Nontraditional investors continue their VC push

AnyVision raises $235M amid data privacy debate; Lightspeed hires former Stripe exec; Aleph Farms pulls in $105M; Video tech startup reels in $100M
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The Daily Pitch: VC
July 8, 2021
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Today's Top Stories
Desperate for deals, America's SPACs set their sights overseas
Germany-based electric aircraft maker Lilium announced a merger with special-purpose acquisition company Qell Acquisition in March. (Courtesy of Lilium)
Under pressure to strike deals, a growing share of blank-check companies are luring foreign companies to list on US exchanges.
  • SPAC mergers with non-US companies are rising and accounted for nearly a fifth of all blank-check deals in Q2 2021.

  • Foreign companies are drawn to the generous valuations and the global opportunities that a US listing can bring.

  • Going overseas allows SPACs to leave behind a saturated US market, but international mergers come with their own obstacles.
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Why nontraditional investors are expected to continue their push into venture
(SEAN GLADWELL/Getty Images)
Nontraditional investors, defined by PitchBook as including PE investors, mutual funds, sovereign wealth funds, hedge funds, corporations and family offices, have ramped up their involvement in the venture markets over the last several years. We estimate that NTIs have between $250 billion and $350 billion to invest in the global venture market, effectively doubling the capital available to VC-backed companies worldwide.

In our latest analyst note, PitchBook analyst Kyle Stanford shows how venture has generated strong returns for NTIs and explains why this group is expected to continue investing in VC-backed companies. Key takeaways include:
  • In 2020, nontraditional venture investors not only participated in 77% of the US market's deal value but were also beneficiaries of around 95% ($285 billion) of the year's total exit value.

  • Annualized returns from NTI investment in Series B through Series E rounds have ranged between 10% and 15%. While these returns may not satisfy traditional venture firms' expectations, NTIs have a different risk profile and can justify relatively lower returns.

  • Although nontraditional investors are generally not set up to invest in asset classes with long periods of illiquidity, they tend to back VC-backed companies during the later stages. This results in a median hold time of only 3.7 years, which is considerably less time than it takes for a typical US startup to achieve an exit.
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A message from West Monroe
How deal teams & operating partners can use analytics to increase deal conviction
Join PitchBook and West Monroe for a lively discussion recapping the first half of the year and diving deep into an expert panel on how private equity firms can make better data-driven decisions.

Topics to be covered:
  • Key findings from the PitchBook Q2 2021 US PE Breakdown
  • How financial sponsors are leveraging analytics to forecast the impact of COVID-19 on customer and revenue growth
  • How data science can increase conviction in a competitive deal process
  • Examples of analytics identifying and quantifying revenue opportunities that can be unlocked during the hold period
Register for the July 21 webcast
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Facial recognition startup AnyVision raises $235M amid growing data privacy debate
(Dan Kitwood/Getty Images)
AnyVision has raised $235 million to expand the reach of its AI-based facial recognition technology. The round was led by SoftBank's Vision Fund 2 and Eldridge, with The Wall Street Journal reporting the funding values the Tel Aviv-based company at over $1 billion.
  • AnyVision's crowd-scanning software interacts with footage from cameras at places like airports, border crossings and stadiums. The company says the product can identify suspected criminals or people on watch lists. AnyVision intends to use the capital to acquire competitors whose software can spot suspicious behavior based on someone's body positioning or objects in their hands, according to The Wall Street Journal report.

  • The startup has previously been subject to controversy. Reports emerged in 2019 that its technology was being used by Israeli security forces to monitor the Palestinian population. Although AnyVision denied the report, Microsoft's venture arm, M12, opted to divest its stake after an audit of AnyVision's ethical practices. The company also had to lay off half of its staff last year due to the pandemic and M12's decision, Reuters reported.

  • Facial recognition has come under growing scrutiny from regulators and activists who argue the technology violates privacy. In April, the EU proposed stricter regulation on the use of facial recognition in public spaces, including prohibiting its usage by law enforcement. US cities including San Francisco have banned it outright.
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Introducing The PitchBook PE Barometer
We recently launched The PitchBook PE Barometer, a linear regression model that incorporates information from 14 significant macroeconomic, credit and equity indicators to explain the variance in quarterly returns. This tool will be updated monthly as indicator data and returns data become available.
  • The PE Barometer provides insight into the current return environment—ahead of the lagged reporting of broader private equity returns data.

  • Individual indicators used to calculate the Barometer help illuminate which factors are driving aggregate returns.

