PitchBook News - Venture debt rises in life sciences

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The Daily Pitch: VC

November 12, 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 why venture debt has grown among life sciences companies, and what makes the sector so attractive to lenders.

Energy Impact Partners' new $1 billion-plus fund will push for a net-zero carbon future.

Our Global Fund Performance Report puts dramatic returns into context with Q1 2021 data.

Today's Top Stories

Low revenue, no problem: Venture debt rises in life sciences

(Dina Belenko Photography/Getty Images)

Venture debt has grown significantly over the past year, with much of its success, and therefore much of the attention, focused on tech. But the life sciences space has also seen its venture loan book value grow, notching $4.5 billion in aggregate value last year—despite zero- to low-revenue companies making up a large portion of the privately held portfolios.

Our latest analyst note takes a deep dive into the rise and risk of venture debt among life sciences companies, exploring the reasons behind the growth and what makes the sector so attractive to lenders.

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Energy Impact Partners amasses $1B+ fund for climate solutions

(Yaorusheng/Getty Images)

A year of bold climate commitments, 2021 has seen a wave of dealmakers step up to the plate to try to save our planet with enormous amounts of money.

The latest example is Energy Impact Partners (EIP), an investment firm focused on sustainable energy startups, which announced Thursday the close of its latest flagship fund at more than $1 billion.

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Partner Perspectives

Digging deeper into Atlanta's ecosystem

The startup ecosystem in Atlanta has grown significantly over the past decade. VC activity is already in record territory this year, despite a lack of prominent VC firms in the city. Atlanta has developed a reputation for bootstrapped startups and cost-conscious business plans. The city's biggest success story, Mailchimp, never took a dollar of venture capital and was acquired this year for $12 billion. One of its newest unicorns, Calendly, got its start in a tech sharing space.

In an ongoing partnership with PitchBook Data, BridgeBank has released Markets to Watch: Atlanta. The city doesn't get the accolades that other ecosystems do, but the market is thriving nonetheless, attracting capital from blue-chip Silicon Valley firms and achieving impressive exits for many years.

To download the report, click here.

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VC, PE funds show staggering returns to kick off 2021

Venture capital funds posted an eye-popping horizon IRR of 52.5% in Q1, followed closely by PE's return of 47.6%. The one-year figures look especially dramatic as the comparison period started on the upswing following the dismal Q1 2020. Other key takeaways from our latest Global Fund Performance Report include:

Both PE and VC funds significantly outperformed the S&P 500 for the year ended March 31. Yet a reversion could be possible as private market performance returns to normal, as it is historically less extreme than that of the public markets.

While unrealized VC returns have been less frequently negative in the past five years than overall private capital figures, the past five quarters have shown a massive amount of unrealized contribution to returns.

Through Q1 2021, private cash flow distributions had already reached 31.4% of full-year 2020 distributions. If that pace continues, 2021 could be the second year in a row with record cash returned to LPs.

Real estate funds appear to have lagged again going into Q2, as the headwinds for retail and office space combine with tailwinds for industrial and storage to provide mediocre returns.

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Edtech backers rewarded as IPO pipeline heats up

(vladwel/Getty Images)

Edtech company IPOs used to be practically nonexistent—until this year. Coursera, Duolingo and Udemy all debuted on the public markets, each with a multibillion-dollar market capitalization.

These are significant outcomes for any Wall Street newcomer, but especially so for a sector that had sometimes struggled to gain wide acceptance among venture capitalists before the pandemic.

Edtech continues to boom now that most schools and universities are again meeting in person. During the first 10 months of 2021, VCs have funneled more capital into the sector than in all of 2020, signaling that more edtech names could soon enter the IPO pipeline.

Recommended Reads

For electric vehicles, at-home charging is much cheaper than gasoline, but how much does it cost non-homeowners to "fill up"? [The Wall Street Journal]

Why India's booming stock market is attracting both local novices and global investors. [The New York Times]

How a Silicon Valley billionaire's hopes of using capital gains to revitalize impoverished local economies turned into a tax break for the wealthy. [Bloomberg]

Since yesterday, the PitchBook Platform added:

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VC valuations

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Quick Takes


	The Daily Benchmark
	2019 Vintage Global Real Assets Funds
	VC Deals
	Mexico-based Stori banks $200M
	Tiger Global leads $41M round for Moov
	Immersive therapeutics startup snags $36M in Series B financing
	Atomic picks up $25M
	Snowflake backs $25M Series B for Habu
	Exits & IPOs
	Autonomous truck tech maker debuts on market after SPAC merger

The Daily Benchmark

2019 Vintage Global Real Assets Funds

Median IRR

11.00%

Top Quartile IRR

28.90%

0.99x

Median TVPI

Select top performers

North Hudson Fortuna III

Scout Energy Partners V

Kimmeridge Energy Fund V

*IRR: net of fees

36 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Mexico-based Stori banks $200M

Stori, a Mexican consumer fintech startup, has raised a $125 million Series C co-led by GGV Capital and GIC, with participation from other investors including General Catalyst, Goodwater Capital and Lightspeed. The startup has also collected $75 million in debt financing from Community Investment Management. The company is focused on expanding access to credit cards for underserved populations in Latin America.

Additional Investors:

Tresalia Capital, Vision Capital, BAI Capital, Source Code Capital

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Tiger Global leads $41M round for Moov

Moov has raised a $41 million Series A led by Tiger Global, with support from Valor Equity Partners, Avenir Growth Fund and existing backers. Based in Tempe, Ariz., Moov offers a B2B marketplace for pre-owned semiconductor manufacturing equipment. The new funding will be used to help the company expand its domestic and global presence.

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Immersive therapeutics startup snags $36M in Series B financing

AppliedVR has raised a $36 million round from F-Prime Capital, Jazz Venture Partners, Sway Ventures and SVB Ventures. The startup's VR tech is used in immersive therapeutics that address chronic pain and other conditions. Founded in 2015, AppliedVR was valued at nearly $68 million this past February, according to PitchBook data.

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Atomic picks up $25M

Atomic has raised a $25 million Series A co-led by QED Investors and Anthemis, with participation from Softbank and Y Combinator. The San Francisco-based company provides an API that's designed to help financial institutions offer investment products to their customers.

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Snowflake backs $25M Series B for Habu

Habu, a provider of data clean room software, has raised a $25 million round led by Wing Venture Capital, with support from Snowflake Ventures, Norwest Venture Partners, Ridge Ventures and Super{set}. Operating out of San Francisco and Boston, the startup's tech allows customers to safely leverage data and insights across distributed data platforms.

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Exits & IPOs

Autonomous truck tech maker debuts on market after SPAC merger

Embark Trucks, a VC-backed developer of autonomous truck technology, debuted on the Nasdaq at a $5 billion valuation following its reverse merger with blank-check company Northern Genesis Acquisition Corp. II. The combined company, which changed its name to Embark Technology, was down roughly 12% at market close. Embark Trucks has received past funding from Tiger Global, Mubadala, Maven Ventures, Sequoia and other investors.

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Chart of the Day

"Private equity exit value in the Nordic region has had a remarkable opening three quarters. Through Q3 2021, €51.3 billion worth of exits closed in the region, hitting a new annual high. To put into context the region's exit value performance, the next-highest annual figure was €28.9 billion in 2018."

Source: PitchBook's Q3 2021 European PE Breakdown