PitchBook News - 'What crisis?'

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The Weekend Pitch

October 10, 2021

Presented by Masterworks

(Drew Sanders/PitchBook News)

The UK's so-called "Winter of Discontent" in 1978-79 is a period that lives in infamy for Britons. It was a time of ongoing fuel shortages and bouts of panic buying as a series of strikes gripped the country. At the time, some accused Prime Minister James Callaghan of being blind to the calamity. The Sun newspaper headline that famously lampooned his denial read, "Crisis? What crisis?"

Déjà vu, anyone? While strikes are no longer a factor, supply-chain snags certainly are. The gas station queues are back; so are the empty store shelves. And like Callaghan before him, today's ever-upbeat Prime Minister Boris Johnson fails to share the nation's collective sense of foreboding.

At least this time, however, the PM isn't alone in his optimism. Private equity dealmaking in the UK has thrived amid this adversity, as a surge in buyouts marks a turning point for the asset class and its role in the British economy. For many investors, the question once again is: "What crisis?"

I'm Andrew Woodman, and this is the Weekend Pitch. You can reach me at andrew.woodman@pitchbook.com or follow me on Twitter via @adwoodman.

The UK isn't alone in its economic woes today; however, its recovery is expected to be slow. In 2020, world real GDP fell by 3.6%, as the pandemic upended trade, investment flows and unemployment globally. While the revival has begun—in Q2 2021, the UK's GDP rose 5.5%—the country's economy is still 3.3% smaller than what it was before the pandemic, putting its recovery behind other G-7 economies, including France, Canada, Japan and the US.

Events of the past few weeks in the UK underscore a rocky road ahead. The country is struggling from a crippling shortage of around 100,000 truck drivers. This is a result of both pandemic disruptions and a scarcity of foreign labor, caused by Brexit immigration restrictions. Dairy farmers have been forced to pour out undelivered milk, and fuel deliveries are being delayed—a problem made worse by panic buying.

But the rate of PE deals in the UK couldn't tell a more different story.

Quote/Unquote

(Mykyta Dolmatov/Getty Images)

"... we underestimated the legal complexities ..."

—Jacob Claerhout and Boris Gordts, co-founders of NFT startup Visionrare, explaining why they decided to shut down a marketplace for "fantasy startup investing" this week.

The service, which was in public beta for a little over a day, let users buy and sell fake shares of startups in the form of non-fungible tokens. The Visionrare founders said they were pivoting to a free-to-play version of the fantasy sports-style investing game.

Datapoints

(Tim E. White/Getty Images)

Israeli startups have raked in $7.45 billion from VC investors in 2021, a 49% jump over last year’s total.

Leading the way for investors was equity crowdfunding platform OurCrowd, which topped our list of the most active VCs in Israel so far this year.

Tel Aviv-based TLV Partners, Vertex Ventures Israel and Bessemer Venture Partners have also each done more than 10 deals in the country in 2021.

The largest deals went to ecommerce marketing platform Yotpo and facial recognition technology company AnyVision, each of which took in more than $200 million.

Deal Flow

As the auto industry races to a lithium-ion future, the question of how to recycle valuable materials from spent batteries looms large. Investment in battery recycling has skyrocketed in 2021, largely on the back of Redwood Materials' $700 million Series C.

The market for spent batteries is just $2 billion now, but it's expected to grow at a CAGR of 33.8% through 2030. The industry may also benefit from government support, as nations seek to reduce their exposure to foreign supply chains in critical industries.

Did you know ...

…That Andreessen Horowitz has participated in eight deals of $100 million or more for crypto startups so far this year?

The rounds also reflect the growing geographic diversity of its crypto portfolio, which includes companies based in India and Vietnam.

We built an interactive bubble chart to track a16z's largest crypto deals this year by country.

Recommended reads

If you have a modest income but access to loads of cash, New York City has an apartment ownership program that's right up your alley—even if it wasn't meant for you at all. [Bloomberg]

As failing companies ditch vessels too expensive to repair or too difficult to sell, crews are being abandoned on ships in record numbers without pay, food or a way home. [The Wall Street Journal]

How Ozy Media, a startup with $70 million in funding and a star-studded list of investors, collapsed in six days. [Fortune]

As spending comes roaring back and supply can't keep pace, scarcity has replaced abundance as the biggest impediment to global growth. [The Economist]

An international team of economists is rethinking the discipline with a new textbook that will "teach economics as if the last thirty years had happened." [The New Yorker]

The global asset management industry survived the pandemic unscathed, notching its best growth in a decade. [Institutional Investor]

This edition of The Weekend Pitch was written by Andrew Woodman, Priyamvada Mathur and James Thorne. It was edited by Alexander Davis, Kate Rainey and Sam Steele.

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PitchBook News - 'What crisis?'

Quote/Unquote

Datapoints

Deal Flow

Did you know ...

Recommended reads

Older messages

A glaring need for electric vehicles

Strong fund performance carries into 2021

A16z's deep crypto pockets

Assessing the UK's new SPAC rules

Real estate funds take a notable dip

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