PitchBook News - Why European PE is riding high

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The Daily Pitch: VC

October 18, 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 the key trends driving Europe's PE ecosystem to record highs.

As the SPAC boom fizzles, VCs are leading a new kind of charge in the electric vehicle space.

Today's Top Stories

European PE rides the wave to record-breaking numbers

European private equity has reached a fever pitch, with deal activity already hitting a new annual record in 2021. The three largest-ever quarters for PE occurred this year, driven partly by the increasing vaccination rate, massive levels of dry powder and sellers wanting to take advantage of the frothy valuation environment.

Our Q3 2021 European PE Breakdown examines the key trends shaping the continent's PE ecosystem, breaking down activity across deals, exits, fundraising and countries. Highlights of the report include:

After three outstanding quarters, deal activity is expected to slow as sponsors near the completion of their dealmaking catch-up after 2020's down year.

Q3's exit volume reached a new quarterly peak, with 425 closed deals worth around €126.4 billion, marking year-over-year increases of 96% and 202.8%, respectively.

Despite an explosive start to the year, fundraising activity cooled slightly in Q3, putting 2021 on pace for the lowest annual fund count total since 2012.

read the report

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As EV blank-check boom fades, VCs double down on electrification startups

(Marija Obradovic/Getty Images)

A year ago, SPAC dealmakers created a furor of excitement for electric vehicle makers, striking pacts to take more than a half-dozen companies public with dizzying speed. Now venture capitalists are leading a new kind of EV charge.

VC investment in the EV sector hit $17.8 billion in the first nine months of 2021, up from $10.6 billion last year.

It's no longer about finding the next Tesla—much of the money is going to startups that support electrification in ways other than making vehicles.

Many new EV stocks have performed poorly, but they have also driven new deals by giving VCs a clearer line of sight to future exits.

Recommended Reads

As other central banks raise interest rates, the Federal Reserve and the European Central Bank are betting against the inflation surge. [The Wall Street Journal]

How the cables are being laid to knit together the world's electricity grids. [The Economist]

Pedro Guazo's plans for the UN pension fund's billions. [Institutional Investor]

Quick Takes


	The Daily Benchmark
	2018 Vintage North American Venture Funds
	A message from RBC Capital Markets
	How will private equity strategies drive the market moving into 2022?
	VC Deals
	Culture Biosciences raises $80M
	Clarifai lands $60M Series C
	Zeus Living brings home $55M
	Spot AI launches with $22M Series A

The Daily Benchmark

2018 Vintage North American Venture Funds

Median IRR

27.70%

Top Quartile IRR Hurdle Rate

43.10%

1.36x

Median TVPI

Select top performers

Inter-Atlantic Ivy

Town Hall Ventures

Polaris Growth Fund I

*IRR: net of fees

60 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

A message from RBC Capital Markets

How will private equity strategies drive the market moving into 2022?

M&A volume has reached record levels driven by a few catalysts, including an accommodating low-rate environment, faster-than-anticipated economic recovery and sponsors putting significant private capital to work. According to RBC's co-head of Global M&A, Vito Sperduto, "In the first half of 2021, about a quarter of the deals $1 billion or more were private equity acquisitions. We also had almost half a trillion dollars of new LBOs in the first half of the year."

What types of deal structures are evolving in this environment? Will convergence continue to drive M&A? How are PE firms diversifying across sectors?

See why more complex PE deals are the future, and what the M&A outlook is for 2022, with insights from RBC Capital Markets' industry experts.

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VC Deals

Culture Biosciences raises $80M

Culture Biosciences has raised an $80 million Series B led by Northpond Ventures. Based in the Bay Area, the startup's platform allows scientists to remotely design, monitor and analyze bioreactor experiments to be run in Culture's lab. Existing investors including Craft Ventures, E14 Fund and Box Group also participated in the funding.

View round

View 13 competitors »

Clarifai lands $60M Series C

Clarifai has raised $60 million in a round led by NEA. The New York-based company is the developer of an AI-based visual recognition platform designed to interpret unstructured images, videos and audio data.

Select Additional Investors:

Menlo Ventures, Lux Capital, Union Square Ventures

View round

View 41 competitors »

Zeus Living brings home $55M

Zeus Living has raised a $55 million Series B led by TI Platform Management. The company is a provider of furnished housing intended for short-term business and personal travel. Zeus Living was valued at $110 million in May 2020, according to PitchBook data.

Select Additional Investors:

CEAS Investments, Initialized Capital Management

View round

View 5 competitors »

Spot AI launches with $22M Series A

Spot AI has raised $22 million in a round led by Redpoint Ventures, with support from Bessemer Venture Partners. Based in the Bay Area, the company is the developer of a video intelligence platform that allows businesses to easily access, search and share security footage.

View round

View similar company »

Chart of the Day

"Mega-deal activity marched onward in Q3 as the YTD number of $1 billion+ deals surpassed 2020 by both number and value. In an environment of low interest rates, high asset prices, a preponderance of mega-funds ($5 billion+), and record levels of dry powder, PE firms are emboldened to pursue massive deals."

Source: PitchBook's Q3 2021 US PE Breakdown