PitchBook News - US, China race for tomorrow's chips

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The Daily Pitch: VC

May 4, 2021

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

Today's Top Stories

It's US vs. China in race to build chip technology of tomorrow

President Joe Biden has sought to ramp up funding for semiconductors. (Doug Mills/Getty Images)

A chip shortage has thrown the global semiconductor industry into chaos, but startups building next-generation chips are thriving.

VC-backed semiconductor companies raised a record $2.64 billion in Q1 alone.

Chinese startups have won the lion's share of those VC dollars, followed by the US. President Joe Biden is calling for $50 billion to invest in semiconductor manufacturing and research as part of an effort to keep up with China's aggressive R&D spending in the sector.

New chip designs are targeting self-driving cars and other AI applications where efficiency is paramount.

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How recent cyberattacks shed light on information security market gaps

Information security venture funding set a record in Q1, with $4.4 billion invested in the vertical. But recent nation-state attacks, like the SolarWinds hack, have shown how legacy vendors are ill-equipped to manage software supply chains and cloud environments, propelling startups to address these market gaps.

Our new installment of Emerging Tech Research explores the major trends that shaped the information security industry in Q1, including rising demand for emerging opportunities and how legacy incumbents are losing market share to next-gen vendors. Among the takeaways:

Late-stage VC deals outnumbered early-stage deal count, suggesting that investors are focusing on companies that can achieve IPOs.

Despite a robust pipeline of exit candidates, US-based companies achieved neither IPOs nor SPAC mergers in Q1.

Endpoint detection & response vendors have been racing to add security operations software via mergers and acquisitions.

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A message from Bridge Bank

PNW's VC ecosystem posts a record $5.4B in value for 2020

The Pacific Northwest represents one of the strongest emerging tech and VC ecosystems in the US. And it lived up to that reputation in 2020, as startups across the region raised a record $5.4 billion in fresh funding.

This installment of Bridge Bank's Markets to Watch series unpacks the top trends that have defined a decade that witnessed VC investment value expand at a CAGR of 19% across the PNW. Additionally, the report contains analysis of the region's leading database software and cloudtech & DevOps segments.

Read the report

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Fidelity cuts Ant valuation in half

Ant Group founder Jack Ma drew the ire of Chinese regulators in November when he publicly criticized them for stifling innovation.
(Lintao Zhang/Getty Images)

Asset manager Fidelity Investments has slashed its estimated valuation of Ant Group to $144 billion, The Wall Street Journal reported, dealing yet another blow to the Chinese financial powerhouse.

Fidelity reportedly pegged Ant's valuation at $295 billion last August. The mutual fund company was one of many global investors to pile into Ant in 2018, according to PitchBook data, when the company was said to be worth about $150 billion.

Ant is in the midst of a major restructuring in the wake of its failed IPO. The group announced plans in April to apply to become a holding company overseen by China's central bank.

China cracked down on the fintech giant on the grounds that it posed a risk to the financial system. Yet the drama is also widely seen as a rebuke to billionaire Jack Ma, Ant's majority shareholder, who criticized Chinese regulators in a speech last fall.

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On the podcast: How the startup ecosystem has fared in the pandemic

More than a year after Sequoia issued its "Black Swan" letter, the US startup ecosystem has rebounded, with VC exit value, deal value and fundraising all setting records in 2020.

The latest episode of "In Visible Capital" takes a look at the lasting impact of the pandemic on the startup ecosystem, including:

The rise in valuations for fintech companies and the growth of so-called embedded finance.

How the skyrocketing price of bitcoin has driven a broader surge of VC investment in cryptocurrency.