  • The Barometer underscores PE's significant exposure to overall market factors, which should be considered when constructing a multi-asset portfolio including an allocation to private equity.
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Recommended Reads
Invite-only social media app Clubhouse aimed to foster diversity. Is it working? [Wired]

During the pandemic, Christina Galbato went from posting about travel to teaching her Instagram followers how to become full-time social media creators. She's helping the growing number of individuals who are turning influencing into a career. [The Information]

The spike in lumber costs over the past year is not only sidelining many first-time homebuyers in the US. It's also shutting out those who need affordable housing the most. [Bloomberg]
Since yesterday, the PitchBook Platform added:
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VC valuations
1612
People
515
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8
Funds
See what our data software can do
 
Quick Takes
  The Daily Benchmark  
  2015 Vintage Global Venture Funds  
  A message from RBC Capital Markets  
  What's the new focus for M&A?  
  People  
  Lightspeed hires ex-Stripe exec as fintech partner  
  VC Deals  
  Israel's Aleph Farms picks up $105M  
  Video tech startup reels in $100M  
  Skedulo secures $75M  
  Lacuna Technologies announces $16M in new funding  
  Investors  
  StepStone to buy late-stage investor Greenspring Associates  
 
 
The Daily Benchmark
2015 Vintage Global Venture Funds
Median IRR
22.15%
Top Quartile IRR Hurdle Rate
31.55%
1.66x
Median TVPI
Select top performers
Vertical Venture Partners Fund I
FirstMile Ventures 2014
OrbiMed Private Investments VI
*IRR: net of fees
61 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
A message from RBC Capital Markets
What's the new focus for M&A?
With confidence on the rise and M&A activity reaching new highs since the markets reopened in 2020, the unusual patterns of the last 12 to 16 months will soon be behind us. An acceleration of key trends, coupled with strong market conditions, has led to a plethora of transaction opportunities across industries.

What's driving M&A today and what's the outlook moving forward? How are private capital and SPACs responding to current conditions? RBC Capital Markets' M&A experts explore how private capital may be deployed—and where these funds are looking for bargains coming out of the pandemic.

See what's ahead for M&A, with insights on key trends and opportunities from RBC's experts.
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People
Lightspeed hires ex-Stripe exec as fintech partner
Justin Overdorff has joined Lightspeed as a New York-based partner specializing in fintech investments. Overdorff began working at payments specialist Stripe in 2015 and helped develop the company's partnerships and lending business, The Information reported. He later worked on Stripe's venture capital team, investing in fintech startups such as Pulley, the report said.
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VC Deals
Israel's Aleph Farms picks up $105M
Aleph Farms has secured a $105 million Series B led by L Catterton and DisruptAD. The startup grows beef steaks from non-genetically modified animal cells. The capital will go toward expanding its manufacturing operations, product lines and international presence. Israel-based Aleph Farms has raised over $118 million in total VC funding to date.
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Video tech startup reels in $100M
Mmhmm, a provider of tools like custom effects, animations and backgrounds for video chats and presentations, has raised a $100 million Series B led by SoftBank. Sequoia, Mubadala, Human Capital, World Innovation Lab and others also participated in the round. The San Francisco-based startup has now raised over $130 million in total private funding.
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Skedulo secures $75M
Skedulo has raised a $75 million Series C led by SoftBank's Vision Fund 2. The San Francisco-based company is a developer of workforce management software designed to help organizations including DHL and The American Red Cross manage deskless employees. Skedulo was valued at $105 million in 2019, according to PitchBook data.
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Lacuna Technologies announces $16M in new funding
Lacuna Technologies has raised a $16 million Series A led by Xplorer Capital Management, with participation from Playground Global. The Palo Alto-based company provides open-source digital tools that help cities and municipalities create and manage transportation policies. Xplorer managing partner and co-founder Keith Nilsson will join the startup's board.
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Investors
StepStone to buy late-stage investor Greenspring Associates
StepStone Group has agreed to acquire Greenspring Associates, a Baltimore-based venture capital and growth equity firm with more than $17 billion in assets under management. Founded in 2000, Greenspring has invested in companies including Calendly and Rover.
View details
 
View 43 investments »
 
Chart of the Day
"Alongside strategics, middle-market PE funds have emerged as important buyers of venture-backed and bootstrapped software companies. Venture-backed companies accounted for over 20% of middle-market tech deals in Q1 2021. Clearlake Capital Group and Motive Partners' buyout of InvestCloud, a modular wealth management software platform, exemplifies this trend."

Source: PitchBook's Q1 2021 US PE Middle Market Report
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