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Also: Where climate tech investment is headed; Fintech reaches unfathomable levels of activity; Retail healthtech mega-deals slow; 7 PE predictions...
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The Research Pitch
December 18, 2021
Our US private equity analysts will be discussing their 2022 outlook in a Jan. 6 webinar, covering predictions on emerging strategies and next year's hottest sectors.

Register here
Winning the pitch: A guide to GP fundraising
I spent the better part of 25 years researching investment managers both as an institutional investor and as an investment consultant.

Through those experiences and learning investment principles from the CFA and CAIA programs, I formulated ideas on the many facets that ought to be taken into account when considering which investment managers to hire.

The very last facet is past performance, as it should be used as a verification of views formed throughout the rest of the due diligence process.

Enter my latest note, titled PitchBook's Guide to Your Pitch, which provides direction to GPs coming to market—the key piece of advice being to better know yourself.
 
"Pricing" is one of the six Ps to consider when fundraising.

In talking to hundreds of asset managers about their offerings over the years, I've developed a good sense for what a good pitch looks like, and most experienced LPs would say the same.

Some of the worst pitches fall in the category of being too focused on aspects like sourcing deals while providing little in the way of explaining how the firm will be managed, what the guardrails will be around fund construction, or why the market that will be addressed is ripe to exploit.

By working through the "Six Ps" framework provided in the note, GPs should be better prepared to respond to the due diligence questions potential investors will ask.

One other key takeaway from the note is that most LPs do not have a correct answer in mind when they ask their questions.

The collective responses do need to feel like they are connected and true to the GP under consideration and they should not be contradictory or overstate the case, concepts better explained through examples in the paper.

LPs understand that emerging managers are operating with different constraints than more experienced managers, but GPs need to be forthright about those challenges and how they intend to handle them.

Finally, to harp on one of my biggest pet peeves, PLEASE do not ever present cumulative years of experience for your team. It provides no meaningful information and makes me cringe every time I see it.

Click to download the full note: PitchBook's Guide to Your Pitch

Feel free to reach out with any questions or feedback, or if you would like to discuss the research.
 
Best,

Hilary Wiek, CFA, CAIA
Lead Analyst, Fund Strategies & Performance
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7 predictions for US private equity in 2022
2021 blew the doors off the previous US PE deals and exits records, as buyout and growth firms deployed capital and monetized portfolio investments at lucrative multiples.

Heading into 2022, we expect another bullish year but believe some areas will flourish more than others.

Mega-funds ($5 billion+), for example, are expected to have a particularly noteworthy year after so many massive funds quickly spent down dry powder in 2021.

Other predictions relate to mid-market software dealmaking, exiting healthcare services platforms, aggregate public PE firm AUM growth, and more.

To see how we fared with our 2020 predictions and read up on all our new predictions, please click to download our 2022 US Private Equity Outlook.

As always, please feel free to reach out with any feedback and questions.
 
Best regards,

Wylie Fernyhough
Senior Analyst, Private Equity
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Market Updates
US PE middle-market activity has rewritten the record books this year.

Dealmaking has largely been driven by firms' desire to capitalize on booming economic growth and low interest rates before the macroeconomic tide turns.

Indeed, inflation remains top of mind for middle-market managers, with increased costs for labor, raw materials and energy driving down earnings growth in industries like manufacturing.

Our new US PE Middle Market Report unpacks all of the latest data, including a remarkable year for exits as well as strong fundraising and fund performance:
download the free report
 
Thematic Research
Archetypal Investing into Climate Tech

The 2021 UN Climate Change Conference (COP26) brought forth outcomes that are particularly relevant for VC and private capital markets.

Our latest climate tech research analyzes the post-COP26 roadmap and also discusses four archetypal investment strategies, as laid out by the Glasgow Financial Alliance for Net Zero.
 

