PitchBook News - China on pace for VC records

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The Daily Pitch: VC

August 31, 2021

Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A

Daily Greeting

In today's Daily Pitch, you'll find:

Our new biannual report on Greater China's VC activity explores the region's rapidly growing startup scene.

Our latest global fund performance report breaks down which asset classes performed the best in 2020.

Why some VCs in the UK are turning away from the classic GP/LP model in favor of the public markets.

Today's Top Stories

How VC in China is tracking toward growth

Venture capital deals in the Greater China region have rebounded from last year's pandemic-rattled levels, and the ecosystem is on pace to surpass $100 billion in total capital invested by the end of 2021. But immense regulatory headwinds are disrupting sensitive industries and complicating IPO prospects for VC-backed companies.

Our new biannual report on Greater China's venture activity focuses on the region's rapidly growing startup scene. Key takeaways include:

Annual exit value is tracking toward fresh highs, with $137.5 billion recorded across 99 deals in the first six months of 2021.

Foreign investors have been a reliable source of capital, participating in nearly a quarter of the area's VC deals during the period.

The region's growing middle class, high adoption of mobile technology and state-sponsored funds for high-tech industries continue to create opportunities for entrepreneurs.

read the report

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PE and VC dominate global fund performance

With COVID-19 upending the global economy, 2020 proved to be an unprecedented year for private market investors. But private equity and venture capital fund performance thrived nonetheless, according to PitchBook's latest Global Fund Performance Report, which cites data through Q4 2020 and the early part of 2021.

A few highlights from the findings:

Private equity funds recorded a rolling one-year horizon IRR of 17.7% in 2020, its second highest in the past decade, which outpaced the S&P 500 and helped the strategy avoid the collapse it endured during the global financial crisis.
Venture capital funds peaked in Q4 2020, reaching a record quarterly horizon IRR of 14.9%. The strategy continued that momentum into the new year, with a preliminary quarterly IRR of 13.3% in Q1. The strong returns were driven in large part by a healthy exit environment, as VCs looked to capitalize on frothy valuations.
Bogged down by office closures, real estate funds trailed other private alternative asset classes and the broader public markets, continuing two-plus years of underperformance. But investment in warehouses and data centers provides some reason for optimism as people work and shop from home.

read the report

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A message from Grant Thornton

PE activity in manufacturing makes a comeback

Even amid ongoing challenges related to the COVID-19 pandemic, the manufacturing sector in the US continues to exhibit signs of recovery. In tandem, private equity firms are closing deals at a faster pace, albeit still off the record levels observed in the 2010s. Grant Thornton's latest market brief, developed in partnership with PitchBook, explores the key trends shaping dealmaking across manufacturing along with insights from Grant Thornton professionals, with top findings including:

The record median buyout size of $170 million indicates ample capital supply, but a relatively lower population of quality targets thus far
Add-ons remain popular, but primarily in the lower middle market
PE firms have already notched nearly $20 billion in exit value via public listings alone

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On the podcast: Private equity's sports investing playbook

With PE sports investing on the rise, Rob Klein of RedBird Capital Partners joins "In Visible Capital" to talk about how his firm aims to help franchises drive revenue and minimize risk through an investment strategy still in its infancy. This week's episode includes:

RedBird's blockbuster deal for a stake in Fenway Sports Group, which owns sports properties including the Boston Red Sox and Liverpool FC.

The recent pushback from fans and players to private equity's enthusiasm for athletics and RedBird's decision to buy the XFL out of bankruptcy.

PitchBook senior editor James Thorne also joins the show to discuss the risks facing VC investors with stakes in Chinese companies, as a regulatory crackdown looms.

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Why some UK VCs see their future in the public markets

Draper Esprit, co-founded by Stuart Chapman, went public in 2016.
(Courtesy of Draper Esprit)

A handful of UK-based VC firms are freeing themselves from the constraints of the traditional closed-end fund structure and opting to go public instead.

Early-stage investor Forward Partners made its debut on the London Stock Exchange last month, joining a small cohort of firms that are turning to public markets as a source of capital.

In eschewing the LP model, public VCs are no longer limited by a traditional fund's lifespan, allowing them to more easily adopt the patient capital approach.

"The true essence of venture is the journey," said Draper Esprit co-founder Stuart Chapman. "We wanted to match entrepreneurs' needs and wishes, and why should their decisions revolve around what is best for the investor's fund?"

