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In today's Daily Pitch, you'll find:
- US VC valuations are on the rise, as later-stage investors look to back younger startups, and competition for seed-stage companies increases.
- VCs who backed direct-to-consumer specialists Allbirds and Warby Parker have something to celebrate, but their success may not spawn a wave of investments in the DTC space.
- An analysis of how electric taxi startups are leveraging emerging technologies that could shake up the ridehailing industry.
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US VC valuations continue their ascension
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Valuations of VC-backed companies continued their dizzying climb across most stages in the third quarter.
PitchBook's latest US VC Valuations Report is chock full of data and must-read analysis regarding how startup valuations have changed amid the frenzied dealmaking of the last few quarters. Key takeaways include:
- Early-stage VC is the strongest segment of the venture lifecycle in terms of valuation growth, as late-stage and growth investors look to back younger companies. Our analysis shows that valuations at this stage more than double between rounds on an annualized basis.
- Increased competition for the most promising seed-stage startups has pushed the pre-money top-quartile valuation to $15 million, creating an unprecedented divide of $10 million between top- and bottom-quartile seed-stage valuations.
- While late-stage valuations declined slightly quarter-over-quarter, half of all late-stage rounds in the last four quarters raised new capital at more than double their previous valuations.
- Exit demand likely reinforced VC valuation growth. Public listing step-ups rose by 1.8 times, while the median valuation step-up for acquisitions swelled to 2.8x, the highest increase on record.
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Why the next Warby Parker and Allbirds might not be backed by VC
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| (the_burtons/Getty Images) |
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VCs who backed direct-to-consumer specialists Allbirds and Warby Parker have something to celebrate. Both companies had successful public market debuts.
Such wins in a particular sector are often followed by a wave of venture investments into similar types of startups. But this is unlikely to be the case for DTC companies.
- Up until several years ago, VCs were happy to write sizable checks to all types of startups that sold goods online. But more recently, it became increasingly apparent that the DTC business model isn't as cost-effective and scalable as initially thought.
- VCs have been more reluctant to invest in DTC companies amid rising customer acquisition costs. And a number of recent high-profile flops in this sector have not helped their outlook.
- Meanwhile, DTC companies are embracing a new motto: become profitable and possibly build without VC.
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A message from the National Science Foundation
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The Bee Corp is combining infrared imaging and data analytics to provide insights about beehive populations using the thermal signature of bees.
The Bee Corp (NSF-1926806) is one of hundreds of deep tech startups funded annually by the National Science Foundation, a government agency that plays a central role in accelerating discoveries into the marketplace.
Each startup can receive up to $2 million to support translational research and development. NSF helps teams navigate the earliest stages of technology translation, investing roughly $200 million annually in startups. In the last five years, these companies have gone on to raise billions in follow-on capital, and the portfolio has had 100-plus exits.
Learn more about NSF funding at seedfund.nsf.gov. |
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The future of taxis is electric
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| (bubaone/Getty Images) |
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The ridehailing industry is facing growing regulatory pressure to decarbonize, presenting a disruptive threat to incumbents such as Uber and Lyft that do not own and operate electric vehicles.
This has led to a new class of electric taxi startups that leverage e-mobility hubs and emerging technologies such as fleet management software, charging stations and battery storage to maximize vehicle use and improve unit economics.
Our recent analyst note details how e-mobility services utilizing EV fleets and full-time drivers could take over the current outsourced car and driver model. |
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Rivian set for $77B+ Wall Street debut
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Rivian is going public valued at more than $77 billion on a fully diluted basis after the electric vehicle maker priced its IPO above its estimated range at $78 a share. The stock begins trading today on the NYSE.
- That valuation is nearly 2.8 times the reported $27.6 billion that Rivian was assigned earlier this year in the private market. The blockbuster deal raised about $12 billion in capital after the company increased the price twice from its initial range of $57 to $62, the Journal reported.
