PitchBook News - Small funds, big opportunity

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The Research Pitch

April 9, 2022

New Q1 VC data! US venture deal value over the first three months of the year declined 8% on an annual basis and 26% compared to Q4 2021.

On the back of poor public market performance for growth assets, IPOs of VC-backed startups neared a complete halt.

Our Q1 2022 PitchBook-NVCA Venture Monitor comes out next week, but to give you an early look, we've published key high-level datasets across US VC dealmaking, valuations, exits, fundraising, and more:

Download the data

VC micro-funds flourish in a market where everything is getting bigger

Within an industry where larger funds are growing more in vogue, US VC funds of under $50 million have continued to proliferate.

In 2021, 339 of these micro-funds were closed, a new record number, collectively receiving $5 billion in commitments.

While the aggregate amount raised by these small vehicles since 2006 doesn't even match half of SoftBank's first Vision Fund, this group wields greater power over the market than almost any other.

Not only are micro-funds largely responsible for launching companies into the venture pipeline, but smaller funds play vital roles in the development of local ecosystems and provide avenues for venture exposure to smaller LPs and emerging managers.

The rise of seed deals and micro-funds is very correlated.

Cash flows from micro-funds also show positive net distributions since 2020, furthering incentives for all parties involved.

But the market has changed in recent years. … Firms raised 63 mega-funds of $500 million+ in 2021. … The median seed deal size has continued to rise, passing $2 million last year. … Valuations have perpetually increased.

All while the median micro-fund size has stayed largely the same.

The growth of micro-funds despite these challenges shows the unique opportunity set that they provide to the market—and that the benefits of micro-funds remain widespread.

For more data and analysis, click to download the free research: Micro-Funding Opportunity

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

Best,

Kyle Stanford, CAIA
Senior Analyst, Venture Capital

Thematic Research

Q1 2022 SPAC Update and Performance

Companies that have completed the deSPAC process have significantly underperformed the S&P 500, with the majority of that underperformance occurring during the last year.

The recent rout in public markets has steepened the rate of loss for these recently public companies, but the initial slide in performance started in early 2021.

Click for more data from our new deSPAC Index.

PitchBook's new deSPAC Index has posted a decline of 48% since 2018, as well as a 36% drop since the beginning of 2022, relative to the S&P 500's 59% gain since 2018 and 11% decline in YTD 2022.

Relatedly, SPAC activity in Q1 reached the lowest point since early 2020, with only 78 listings and the median deal size cut in half compared to last year:

download the free research

Private Equity in the European Insurance Sector

The insurance subsector has accounted for the bulk of European PE financial services deal activity over the past decade, especially insurance brokers.

PE deal volume for insurance brokers has increased 8.5x from 10 years ago and hit a record in 2021—with add-ons accounting for 84% of last year's activity.

To launch our dedicated PE coverage in the financial services sector, we dive into the factors driving this boom, including robust recurring revenues, sticky and long-term customer relationships, asset-light business models, and heavily fragmented markets.

We look into what the future holds and the tech trends poised to transform the space:

download the free research

Market Updates

Originally an internal report for PitchBook analysts, our Global Markets Snapshot features the datasets that we're keeping an eye on as financial markets continue their wild ride in 2022.

This 8-page digest breaks down a month of trends in the equity, debt, and commodities markets, tracking returns across a range of indexes and sectors.

It also includes private markets activity on major deals, IPO performance, and unicorn creation.

This is the second time we've made the Snapshot available to all our readers, as we look to provide more insight into how our team analyzes private markets with the macro environment in mind:

download the free report

Webinars & Events

PitchBook is hosting a live recording of the Acquired podcast on May 4 at Seattle's Climate Pledge Arena.

Hosts Ben Gilbert and David Rosenthal will interview a slate of business leaders about their journeys in the boardroom and life. PitchBook initially partnered with Acquired in 2021, supplying data and insights to help inform their podcast conversations.

Tickets for the live show cost $20 with all proceeds benefiting the Seattle Kraken and Climate Pledge Arena's One Roof Foundation: register here

April 26: Analyst Jinny Choi will discuss PE, supply chain tech, and pandemic disruption at ACG Global + Intergrowth 2022 in Las Vegas. More details here.

In the News

Our insights and data featured in the press:

The SPAC market's cooldown continues, as Q1 saw the fewest acquisitions since the back half of 2020. [Axios]

Amid declining public market performance, VC deal sizes and valuations have begun to erode. [Institutional Investor]

"Up until two years ago, Miami was not even an afterthought in much of the VC world. It's going to take more than a couple years." [Bloomberg]

The indoor farming space raised a total of $1.6 billion through 70 deals in 2021, a 36% increase YoY. [Food Dive]

Strong corporate earnings and the continued recovery from the first year of the pandemic pushed up overall private debt returns to a record 19% for the trailing 12 months through Q2 2021. [Private Debt Investor]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

Highlights from our other recent research:

Market updates

Thematic research

Emerging Technology Research

Coming next week (subject to change)

US PE Breakdown
PitchBook-NVCA Venture Monitor
PitchBook Benchmarks
Plumbing AI Data Pipelines

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PitchBook News - Small funds, big opportunity

Older messages

Insurance drives Europe's PE dealmaking

Tracking deSPAC performance

US VC faces a market full of headwinds

Micro-funds' surprising success

Global Markets Snapshot: Most equities bounce back

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