PitchBook News - Why VCs are poised for a smooth landing

Plus: A timeline of the events that shaped Sequoia; a proliferation of US micro-funds; notable VC deals in the carbon capture sector & more
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The Weekend Pitch
April 10, 2022
Presented by Masterworks
(Viaframe/Getty Images)
Some investors I talked to in the second half of last year complained about the VC market's exuberance. They yearned for a slowdown in the dealmaking pace and even a decline in valuations.

Their wish came true earlier this year following a correction in the stock market. And despite the new climate of pressure on late-stage VC-backed valuations, there are plenty of reasons to expect the market to ride out the storm.

I'm Marina Temkin, and you can reach me marina.temkin@pitchbook.com or @MTemkin on Twitter. In this edition of The Weekend Pitch, we'll look at why many venture capitalists could be poised for a smooth landing.
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Experts predicted a $900 billion megatrend years ago but never saw this coming
Analysts predict a tsunami of capital will flow into an unexpected asset class by 2026. How much? Try $900 billion.

And it's already begun.

Ultra-wealthy investors just poured over $100 billion into it. This alternative isn't BTC or anything digital—it's real art.

Since 1995, contemporary art prices increased by 2,816%, nearly 3x the S&P 500. This explains why so much smart money is moving into this asset class like never before.

But experts never expected a tech company would be at the center of it all. They've invented a revolutionary platform where you can invest in shares of paintings.

Hear that? It's opportunity knocking.

PitchBook subscribers can skip their waitlist and capture the trend here.

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Quote/Unquote

"Private markets products are designed with a 10-year horizon in mind; they are not designed for the individual. An individual would want multiple private market investments and therefore will prefer a smaller ticket size."

—Oi-Yee Choo, CEO of ADDX, a Singapore-based private markets exchange that uses blockchain tech to tokenize funds and attract accredited investors to alternative assets.

Can the nascent offering fight regulatory constraints and disrupt the private markets?

Deal Flow

Roelof Botha will take over as leader of Sequoia in July.
(Brian Ach/Getty Images)
Earlier this week, Sequoia global managing director Doug Leone named Roelof Botha his successor. Botha, who became head of Sequoia's US operations in 2017, has cemented himself as a top dealmaker at the storied VC firm with investments in the likes of YouTube and Instagram.

Sequoia dramatically changed its fund structure last year and is looking to double down on its China strategy despite an uncertain regulatory outlook. To see more of the major events that shaped the VC firm under the guidance of Leone, check out our timeline.

Datapoints

Micro-funds—vehicles of $50 million or less—have adapted to the changing venture landscape despite mega-funds' historical dominance of the VC storyline.

Over the past decade, the number of micro-funds has grown from an average of 75 each year between 2006 and 2011 to an average of 320 each year between 2018 and 2021, according to PitchBook data.

Our recent analyst note tracks the growth of these vehicles and the opportunities they offer for LPs, companies and new investment firms to access the venture market.

Did you know ...

(Dmitry Kovalchuk/Getty Images)
... That a recent United Nations climate report indicated that some amount of carbon dioxide removal will likely be necessary to offset unavoidable emissions?

While climate experts have frequently cautioned against relying on unproven carbon capture technology, venture capital is still flowing into a growing cadre of startups that target the reduction and removal of carbon dioxide from the atmosphere.

Here's a visualization of some notable global VC deals in the carbon tech industry.

Recommended reads

They thought their payments were untraceable, but they couldn't have been more wrong. Inside the bitcoin bust that took down the web's biggest child abuse site. [Wired]

Millennials have been renouncing homeownership for years. But with one in three renters now completely priced out of the homebuying market, it's turned from a lifestyle choice to a brutal reality. [Fortune]

How a short-term rental gold rush in southeastern California is fueling concern for the area's signature Joshua trees and debates about whether life in the region may be changing forever. [The New York Times]

From padded rooms for VR to high-tech areas for workouts, real-estate developers predict that homes of the future will have plenty of spaces for the metaverse. [The Wall Street Journal]

Fueled by the pandemic, many individuals have opted for a rural, alternative existence far from pollution, crime—and people. [Financial Times]

Meet Oren Zeev, the Israeli-American solo venture capitalist whose investment strategy mirrors that of Andreessen Horowitz. [The Information]
This edition of The Weekend Pitch was written by Marina Temkin and Priyamvada Mathur. It was edited by Alexander Davis, Angela Sams and Sam Steele.

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