- Rivian's top shareholders are Amazon, with a pre-IPO stake of 22.4%, along with T. Rowe Price (18.8%), Saudi Arabia's Oryx Global (15.9%), Ford (14.4%) and the Manheim Investments arm of Cox Enterprises (5.5%). Before launching its IPO roadshow, Rivian also lined up anchor investor commitments in a deal with Coatue, Franklin Templeton, Amazon and T. Rowe Price, the Journal reported.
- PitchBook mapped out a visual breakdown of Rivian's private investing profile in this interactive infographic.
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Meet the managers and holdings behind top university endowments
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| MIT was among the universities with top-performing endowments. (Maddie Meyer/Getty Images) |
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Venture capital and private equity have driven blockbuster returns at university endowments in the 2021 fiscal year. But buried in that news are a few surprises.
- The top performers weren't the storied names that typically make headlines. Instead, Washington University in St. Louis and Bowdoin College topped the list.
- A glimpse into the assets of these often secretive LPs reveals that the flood of tech IPOs has left endowments with large, liquid holdings in newly public companies.
- David Swensen, the late Yale investment chief, was a mentor to two of the managers of the top five funds.
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In-person shopping is still attracting significant investment as tech that can count crowds, track foot traffic and follow local shopping habits promises high returns. [The New York Times]
Why the SEC is looking to increase transparency in the private markets. [Institutional Investor]
Morgan Stanley hopes to offer stakes in private startups to its wealthiest customers. The price of admission? At least $20 million in assets. [The Wall Street Journal] |
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Since yesterday, the PitchBook Platform added:
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16
VC valuations
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1799
People
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459
Companies
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24
Funds
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2015 Vintage Global Debt Funds
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Many deals to be done, but dealmakers need to avoid overpaying
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According to the Litera Annual M&A Report, 2021 was a year of two halves, with the second half rebounding after the initial uncertainty of the pandemic outbreak.
Furthermore, the market is currently very competitive due to several factors, including low interest rates, a stock market rebound and stockpiles of private capital—all of which increase pressure, urgency and risk levels for corporate lawyers.
Download the report to learn the answers to:
- What is driving the recovery?
- What can dealmakers expect during the next 12 months?
- What are the priorities and motivations going forward?
- What were the median deal sizes in 2020, and how do they compare with 2021?
- What's going on with valuation figures?
Download your complimentary copy today |
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Fraud detection startup nabs $450M
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| Socure has raised $450 million at a $4.5 billion valuation in a round co-led by Accel and T. Rowe Price. The New York-based company offers an identity verification and fraud detection platform. Socure was valued at $1.3 billion with a $100 million round in March. |
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Sequoia backs $250M round for Collibra
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| Collibra has raised a $250 million Series G co-led by Sequoia and Sofina, valuing the company at $5.25 billion. Based in Brussels, Collibra is the developer of a cloud-based data intelligence platform that's used by those in sectors like manufacturing, healthcare and government. It plans to use the funding in part to expand partnerships with AWS, Google Cloud, Snowflake and Tableau. |
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Arbor Biotechnologies raises $215M to treat genetic diseases
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Sirona Medical hauls in $40M
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Datafold banks $20M Series A
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PitchBook has partnered with Wall Street Prep, the trusted training provider for the world's top I-banks, PE firms, Fortune 1000 companies, and business schools, to help you get into the data when you enroll in their Premium Financial Modeling package.
As you work your way through the course modules, access the PitchBook Platform to see comprehensive private and public market data in action. With detailed data at your fingertips, explore PitchBook's tools for understanding valuations, such as M&A comps, venture valuation comps, public comps and fund data.
Learn more |
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Sweetgreen targeting over $300M in IPO
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Indonesia's Alpha JWC Ventures collects $433M for third fund
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| Jakarta-based Alpha JWC Ventures has closed its third fund on $433 million, with support from global and regional backers. The vehicle, which will be used to target tech deals, has already made seven investments in financial tech, B2B SaaS and SME solutions in Indonesia, Singapore and Vietnam. Founded in 2015, Alpha JWC Ventures closed its second vehicle on $143 million in 2019; it has used the capital to invest in 30 companies. |
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