The leading areas of climate tech investment will likely include:
  • Grid and PV power in southern world countries
  • Clean industry
  • The built environment
  • Battery and energy storage
read the free research note
 
2022 European Private Capital Outlook

European VC deal value will hit a record in 2022, but VC-backed public listings will decline in count and value.

Global carveout deal value will hit a new high of €200 billion next year.

More than a dozen companies that completed a SPAC merger in 2021 will be taken private again in 2022.

These are just a few of the predictions made by our senior EMEA private capital analysts for the coming year. There's much more to unpack in the full list:
download our free outlook
 
VC in Southern Europe

Led by Spain, Italy and Portugal, venture capital activity in Southern Europe has typically lagged behind other regions.

But the ecosystem is gathering momentum, as 2021 is set to nearly double last year's record for deal value.

A number of tailwinds propelling Southern Europe include a favorable climate, proximity to the MENA region, favorable taxation rates in some smaller territories, and well-regard business schools and conferences drawing in talent.

Our research serves as a primer for VC in Southern Europe, exploring these key factors, future considerations for the ecosystem, and more:
download the free research note
 
Emerging Tech Research
FINTECH: VC-backed exit value for fintech startups worldwide has passed $244 billion this year.

For context, the combined exit value from the start of 2010 to the end of 2020 was $125 billion.

Indeed, fintech activity has been off the charts; our analysts break down all the record-breaking trends in our latest research, while also identifying a few emerging opportunities:
  • Autonomous finance solutions are expanding for financial planning and analysis.

  • Startups are racing to support real-time payments.

  • Institutional crypto custodians are offering an important service to furthering crypto adoption.
read an executive summary
 
RETAIL HEALTHTECH: VC funding for consumer-focused healthtech startups has declined for two straight quarters following a frenzied start to the year.

Mega-deals, in particular, have noticeably fallen off.

Even still, 2021 has broken several annual records as VC-backed companies find new ways to improve personal health & wellness at low costs and in innovative ways. Our analysts have curated the latest data and identified emerging areas of interest:
  • Insurers are adopting utilization-based reimbursement models for high-cost digital health solutions.

  • Applications are leveraging continuous glucose monitoring to develop personalized insights.
read an executive summary
In the News
Dylan Cox, our head of private markets research, talks SPACs
Our insights and data featured in the press:
  • Discussing SPACs and the outlook for private market valuations, particularly the impact of "valuation agnostic" investors and "performance chasing." [CNBC]

  • Assessing the challenging road ahead for Rivian's CEO: "Rivian has been incredibly successful at curating the investors they've brought in." [WSJ]

  • Investment in projects led by women has registered a sustained increase since the last four months of 2020. [Entrepreneur]

  • Why accelerating inflation and the potential for a more hawkish monetary policy environment next year could mean the number of PE-backed listings will slow. [Investors Chronicle]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.
Deal Commentary
AI and IoT analyst Brendan Burke weighs in on Samsara's VC lifecycle after the company went public in an IPO that valued the company at over $10 billion:

"Samsara captured market share in commercial vehicle telematics by raising VC funding at an unprecedented rate.

"As of its Series F, the company achieved the highest pace of VC funding of any pure-play IoT company we have tracked, measured by total VC raised per years since founding.

"Samsara's founding team parlayed their sale of Meraki to Cisco into a rapid series of early-stage funding rounds by leading VC firms, particularly Andreessen Horowitz.

"Using this funding, the company found a sweet spot in vehicle telematics and driver safety detection.

"By shifting video processing from the cloud into the vehicle, the company has become the Tesla of commercial third-party telematics, a market that we estimate will reach $33 billion in 2021."

 
Brendan Burke

Senior Emerging Technology Analyst
AI/ML & Internet of Things
ICYMI
Highlights from our other recent research:

Market updates Thematic research Emerging Technology Research Coming next week (subject to change)
  • US VC Outlook for 2022 (sneak peek)
  • Emerging Technology Outlook for 2022
  • Established PE Healthcare Provider Plays
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