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The Daily Pitch: VC

June 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

Estimating the true volatility of private market returns

(RapidEye/Getty Images)

When investors take stakes in public companies, tracking returns is a straightforward exercise. But the opaque nature of the private markets makes it much harder for institutional investors to accurately track how their investments have performed.

Our latest analyst note breaks down how the uneven presentation of private market returns has impacted asset allocators. Takeaways include:

How unaudited accounting practices and the tendency to underestimate valuations have led to lower volatility metrics within the private markets.

How a return "desmoothing" formula developed by MIT professor David Geltner can give institutional investors a better sense of volatility and the level of diversification within a portfolio.

How artificially smoothed returns can impact asset allocation modeling investors have relied on for years.

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Blackstone bets on tech data giant IDG in $1.3B deal

Blackstone has agreed to acquire International Data Group from Oriental Rainbow, a subsidiary of China Oceanwide Holdings Group. The deal, which comes with an enterprise value of $1.3 billion, represents an indirect bet on the future of the tech data industry.

Founded in 1964 and based in Boston, IDG provides market and data intelligence and research for the tech sector. Blackstone's backing will allow IDG to take on more strategic tech acquisitions. The company acquired IT benchmarking and sourcing specialist Metri in May; it purchased Triblio, a provider of account-based marketing software, in June 2020.

In 2017, IDG was bought by Beijing-based China Oceanwide and IDG Capital, with a Wall Street Journal report at the time indicating a purchase price of less than $1 billion. Through the deal, China Oceanwide acquired a 90% stake in the company, and IDG Capital picked up the remaining 10%.

The acquisition will add to Blackstone's already extensive portfolio. The private equity giant had $619 billion in assets under management as of January.

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Partner Perspectives

How PE fundraisers are adapting for the future

Allocations to PE surged in the past decade, culminating in record sums committed to the asset class in the past few years. However, as the dealmaking landscape intensifies, how are PE firms adapting their strategies as they look toward the future?

Datasite's latest market brief unpacks the key trends defining the past and present of PE fundraising, offering insight into the priorities of fund managers as they plan for their next vehicle. Highlights include:

Analysis of PE fundraising datasets by size, manager experience, speed of close and more
Commentary on persisting technical gaps common in the PE industry
Insights as to the operational and relational edges PE fund managers can eke out to stand out amid competition

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Fintech takes aim at a $400B healthcare puzzle

(Rubberball/Nicole Hill/Getty Images)

Over the last two decades, the financial burden on patients has skyrocketed amid the rising costs of healthcare in the US and the growing prevalence of high-deductible medical plans.

Hospitals now rely on patients' out-of-pocket payments more than ever to keep their doors open—but these bills are proving hard to collect.

Fintech startups that allow individuals to pay for healthcare in small increments seek to make bills more manageable for patients and increase providers' cash flows.

The challenge for these companies is convincing the famously bureaucratic health systems to adopt new tech solutions.

Recommended Reads

Enhanced and extended unemployment benefits, childcare responsibilities, and the risk of COVID-19 exposure are making it difficult for restaurants and supermarkets to find workers. [The Wall Street Journal]

How America's largest homebuilder is capitalizing on the craze for new homes. [Fortune]

At any given time, about 1 million US families are looking to adopt a child. An inside look at the lucrative—and murky—business of baby brokering. [Time]

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Quick Takes


	The Daily Benchmark
	2018 Vintage Global Buyout Funds
	VC Deals
	Gong brings in $250M Series E
	Intrinsic emerges from stealth with $113M
	Alation banks $110M Series D
	Orbital mapping specialist LeoLabs snags $65M
	Realtime Robotics secures new funding
	Exits & IPOs
	Babylon Health secures SPAC deal
	Fundraising
	Lux Capital raises nearly $1.5B across two funds
	VenBio closes on $550M for fourth life sciences fund

The Daily Benchmark

2018 Vintage Global Buyout Funds

Median IRR

6.31%

Top Quartile IRR Hurdle Rate

19.38%

1.05x

Median TVPI

Select top performers

SSC Partners I

Nexus Special Situations II

Oaktree Special Situations Fund II

*IRR: net of fees

112 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Gong brings in $250M Series E

Gong, the creator of an AI-based revenue intelligence platform, has raised a $250 million Series E led by Franklin Templeton and joined by existing investors such as Coatue, Salesforce Ventures, Sequoia, Thrive Capital and Tiger Global. The round values the Palo Alto-based company at $7.25 billion and brings Gong's total funding to $584 million.

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Intrinsic emerges from stealth with $113M

Intrinsic has raised a $113 million Series A led by Define Ventures, with participation from Link Ventures. The New York-based company acquires health and wellness brands to help scale their operations on ecommerce sites such as Amazon.

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Alation banks $110M Series D

Riverwood Capital has led a $110 million round for Alation, the developer of an enterprise data intelligence platform. The funding values the Redwood City, Calif.-based company at $1.2 billion. Snowflake Ventures, Sanabil Investments, Salesforce Ventures and others also participated in the financing. Alation has over 250 enterprise customers including Cisco, Nasdaq and GE Aviation. The startup was valued at $290 million in 2019, according to PitchBook data.

Additional Investors:

Dell Technologies Capital, Costanoa Ventures, Icon Ventures, Sapphire Ventures, Union Grove Venture Partners

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Orbital mapping specialist LeoLabs snags $65M

LeoLabs has raised a $65 million Series B co-led by Insight Partners and Velvet Sea Ventures. Founded in 2016 and based in Menlo Park, Calif., the company offers mapping technology and services to track small debris and satellites in low-Earth orbit. It was valued at $33 million in 2018, according to PitchBook data.

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Realtime Robotics secures new funding

Realtime Robotics has raised a $31.4 million Series A from investors including HAHN Automation, SAIC Capital, Soundproof Ventures and Heroic Ventures. The Boston-based company is a developer of industrial robot technologies for manufacturing and logistics operations.

Select Additional Investors:

SPARX Asset Management, Duke Angels, Omron Ventures, Scrum Ventures, Toyota AI Ventures

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Exits & IPOs

Babylon Health secures SPAC deal

Telehealth startup Babylon Health has agreed to merge with Alkuri Global Acquisition Corp, the blank-check company led by former Groupon execs Rich Williams and Steve Krenzer. The deal will give the combined entity a pro forma equity value of $4.2 billion. Babylon was valued at $1.9 billion in 2019 after raising $450 million. The London-based company has raised funding from investors including Saudi Arabia's Public Investment Fund, VNV Global and Kinnevik.

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Fundraising

Lux Capital raises nearly $1.5B across two funds

Lux Capital, a VC firm focused on emerging science and tech, has raised $675 million for its seventh namesake early-stage fund. The firm has also collected $800 million for an opportunities fund, which will be used to back companies on the edge of scientific and technological breakthroughs. The new funds bring Lux's total committed capital to $4 billion. Over the last year, the firm completed or announced exits of around a dozen portfolio companies, including Desktop Metal, Latch and Recursion. Lux Health Tech Acquisition, a blank-check company sponsored by the firm, also went public.

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VenBio closes on $550M for fourth life sciences fund

San Francisco-based VenBio has raised $550 million for its fourth life sciences venture fund. The oversubscribed fund closed a little more than a year after the firm announced the closing of the series' third vehicle on $394 million. Founded in 2011, VenBio targets companies that are working to create therapeutics for unmet medical needs.

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