food industry, where grocery stores and food delivery apps are bursting with new products competing for palate-share.

But have no fear because AI is here.

As we describe in our latest foodtech research, food industry participants are investing heavily in intelligence technologies that can not only help guide product development, but also help consumers find the food they want they most—at least mathematically.

This is being aided by the proliferation of data capture points that give product managers a much more insightful view into real-time consumer behavior as it relates to food.

Sure, the new jalapeno-curry Cheetos might sound a bit off, but rest assured, they are algorithmically guaranteed to satisfy enough of the market to justify their development.

But it's not just about creating new products. Intelligence tech can also identify micro-profit opportunities in the mispricing of certain goods.

For example, those pesky customers that always buy longer-dated milk in the back (guilty) might change their behavior if the quicker-to-expire milk was 15% cheaper.

The ability to continuously squeeze out incremental efficiencies are emerging as a defining characteristic of the AI-era, and will likely continue to shape our consumption patterns. Feel free to email me or our institutional research team with any feedback or questions.
 
Best,

Paul Condra
Head of Emerging Technology Research
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Thematic Research
US PE Firm Style Drift
Examining the trend toward PE firm specialization

It's been no secret in the private equity industry that many investors have shifted to more specialized approaches in recent years.

In our newest PE research, we've quantified that trend in a way we've done before, building off of the Private Manager Style Framework we launched last year.
 

Tech specialists like Thoma Bravo and Vista Equity Partners are clear standouts in this type of approach, as they've grown to raise staggeringly large funds.

First-time managers are also increasingly launching with a clear focus, be it healthcare, financial services or certain types of manufacturing.

Even the largest, most established firms are shifting away from a generalist style.

There's much more to explore in the full note:
download the research
 
In the News
Nalin Patel explains why US investors are looking to Europe
Our insights and data featured in the press:
  • Analyst Nalin Patel joined Squawk Box Europe to discuss VC valuations and the London IPO market following Deliveroo's listing. [CNBC]

  • In the wake of Guardian Ag's fundraise, analyst Alex Frederick addresses trends in the advanced farm equipment space, including how new business models are driving adoption. [Forbes]

  • Is femtech the next big thing in healthcare? PitchBook data helps put the industry into a broader tech context. [New York Times]

  • 25 new unicorns were born in the Bay Area in Q1. Here are the top ten and some thoughts from our analyst team. [San Jose Biz Journal]
If you're a media member interested in interviewing our analysts, contact our PR team.
Deal Commentary
Mobility tech analyst Asad Hussain weighs in on TuSimple's IPO:

"TuSimple's IPO will be the first major IPO of a pure-play autonomous driving company. As such, the reception of TuSimple's listing will be a test of whether investor enthusiasm for EVs (which manifested in a flurry of SPAC listings and surging valuations for publicly traded EV stocks) can translate into enthusiasm for autonomous driving.

We think leaders in the autonomous trucking space such as Aurora, TuSimple, and PlusAI are attractive candidates for public listings. In our view, relatively low valuations for these companies (compared to robotaxi companies such as the $30B Waymo, $19B Cruise Automation, and $15.3B MobilEye) are at odds with the potentially broader and more near-term market opportunity available to automating logistics.

Unlike using autonomous vehicles for consumer transport, transporting commercial goods is not beholden to customer expectations about passenger experience, has lower safety hurdles, and is not as sensitive to delays. Moreover, many of these vehicles operate on fixed routes as opposed to dynamic routes, which decomplicates routing for AI-based systems. These environments enable lower success thresholds relative to consumer applications of autonomous vehicles, increasing the likelihood of adoption over a shorter time horizon.

So far, TuSimple has raised $647.9 million across 11 deals, and was last valued at $1.1 billion in September 2019."
 
Asad Hussain

Senior Emerging Tech Analyst
Mobility Tech
Webinars & Events
The newest season of the PitchBook podcast kicked off this week with the insights of private equity analysts Dylan Cox and Wylie Fernyhough.

They forecast what to expect this year in government regulation, PE fundraising, SPACs, carveouts and more. Listen here.

Save the date for these upcoming engagements:
  • April 14: Last call! Join our analysts as we discuss the ever-entertaining world of SPACs and why these mergers are often targeting electric vehicle startups. Register here.
     
  • April 14: Join PitchBook analyst Kyle Stanford, Counterpart Ventures, and select members of the Counter Club for a discussion on corporate venture capital activity from Q1 2021. Details here
     
  • April 22: What is sustainability tech? How big of an industry can it be? Senior analyst Alex Frederick will cover it all. Details here.
ICYMI
Changing things up this week, here are our most-read pieces of Q1 research by each coverage type:

Market updates Thematic research Emerging Technology Research deep dives Coming next week (subject to change)
  • Q1 US PE Breakdown
  • Q1 PitchBook-NVCA Venture Monitor
  • Exploring Trends in Add-On Acquisitions
Thanks for reading! Feel free to email us any time with feedback, questions or tips!

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