PitchBook News - How the Vision Funds flipped the script

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The Research Pitch

May 22, 2021

SoftBank's Vision Funds get $20B boost

SoftBank announced its largest earnings ever during the fiscal year ended March 31, a year after it announced total losses of nearly $13 billion (the company's worst ever).

Despite not being the company's largest segment in terms of equity value, the SoftBank Vision Funds have been the major driver behind each of those figures.

Now, on the heels of the Vision Funds' $58 billion in gains last year, SoftBank is tripling down on its second vehicle, adding an additional $20 billion to the pot.

When the first Vision Fund was announced at nearly $100 billion, it was an unsure prospect that the global venture market could support such a fund. The market dynamics over the past several years, however, have shown that it's more than possible.

Even as private valuations continue to rise, exit values, especially those of public listings, have continued to provide strong returns to investors, and capital demand at the late-stage has never been higher.

Nontraditional investors took part in nearly $55 billion of US VC deal value in Q1, and there's no sign that they'll be slowing down.

It was easy to cast doubt on the Vision Fund when WeWork's IPO fell apart, but SoftBank has built a global portfolio of 125 companies (as of March 31), and still has eight to 10 years left in its lifecycle.

Its broad focus on artificial intelligence, rather than a specific sector, has allowed the fund to invest where opportunities present themselves, whether that be in tech, healthcare or another growing industry.

While the story isn't complete, SoftBank and its Vision Funds have rewritten their narrative and become ever impactful in the global VC landscape:

Read our full analysis: Vision Funds Lead SoftBank Earnings to New Highs

Feel free to reach out to me or our institutional research group with any feedback or questions.

Best,

Kyle Stanford
Analyst, Venture Capital

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Market Updates

The growing dominance of private capital's biggest funds has been a perennial narrative over the past decade.

The pandemic has only exacerbated this, as the gravitational pull of the industry's mega-funds seems stronger than ever.

This ongoing concentration of commitments provides the spotlight for our latest Private Fund Strategies Report, which offers a fresh analysis of fundraising trends in first three months of the year across all major strategies.

Other topics covered include the rapid rise of secondaries fundraising both in 2020 and 2021 as well as the growing mountain of private capital AUM:

read the full report

Europe's largest PE market has had an impressive start to the year, with deal volume and value reaching quarterly peaks, PitchBook analysts write in our new UK & Ireland Private Capital Breakdown.

The technology and healthcare sectors—two havens during the COVID-19 pandemic—hit quarterly volume highs. Public listing exit value had an inspiring first quarter, and PE exit volume followed suit.

On the venture side, deal value is on course to surpass the current annual record, while exit value has already reached a new landmark figure.

Despite Brexit, UK-based startups have continued to close deals and press ahead with ambitious growth plans. Late-stage capital has dominated deal value, and financing options have grown—thus allowing startups to lengthen their investment runways:

read the full report

Emerging Tech Research

INSURTECH: The pandemic accelerated the digital transformation of most insurers as many had to interact with customers remotely, underwrite assets without physical inspection, or adjust claims virtually.

At the same time, insurtech startups have found an opportunity to penetrate new markets and attract underserved customers—increasingly threatening slow-moving incumbents.

In Q1, insurtech startups raised $2.2 billion across 110 deals globally, with commercial lines attracting around one-third of total capital invested in the vertical.

Our latest report, exclusively for clients, covers it all and also identifies emerging trends like embedded insurance and standalone cyber insurance.

Non-clients can get an idea of what's in the premium report here.

FOODTECH: A group of three categories collectively known as "alt-proteins" is experiencing heightened interest from investors; deal value in the subsector reached $715 million in Q1, on pace to exceed 2020's annual record.

You've likely heard of the first two alternatives to meat and dairy: plant-based and cultivated/lab-grown. But another area of brewing curiosity involves the fermentation of microorganisms (e.g., fungi, bacteria).

Our Q1 update on the foodtech sector, exclusively for clients, is full of fresh data and analysis, including why online grocers and apps & marketplaces represent compelling opportunities right now.

Non-clients can get an idea of what's in the premium report here.

Webinars & Events

What's driving the boom in European PE deal activity?

Is this the best exit environment for the region in recent memory?

How serious are concerns of inflation?

Our EMEA private capital analysts Dominick Mondesir and Nalin Patel discussed all aspects of European PE and VC in this week's webinar: watch the replay.

Also, our podcast colleagues explored the worlds of mobility tech and real estate tech with analysts Asad Hussain and Zane Carmean.

Deal Commentary

Mobility tech analyst Asad Hussain weighs in on eVTOL startup Beta Technologies raising $368 million in funding led by Fidelity and Amazon's Climate Fund:

"This funding round is a major validation signal from logistics giant Amazon and showcases the promise of eVTOL aircraft for logistics applications.

"In addition to receiving backing from Amazon, Beta has received a purchase order for up to 150 eVTOL aircraft from UPS.

"Beta Technologies' aircraft utilizes a relatively simple lift-plus-cruise design, incorporating four overhead propellers for takeoff and landing along with a rear propeller for cruising.

"Beta primarily plans to monetize through cargo delivery and military applications, replacing helicopters and light aircraft. The aircraft promises to improve operational efficiencies, expand routing for middle-mile cargo transport, and reduce emissions for air logistics operations.

"In our view, the company's focus on logistics could help it commercialize faster than other eVTOL companies focused on passenger air mobility.

"Regardless, passenger air mobility could be a potential adjacent market; Beta has received an order for up to 20 aircraft from Blade Urban Air Mobility.

"This deal values Beta at $1.4 billion, a discount compared to passenger eVTOL companies Joby ($6.6 billion), Archer ($3.8 billion), and Lilium ($3.3 billion)."

Asad Hussain

Senior Emerging Technology Analyst
Mobility Tech

In the News

Our insights and data featured in the press:

Why is Waymo, the self-driving unit of Alphabet, looking to raise outside capital? Enthusiasm for its technology "may be greater outside its parent company than inside," says analyst Asad Hussain. [Bloomberg]

To help explains the recent ups and downs in the world of proptech, aka real estate tech, analyst Zane Carmean provided broader context and data following a notable funding round. [dot.LA]

PE investment in professional sports teams is hardly straightforward, according to recent PitchBook research. [Institutional Investor]

Proceeds from PE-backed IPOs in Europe are "comfortably" on pace to set a new annual record, says analyst Dominick Mondesir. [Investors' Chronicle]

If you're a media member interested in interviewing our analysts, contact our PR team.

ICYMI

Highlights from our research content published over the past few months:

Market updates

Thematic research

Emerging Technology Research (client only)

Coming next week (subject to change)

US VC Valuations Report
Global Fund Performance Report
ETR: AI & Machine Learning (sneak peek)
ETR: Supply Chain Tech

Thanks for reading! Feel free to email us any time with feedback, questions or tips!

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PitchBook News - How the Vision Funds flipped the script

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