How the shift to working remotely has spurred companies to reconsider their office space.

listen now

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Recommended Reads

Justin Zhu's $2 billion digital marketing startup was thriving, until an unorthodox style and tension with investors brought everything crashing down. [Bloomberg]

Are CFOs likely to flock to bitcoin as an investment for corporate cash? Not a chance, says one managing director. [Fortune]

As local newspapers continue to fold, Capital Daily has managed to defy the odds. Now, the media startup behind the Canadian newsletter is hoping to replicate that model across the country. [The Guardian]

Since yesterday, the PitchBook Platform added:

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Quick Takes


	Partner Perspectives
	COVID's impact on B2B
	The Daily Benchmark
	2017 Vintage North American Debt Funds
	VC Deals
	Wealthsimple banks $611M for fintech platform
	SafetyCulture hits $1.6B valuation
	Solid Power nails down $130M to support EV battery development
	Affinia Therapeutics secures $110M
	Path Robotics lands $56M

Partner Perspectives

COVID's impact on B2B

COVID-19 had visible impacts on retail, education and tech, but what was its impact on B2B, one of the sturdiest sectors of the market? In partnership with PitchBook, INSIGHT2PROFIT dives into the details, ranging from modest, one-time impacts to more lasting changes, depending on the subsectors.

PE dealmaking in B2B products actually rose 20% in 2020, while investments in B2B service companies were nearly cut in half last year. While B2B ecommerce came of age out of necessity, companies changed their purchasing habits, perhaps permanently. With a mountain of data to study, B2B companies can adjust their plans around pricing, cross-selling, product positioning and sales productivity. PE investors will be paying close attention to B2B as the recovery unfolds.

To download the report, click here.

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The Daily Benchmark

2017 Vintage North American Debt Funds

Median IRR

8.00%

Top Quartile IRR Hurdle Rate

12.14%

1.10x

Median TVPI

Select top performers

Hamilton Lane Strategic Opportunities Fund 2017

Castlelake Aviation III

Stellex Capital Partners

*IRR: net of fees

48 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Wealthsimple banks $611M for fintech platform

Canadian fintech company Wealthsimple has raised C$750 million (about $611 million) at a C$5 billion valuation, a dramatic rise from the C$1.4 billion valuation it received last year. Meritech and Greylock Partners led the round, with support from DST Global, Sagard, Iconiq Capital, Dragoneer Investment Group, Two Sigma Ventures, Plus Capital and others, including several angel investors. The Toronto-based company operates an investment platform, a tax filing software service and a payments app.

Additional Investors:

TCV, Inovia Capital, Allianz X, Base10 Partners, Redpoint Ventures, Steadfast, Alkeon

View round

View 19 competitors »

SafetyCulture hits $1.6B valuation

SafetyCulture has raised $73 million in a round led by Insight Partners, valuing the startup at $1.6 billion. The Australian company is the developer of a safety inspection and observation app that helps users perform workplace checks, train staff and automate tasks and communication. SafetyCulture's tech is used in industries such as construction, manufacturing, hospitality and retail.

Additional Investors:

Blackbird Ventures, Index Ventures, Tiger Global

View round

View 37 competitors »

Solid Power nails down $130M to support EV battery development

Electric vehicle battery maker Solid Power has secured a $130 million Series B led by BMW Group, Ford and Volta Energy Technologies, a VC firm spun out from the US Department of Energy's Argonne National Laboratory. The Louisville, Colo.-based company raised a $28 million Series A last October.

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Affinia Therapeutics secures $110M

Affinia Therapeutics has raised a $110 million Series B co-led by EcoR1 Capital and Farallon Capital Management. Founded in 2019 and based in the Boston area, the company is developing gene therapies for diseases affecting the central nervous system and muscles. It was valued at $110 million in March 2020, according to PitchBook data.

Select Additional Investors:

Atlas Venture, Avidity Partners, Casdin Capital, F-Prime Capital, GV, Mass General Brigham Ventures, Perceptive Advisors

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Path Robotics lands $56M

Path Robotics has raised a $56 million Series B led by Addition, with participation from Drive Capital, Basis Set and Lemnos Lab. The Columbus, Ohio-based company offers a robotic welding system to help manufacturing plants improve production processes.

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View similar company »

Chart of the Day

"Uncertainty stemming from the Brexit deadline at the turn of the year did not suppress valuations in the UK. Valuations grew impressively across all stages from 2019's figures. UK-based startups now outside the EU bloc have developed their valuations and garnered capital from international sources."

Source: PitchBook's 2020 Annual European VC Valuations Report