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The Daily Pitch: VC

September 23, 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:

Despite headwinds, the US PE middle market thrived in Q2. From exits to fundraising, our analysts break it all down.

Investment firms haven't been spared in the Great Resignation. New data from a recent J.Thelander-PitchBook survey shows why employees are quitting.

DraftKings has bid more than $22 billion for its UK peer Entain—but MGM could have something to say about the deal.

Today's Top Stories

US PE middle-market dealmaking remains red-hot

Despite several macroeconomic headwinds, middle-market PE dealmaking in the US has continued its unprecedented run, supported by continued economic recovery and significant capital availability.

In our Q2 US PE Middle Market Report, sponsored by Antares, SRS Acquiom and Baker Tilly, PitchBook analysts break down the middle-market environment of last quarter. A few key takeaways:

Add-ons continued their decade-long trend and increased as a share of PE deals, with middle-market firms pursuing specific strategies toward these acquisitions.

Even as exits to strategics lagged, attractive valuations and investor confidence led to healthy exit activity in the middle market, especially in sponsor-to-sponsor deals.

Middle-market fundraising set off at a rapid clip in the first half of 2021, as firms benefited from LPs' robust appetite for private markets exposure.

read the report

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VC, PE firms resort to salary hikes amid historic quitting spree

(Chalirmpoj Pimpisarn/Getty Images)

The ongoing tidal wave of employees quitting their jobs in search of more money and flexibility hasn't spared investment firms.

New data shows that 27% of venture capital, corporate venture capital and private equity firms lost a partner or key recruit in 2021, according to a recent J.Thelander-PitchBook survey of more than 760 respondents.

Find out more about where those who resigned went, and how compensation at VC firms changed between 2020 and 2021.

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Partner Perspectives

Analyzing opportunities for expansion-stage business software companies

In the latest edition of the Road to Next series, Deloitte examines how expansion-stage business software companies are adapting in an era of unprecedented change. Key findings include:

Analysis of how hybrid work models will affect business operations and tax implications
With a record sum of investment in the year already, how are they making capital allocation choices?
As they expand, business software companies increasingly face challenges related to evolving digital service taxes—how can they best prepare?

Read it now

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DraftKings makes $22B+ bid for Ladbrokes owner Entain

(Robert Cianflone/Getty Images)

US sports betting group DraftKings has offered to pay £16.4 billion (about $22.4 billion) for London-listed rival Entain, dwarfing an earlier bid from casino operator MGM. With assumed net debt, the deal would have a total value of about $25 billion.

Entain said DraftKings has twice bid to acquire the company, which owns bookmaker Ladbrokes. The first approach, a cash-and-stock offer of £25 per share, was rejected, but the board said it will carefully consider the new offer of £28 per share, a 46% premium to Entain's Monday closing price.

MGM abandoned its efforts to acquire Entain in January after its £8 billion offer was rejected. The pair have equal stakes in a US sports betting platform, BetMGM, set up in 2018.

In response to DraftKings' bid, MGM argued that, because of the joint venture, any deal in which Entain or its affiliates own a competing business in the US needs MGM's consent. MGM added that it would seek full control of BetMGM.

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Recommended Reads

Just weeks after the fall of Kabul, a nascent cryptocurrency economy is already establishing itself in Afghanistan. [Financial Times]

Freshworks went public this week at a $10 billion valuation. From the Indian company's 2010 founding in a warehouse to its fundraising from firms like Sequoia and Tiger Global, a look at how the customer service specialist got here. [Forbes]

A factory in Toronto is using plastic bottles to create outdoor dining structures. Why they could be the future of disaster relief. [Fast Company]

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Quick Takes


	The Daily Benchmark
	2012 Vintage Global Growth Funds
	VC Deals
	Mexico's Kavak grabs $700M at $8.7B valuation
	Hai Robotics picks up $200M+
	Flyr Labs lands $150M
	SoftBank leads $100M round for StreamElements
	Ketch secures $20M
	Exits & IPOs
	Toast raises $870M in NYSE debut

The Daily Benchmark

2012 Vintage Global Growth Funds

Median IRR

12.52%

Top Quartile IRR Hurdle Rate

23.03%

1.44x

Median TVPI

Select top performers

Trinity Hunt Partners IV

Summit Partners Growth Equity Fund VIII

Fulcrum Growth Fund II

*IRR: net of fees

17 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Mexico's Kavak grabs $700M at $8.7B valuation

Kavak, a used car marketplace based in Mexico, has reportedly raised a $700 million Series E at a valuation of $8.7 billion, making it the second most valuable startup in Latin America. The financing was reportedly led by General Catalyst, with participation from investors including Tiger Global, D1 Capital Partners, Founders Fund and SoftBank. The new financing comes less than six months after Kavak raised a $485 million round at a reported $4 billion valuation.

Additional Investors:

Spruce House, Ribbit Capital, Sea

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View 4 competitors »

Hai Robotics picks up $200M+

Hai Robotics, a China-based warehouse automation startup, has raised more than $200 million across two rounds. The Series C was led by 5Y Capital, with participation from investors including Sequoia China and Source Code Capital. The Series D was led by Capital Today and included existing investors.

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Flyr Labs lands $150M

Flyr Labs has raised a $150 million Series C led by WestCap. The company offers an AI-based platform for airlines to forecast demand and set prices.

Select Additional Investors:

JetBlue Technology Ventures, Silver Lake, Streamlined Ventures

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SoftBank leads $100M round for StreamElements

StreamElements, which offers a production platform for livestreaming and more, has raised $100 million in a round led by SoftBank. Investors including PayPal Ventures, MoreTech and Pitango Venture Capital also participated in the funding for the Israel-based company.

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Ketch secures $20M

Ketch has raised $20 million in Series A1 funding led by Acrew Capital. The Bay Area-based startup offers a platform to help enterprise customers such as Snowflake and Smartsheet manage data privacy and governance processes.

Additional Investors:

CRV, Ridge Ventures, Silicon Valley Bank, Superset

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View 5 competitors »

Exits & IPOs

Toast raises $870M in NYSE debut

Restaurant-focused tech provider Toast raised about $870 million in its initial public offering after upwardly pricing its shares at $40 apiece. The stock opened on the NYSE at $65.26, a gain of 63%, giving Boston-based Toast an initial market capitalization of over $37 billion, fully diluted. Toast's top venture capital backers include Tiger Global, with a 12.8% pre-IPO stake, Bessemer Venture Partners (12.5%), T. Rowe Price (6%) and TCV (5.5%).

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View 32 competitors »