PitchBook News - PE's inconvenient truth

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The Weekend Pitch

November 21, 2021

Presented by Masterworks

(Drew Sanders/PitchBook News)

Not for the first time, the relationship between politicians and their corporate connections has come under scrutiny.

The latest focus has been the more than 30 members of the British Parliament who supplement their public income by moonlighting as consultants in the private sector and the potential conflicts of interest that come with it.

Ethical gray areas aside, these relationships are not only legal but common practice, and not just in the UK. For better or worse, however, the ensuing uproar has raised the public's ire about the coziness between public servants and the private sector, and the whole affair could impact the private equity industry and investors' attempts to do business with key decision-makers.

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

Lawmakers' moonlighting affair is an inconvenient truth for private equity

The roots of the latest furor begin with Owen Paterson, an MP who last month was caught breaking lobbying rules for members of Parliament while working as a consultant for Randox, a drug company that was paying him £8,333 (about $11,200) a month for 16 hours of work. Randox had won a lucrative contract to provide the government with COVID-19 test kits during the pandemic. Paterson was also paid £12,000 a year from a VC-backed food processing company, Lynn's Country Foods.

Under parliamentary rules, MPs are permitted to have second jobs, as long as it is disclosed, but they can't lobby on behalf of their employers. As such, the Parliament's committee on standards recommended a 30-day suspension for Paterson, a member of Prime Minister Boris Johnson's Conservative Party, for what it called an "egregious case of paid advocacy."

Johnson's Teflon-like quality means that his government has been able to shrug off much bigger scandals than this. As such, Paterson's actions would have likely been forgotten had he accepted the recommended punishment. Unfortunately, Johnson decided to try and shield his colleague with an ill-advised attempt to retroactively change the rules around lobbying.

Quote/Unquote

"One day does not decide what our future is."

—Paytm founder and CEO Vijay Shekhar Sharma speaking to Reuters after stock of the Indian digital payments company tumbled more than 27% Thursday in its debut on the Bombay Stock Exchange.

Deal Flow

Beverage robots have the potential to help restaurants streamline operations, maintain target service levels and reduce wastage costs. This nascent market within the hospitality industry has recently garnered attention due to labor shortages and a rise in consumer demand for personalized and contactless services.

Our recent analyst note on the topic tracks 47 VC-backed beverage robot providers, including company spotlights on Botrista, Somabar and Cafe X. As of mid-October, investors had funneled more than $104 million into the sector, according to PitchBook data.

Datapoints

Numerous mega-deals throughout the year have uplifted US VC valuations to new levels. The crypto/blockchain vertical is commanding the largest valuation step-up so far in 2021, according to PitchBook data.

Cybersecurity comes at a close second, as investments in the sector have exploded amid a recent spate of high-profile cyberattacks.

Did you know ...

(Vieriu Adrian/Getty Images)

… That the University of Toronto and Tsinghua University in Beijing are rocketing up the list of schools producing the most successful entrepreneurs?

Each year, PitchBook ranks undergraduate and MBA programs by the number of venture capital-backed founders among their alumni.

See who else made our list

Recommended reads

Nuclear reactors have already altered the course of one century. Now some experts are hoping to re-invent them for a green future. [Time]

Zoom CEO Eric Yuan used to think the idea of selling ads on the video conferencing platform was tacky. Then he changed his mind. [The Information]

Many big brands don't appear to be concerned about passing along price increases to their customers. Should they be? [Fortune]

Why hostility toward private equity's push into property may be misguided. [The Economist]

How a so-called financial flash mob is trying to raise $20 million for a rare copy of the US Constitution. [The New York Times]

Most tech companies offer some sort of paid parental leave, but the stigma around it remains—especially for men. [Protocol]

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

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PitchBook News - PE's inconvenient truth

Lawmakers' moonlighting affair is an inconvenient truth for private equity

Quote/Unquote

Deal Flow

Datapoints

Did you know ...

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