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The Research Pitch

July 24, 2021

Quick reminders:

Join our webinar on Aug. 4 to discuss the major trends in the US VC industry! Register here.

Time is running out to take our 2021 Sustainable Investing Survey!

Our VC Dealmaking Indicator quantifies the relationship between startups and investors

Using PitchBook's wealth of data on VC deal terms, valuations and fundraising, we have constructed an indicator that captures how startup- or investor-friendly the deal environment is in the early- and late-stage markets.

To cut to the chase, we found that Q2's early- and late-stage deal terms have grown 2.7x and 3.3x more startup-friendly, respectively, since Q1 2010.

To construct the indicator, we encoded five different deal terms as well as the time between rounds, valuation step-ups, and percent of ownership acquired.

We've also included a new metric that seeks to estimate the supply and demand of capital in the VC market.

Currently, both the early and late stages are quite startup-friendly, with the amount of capital in the market driving a large portion of that trend.

Historically, we see that early-stage deals tend to be more startup-friendly when compared to late-stage deals.

Check out more details about the indicator here:

Read our free research: "Introducing the VC Dealmaking Indicator"

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

Best,

Alex Warfel
Quantitative Data Analyst

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Thematic Research

Grading our 2021 predictions for US VC

Has the Bay Area been able to retain its percentage of VC deal flow?

Have SPACs lived up to expectations?

Are founders still increasingly turning to venture debt?

We may have been a quarter too early on our SPAC prediction.

We made eight predictions for the US VC industry before the start of 2021, and, so far, the results have been a mixed bag.

We explain what's gone to plan and what's surprised us in areas that also cover biotech & pharma, nontraditional investors, direct listings and more:

read the free research

Grading our 2021 predictions for US PE

The level of US PE activity we're seeing these days has far exceeded our analysts' most bullish expectations.

That's the backdrop for looking back at the six predictions we made before the start of the year across topics like fundraising, GP stakes, SPACs, carveouts and 20x buyout multiples.

Carveouts may hit a record, but not in the way we thought.

So, how did we do?

Well, some predictions have played out as we thought.

Others are looking good, but for different reasons than we projected in December.

For the rest, the answers are still unclear:

download the free research

Market Updates

At the midpoint of 2021, European PE activity is surging toward annual records in dealmaking, exits and fundraising, highlighting PE as one of the most in-demand asset classes right now.

The great lockdown crisis toppled many industry forecasts and trends while reinforcing and accelerating others, including PE, which arguably has never seen a more favorable environment for dealmaking.

Other key takeaways from our new report:

PE exit activity in Europe has returned with gusto after 2020's pandemic-induced slowdown, driven by €2.5 billion+ deals.

Fundraising has been exceptionally strong, as robust secular trends continue to fuel LP confidence and boost PE allocations.

Despite inflationary pressures and COVID-19 spikes with the delta variant, we expect to see much of the same from the European PE industry in the second half of the year.

Read our Q2 European PE Breakdown for our full analysis (and get the underlying data in XLS format):

get the free research and data

Deal Commentary

AI & machine learning analyst Brendan Burke weighs in on the recent IPO of Blend, which went public at a valuation of just under $4 billion:

"Blend's IPO continues a trend of VC exits for AI-integrated fintech startups.

"Along with Blend, companies like Upstart, Bill.com, Lemonade and nCino have recently achieved outstanding IPO outcomes by applying AI to distinct categories of financial services.

"Blend delivers cloud-based SaaS to consumer financial services firms, focusing on mortgage lending along with other consumer products.

"The company incorporates AI in its mortgage lending workflow automation product, not explicitly as part of loan decisioning.

"Upstart has demonstrated that AI can be successfully and ethically applied to loan decisioning, which may present an opportunity for Blend as it collects more data.

"Blend's S-1 is not explicit about the role of AI in its software nor its data inputs, creating uncertainty about the company's approach to AI ethics. The company's internally developed patents do not involve AI.

"Blend was recently assigned a patent for a novel neural network architecture by Carnegie Mellon researchers that may lead to more extensive AI integration.

"Financial services dependent on costly manual processes remain susceptible to disruption by AI-integrated startups."

Brendan Burke

Senior Emerging Technology Analyst
AI & Machine Learning

In the News

Our insights and data featured in the press:

Space tech is having a moment. But just how much VC money is going to those startups? And what does the future of the industry look like? [Bloomberg]

PE's more growth-oriented investment approach is leading to new opportunities in cybersecurity, and our analysts say that might also be a boon for VC-backed startups. [Insider]

The PE dealmaking environment in Europe has never been better, and the findings from our latest report on the region were picked up by several outlets. [WSJ Pro, Guardian, Private Equity News, Private Equity Wire]

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

ICYMI

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

Market updates

Thematic research

Emerging Technology Research (report previews)

Coming next week (subject to change)

Global M&A Report
European Venture Report (sneak peek here)
Impact Funds by Reason and Region
Autonomous Trucking Gains Traction
The GP Stakes Investable Landscape

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

Learn more about the PitchBook Institutional Research Group or access our research libraries for clients and non-clients.

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