PitchBook News - Charting PE's march on VC

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The Daily Pitch: VC

September 8, 2021

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

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

An analysis of US PE fund performance broken down by GP investment styles.

PE firms have ramped up their participation in venture deals. What's driving the surge?

Apax Partners and Warburg Pincus struck a $6 billion deal for the Dutch operations of T-Mobile.

Measuring the effects of specialization strategies in US PE funds

(Bet_Noire/Getty Images)

Specialization has been a defining theme among US PE firms for over two decades. Firms and funds have focused on geography, sector and investment type, such as buyout or growth equity vehicles.

Regardless of performance, many allocators appreciate the additional control this approach allows in portfolio construction and management. But the question remains: Does specialization, particularly by sector, lead to outperformance? Our latest analyst note explores this question. Takeaways include:

Buyout fund performance for generalist, targeted and specialist vehicles shows no clear outperformance trends among the three types over time based on public market equivalents.

Metrics such as IRR also support the conclusion that no single style reigns supreme.

A regression analysis illustrates that while there is no linear relationship between sector concentration and performance, funds that were classified into the targeted group had slightly lower average PMEs and IRRs than both generalist and specialist funds.

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What's driving private equity's march on VC?

(Overearth/Getty Images)

Private equity firms now participate in more than half of all venture deals by value, a share that has risen sharply in recent years.

In five charts, we break down how nontraditional investors like PE firms became such a force in VC.

The risk-reward spectrum of late-stage VC is now squarely in the wheelhouse of PE investors and traditional asset managers.

Pre-IPO rounds can be hugely lucrative. They're also a preferred method of securing an allocation in the subsequent IPO.

Growth equity funds have boomed alongside VC fundraising, a trend that shows no signs of slowing.

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A message from Twin Brook Capital Partners

Experience and relationships matter

Navigating the pandemic has highlighted the value of strong relationships and the importance of experience when it comes to underwriting and portfolio management, say Twin Brook Capital Partners' Drew Guyette, Tim Schifer and Tony Maggiore, who recently shared their thoughts on takeaways from the past 18 months and their expectations for the future.

Recommended Reads

Silicon Valley is pushing for a bigger role in the defense industry, but rank-and-file workers are skeptical. [The Wall Street Journal]

After lagging behind longtime rival AstraZeneca in the race to develop a COVID-19 vaccine, UK pharma group GSK is now watching its shares sell to an activist fund that promises a management shakeup. [Bloomberg]

Regulators are struggling to keep up as crypto's rapid move into banking leaves customers and financial markets vulnerable. [The New York Times]

Since yesterday, the PitchBook Platform added:

13

VC valuations

1968

People

516

Companies

8

Funds

See what our data software can do

Quick Takes


	The Daily Benchmark
	2015 Vintage European Debt Funds
	VC Deals
	Senegal's Wave grabs $200M Series A
	Emulate picks up $82M
	Factorial books $80M Series B
	Apriori raises $30M Series D
	DataChat banks $25M
	Fundraising
	VW plans $355M+ decarbonization fund

The Daily Benchmark

2015 Vintage European Debt Funds

Median IRR

4.70%

Top Quartile IRR Hurdle Rate

7.33%

1.12x

Median TVPI

Select top performers

AnaCap Credit Opportunities Fund III

Ares Capital Europe III

BlueBay Direct Lending Fund II

*IRR: net of fees

13 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Senegal's Wave grabs $200M Series A

Wave, a provider of mobile money services that's based in the US and Senegal, has reportedly raised a $200 million Series A led by Sequoia Heritage, Founders Fund, Stripe and Ribbit Capital at a valuation of $1.7 billion. Though similar to PayPal, Wave's platform does not require users to have bank accounts, and transactions can be facilitated via local businesses that function as agents. The funding will be used to expand into additional markets such as Uganda, TechCrunch reported.

Additional Investors:

Partech, Sam Altman

View round

View 2 competitors »

Emulate picks up $82M

Emulate has raised an $82 million Series E led by Northpond Ventures, with participation from Perceptive Advisors. The Boston-based company offers an in vitro modeling system to help drug researchers replicate and study human biology and disease. Emulate was valued at $278 million in 2019, according to PitchBook data.

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View 4 competitors »

Factorial books $80M Series B

Factorial has raised $80 million in a round led by Tiger Global. The Barcelona-based company is the developer of an HR automation platform designed to help employers manage recruitment, onboarding and other administrative operations. Founded in 2016, Factorial counts KFC and Booking.com among its clients.

Additional Investors:

CRV, Columbia Lake Partners, Creandum, K Fund, Point Nine Capital

View round

View 60 competitors »

Apriori raises $30M Series D

Apriori, the developer of a product management platform for manufacturing teams, has raised $30 million at a $280 million valuation in a round co-led by PBJ Capital and Omega Venture Partners. Based in the Boston area, the company was valued at $115 million in 2019, according to PitchBook data.

View round

View 17 competitors »

DataChat banks $25M

DataChat has raised a $25 million Series A co-led by Redline Capital and Anthos Capital. The Madison, Wis.-based company aims to democratize data science with their no-code, AI-based business intelligence platform.

Additional Investors:

Celesta Capital, Nepenthe Capital

View round

View similar company »

Fundraising

VW plans $355M+ decarbonization fund

Volkswagen intends to launch a €300 million (about $355.14 million) fund to invest in decarbonization projects and startups, CEO Herbert Diess wrote in a LinkedIn post. The German carmaker reportedly also plans to produce only electric vehicles by 2035. Volkswagen has previously invested in electric vehicle battery companies Northvolt and QuantumScape.

View details

View 71 investments »

Chart of the Day

"In H1 2021, the valuations of companies based in the UK & Ireland across all financing stages paced higher than 2020 figures. Most notably, the late-stage median came in at €15.0 million through H1 2021, 45.1% larger than the record €10.4 million in 2020. VC in the region has developed strongly during the last decade, and entrepreneurs, operators, and investors remain confident of the long-term prospects as evidenced by record capital investment and 2021 valuations in the region."

Source: PitchBook's Q2 2021 European VC Valuations Report