Recommended Reads

As traditional banks scramble to stay competitive, one writer argues that it may not be fintech companies that are dealing the final blow to brick-and-mortar lenders. [Bloomberg]

New tech for making smaller chips promises to keep Moore's Law alive for years to come—but for now it won't be cheap. [Wired]

Floating wind turbines could be the next big win for renewable energy, but cost, design and opposition from the fishing industry may be standing in the way. [The Guardian]

Since yesterday, the PitchBook Platform added:

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VC valuations

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People

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Companies

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Funds

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Quick Takes


	The Daily Benchmark
	2014 Vintage Global Secondaries Funds
	VC Deals
	Flagship-backed Laronde nabs $440M
	Whoop hits $3.6B valuation in SoftBank-led round
	Brazil's Petlove digs up $150M
	Eight Sleep secures $86M
	Genome Medical picks up $60M Series C
	Origin lands $56M
	Fundraising
	Elad Gil targets $620M for new vehicle
	Susa Ventures nails down $375M across two funds

The Daily Benchmark

2014 Vintage Global Secondaries Funds

Median IRR

14.35%

Top Quartile IRR Hurdle Rate

15.77%

1.36x

Median TVPI

Select top performers

Greenspring Secondaries Fund I

Lexington Capital Partners VIII

Ant Bridge Asia V

*IRR: net of fees

12 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Flagship-backed Laronde nabs $440M

Biotech startup Laronde has raised $440 million in a Series B round backed by Flagship Pioneering, T. Rowe Price, Invus and others. The Cambridge, Mass.-based company was created within Flagship Labs in 2017 and develops programmable RNA for use in therapeutics.

Additional Investors:

BlackRock, Canada Pension Plan Investment Board, Federated Kaufmann Fund, Fidelity Management & Research

View round

View similar company »

Whoop hits $3.6B valuation in SoftBank-led round

Fitness tech startup Whoop has raised $200 million in a Series F led by SoftBank. The Boston-based company was valued at $3.6 billion with the round, up from $1.2 billion last year. Whoop offers athletes a digital health coach service that combines wearable tech and analytics software.

Additional Investors:

Accomplice, Animal Capital, CAVU Venture Partners, GP Bullhound, IVP, NextView Ventures, Thursday Ventures

View round

View 16 competitors »

Brazil's Petlove digs up $150M

Petlove, the Brazil-based operator of an ecommerce platform for pet products and services, has raised a $150 million round led by Riverwood Capital, with participation from others including Tarpon, SoftBank and L Catterton. The company was founded in 1999 under the name PetSuperMarket. The new funding will go toward growing the company's subscription program and expanding its logistics network.

View round

View 8 competitors »

Eight Sleep secures $86M

Eight Sleep has raised an $86 million Series C led by Valor Equity Partners, with participation from SoftBank, Khosla Ventures, Founders Fund and General Catalyst. The New York-based company offers "smart" mattresses to monitor and adjust temperature and other sleeping conditions.

View round

View 14 competitors »

Genome Medical picks up $60M Series C

Genome Medical has raised $60 million in a round led by Casdin Capital. Founded in 2016, the Bay Area-based company is the developer of a telehealth platform focused on genomic medicine that provides clinical assessments, test recommendations, personalized care plans and more. Genome Medical has also announced its plan to acquire GeneMatters, a provider of telehealth-based genetic counseling and software solutions.

Select Additional Investors:

Amgen Ventures, Avestria Ventures, Dreamers VC, Echo Health Ventures, Flywheel Ventures, GV, Illumina Ventures

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View 7 competitors »

Origin lands $56M

Origin has raised a $56 million Series B co-led by 01A, General Catalyst and Lachy Groom. Founded in 2018, the San Francisco-based company is the developer of a financial platform intended to help employees of companies including DocuSign and Zynga manage compensation, benefits and personal finances. The funding values Origin at $400 million.

Additional Investors:

Abstract Ventures, Felicis Ventures, Founders Fund

View round

View 3 competitors »

Fundraising

Elad Gil targets $620M for new vehicle

Elad Gil, a co-founder of Color Genomics and former Twitter executive, is raising a $620 million venture fund, the largest vehicle ever managed by a solo VC, The Information reported. Gil's limited partners include Harvard University's endowment. In recent years, some solo VCs, including Gil and Lachy Groom, have started to lead rounds and invest in late-stage deals.

View details

View 125 investments »

Susa Ventures nails down $375M across two funds

Susa Ventures has raised $375 million across two funds, including $125 million for its fourth seed-stage vehicle and $250 million for its second opportunity fund, the latter of which will focus on Series B and C investments. Founded in 2013, the San Francisco-based firm has backed companies including Robinhood, Flexport and Viz.ai. Susa plans to use the capital to continue investing primarily in the fintech, healthcare, supply chain and SaaS sectors.

View details

View 122 investments »