VCs and the synthetic biology revolution

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The Daily Pitch: VC

June 7, 2021

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Today's Top Stories

Wall Street wins signal the start of a synthetic biology revolution

(Courtesy of Ginkgo)

Venture capitalists foresee a bright future for synthetic biology companies that are notching big breakthroughs after a decade of innovation.

The excitement is driven in part by public debuts for two leaders in the field: Zymergen went public in April at a roughly $3 billion valuation, and Ginkgo was valued at $15 billion in a SPAC deal.

The cost to design and produce engineered cells has fallen rapidly, and new opportunities in everything from agriculture to cancer drugs keep sprouting up.

One investor's take: "I think in 10 years we will probably look back and will recognize that this is the most important technological revolution of our time."

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Biotech, fintech draw the most attention from top VCs in Q1

Our newest report, the Emerging Tech Indicator, provides a quarterly overview of the startups receiving early-stage investment from a select group of the world's most successful venture firms. This group of investors is identified each quarter based on our proprietary methodology that measures the historical success of the startups they invest in, in terms of ability to raise capital, valuation and exit rates.

By narrowing down the thousands of early-stage VC deals that occur each quarter to focus only on those deals involving the most successful investors, our first ETI report offers a unique perspective on the kinds of technologies attracting early growth investment.

We tracked more than 170 startups across 30 market segments in Q1 that received capital from ETI firms. The top five areas of technology investment included biotech at $1.49 billion, followed by fintech, decentralized finance, health and wellness tech, and ecommerce. Key takeaways include:

The trend of developing demographic-focused financial services, such as mobile banking apps for Black and Latino communities, was a popular formula for attracting ETI deal capital in Q1.

Remote work has impacted where people choose to live and changed how they think about travel and vacationing. Proptech activity in Q1 suggests new opportunities in real estate and housing may be emerging, potentially stemming from the pandemic-driven upheaval of the real estate and travel industries.

Capital investment in decentralized finance startups represented the third-largest area of ETI deal activity in Q1. The funding activity was primarily led by the price strength of core crypto assets including bitcoin and Ethereum, the emerging market for products such as NFTs, continued institutional involvement in the space, general regulatory acquiescence to the industry, and the IPO of Coinbase.

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A message from InCloudCounsel

Guide: The top 10 terms in private equity NDAs

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Recommended Reads

Joe DeRisi created a way to detect pathogens that scientists didn't even know to look for. Will it help prevent the next pandemic? [The New York Times]

As big tech and big finance flock to Texas, the state is on the rise. [Bloomberg]

The story of one English professor's weekend at a TikTok mansion. [Harper's]

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Quick Takes


	The Daily Benchmark
	2019 Vintage Global Growth Funds
	Partner Perspectives
	PE keeps piling into healthcare
	VC Deals
	Capchase lands $125M
	Hungryroot brings in $40M Series C
	Exits & IPOs
	Aurora nears deal with Reid Hoffman-backed SPAC
	Fundraising
	Architect Capital raises $100M for asset-based financing

The Daily Benchmark

2019 Vintage Global Growth Funds

Median IRR

20.39%

Top Quartile IRR Hurdle Rate

38.98%

1.06x

Median TVPI

Select top performers

Bain Capital Life Sciences Fund II

Dyal Capital Partners IV

Riverwood Capital Partners III

*IRR: net of fees

31 Funds in Benchmark »

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Partner Perspectives

PE keeps piling into healthcare

Despite the COVID-19 pandemic, PE investors notched a record tally of deals closed within the US healthcare sector. In Grant Thornton's latest sector-focused PE market brief developed in collaboration with PitchBook, their industry luminaries examine the key drivers of this resilient, robust pace of investment. Highlights include:

Datasets from PitchBook spanning investment by size, type, median deal sizes and more
Spotlights on home health and hospice and behavioral healthcare
Insights from Grant Thornton's healthcare-dedicated experts

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VC Deals

Capchase lands $125M

Capchase has raised a $125 million Series A led by QED Investors. The New York-based business offers a platform to help companies finance growth with cash that's otherwise tied up in future revenue payments.

Additional Investors:

Bling Capital, Caffeinated Capital, SciFi VC

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Hungryroot brings in $40M Series C

Hungryroot has raised $40 million in a round led by L Catterton. The New York-based company offers an AI-powered platform for personalized grocery deliveries. Hungryroot was valued at $118 million in 2018, according to PitchBook data.

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Exits & IPOs

Aurora nears deal with Reid Hoffman-backed SPAC

Self-driving car company Aurora is nearing a deal to merge with Reinvent Technology Partners Y, a SPAC launched by LinkedIn co-founder Reid Hoffman, TechCrunch reported. The deal could reportedly value the company at $12 billion. Hoffman is a board member at Aurora, which was said to be valued at more than $2.5 billion in 2019 and has been backed by Amazon and Sequoia.

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Fundraising

Architect Capital raises $100M for asset-based financing

Architect Capital, an asset-based lender, has raised a maiden $100 million fund for providing non-dilutive or less-dilutive capital to fintech, ecommerce and SaaS early-stage startups in Latin America and the US. The San Francisco-based firm intends to provide funding alongside traditional venture capital.

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