| | | | | The Daily Pitch: VC, PE and M&A | December 28, 2020 ![]() | | Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A | | | | | | | | |  | Airbnb's wild ride was one of the biggest stories of the year, but a dark horse rivaled its blockbuster IPO when it came to market value.
(Courtesy of Airbnb) | | | A lot can happen in 12 months. Just ask Airbnb.
When 2020 began, the company was preparing for a long-awaited IPO after more than a decade as a venture-backed darling. Then, COVID-19 arrived. By May, Airbnb had laid off a quarter of its workforce and raised billions in new debt and equity at a highly reduced valuation.
But it was able to survive, and then to thrive. Never mind the pandemic. By December, Airbnb went public. On its first day of trading, its valuation at one point topped $100 billion, a number that even the biggest optimist might have found hard to believe in 2019.
It was that sort of year for venture capital and private equity, a wild one full of huge ups, huge downs, scandals, sports and a whole lot of SPACs. Overall, thousands of different transactions were conducted on the private markets in 2020. Here are 10 of the deals that mattered most:
The best of the IPO flurry: Snowflake
Despite record-breaking, late-year blockbuster IPOs from DoorDash and Airbnb, cloud data company Snowflake was 2020's IPO dark horse, emerging from relative obscurity to surprise investors and industry-watchers alike. By venture capital standards, the Silicon Valley upstart was fairly young and perhaps prematurely filed to go public.
But all those reservations were cast aside when it exploded onto the scene in mid-September, closing its first day worth roughly $70 billion. In February, Snowflake had been privately valued at $12.4 billion, according to PitchBook data. As of this writing, it has a market cap of over $90 billion.
Trading up: Robinhood
With extra time at home, some novice retail investors took advantage of their quarantine by buying and trading stock with Robinhood, a New Age brokerage platform that aimed to make investing fun and engaging. Investors caught on and wrote Robinhood checks totaling nearly $1.27 billion this year—more than half of its total fundraising since its founding seven years ago.
On the cusp of an IPO that could value it at $20 billion (compared with its latest private valuation of $11.7 billion), Robinhood boasts of over 3 million new users this year. But it also had several hiccups, including a $65 million settlement with the SEC over allegedly misleading customers about how it makes its money, a Massachusetts complaint claiming it manipulated inexperienced investors, a reported hack compromising user accounts and platform outages earlier in the year.
SPAC attack: Nikola
Electric vehicle maker Nikola went public after merging with blank-check company VectoIQ, setting off a chain reaction of deals that brought the burgeoning battery-powered auto industry onto public exchanges.
Nikola was valued at $3.3 billion in the SPAC deal, but investors bid up its stock to push its market cap to a high of $34 billion in June. It wasn't to last. Short seller Hindenburg Research accused the company of fraud in September. And a deal Nikola struck with GM was subsequently curtailed, leaving the startup with no way to produce its consumer pickup truck. Nikola's market cap now stands at around $6.6 billion.
Despite the drama, Nikola's SPAC deal underlined the public market's hunger for pre-revenue automotive tech companies. There have been at least a dozen such SPAC mergers this year, a list that includes Canoo, Hyliion, Fisker and Lordstown Motors.
Blockbuster flop: Quibi
Quibi, we hardly knew ye. Longtime Hollywood mogul Jeffrey Katzenberg's video streaming startup raised $750 million in early March, bringing its total haul to $1.75 billion in just two years.
The company's hypothesis centered on a market of on-the-go viewers who wanted premium shows in bite-sized chunks. When on-the-go turned into stay-at-home, Quibi's wildly ambitious plan began to show cracks.
The platform launched in April and officially shut down in December after Katzenberg and CEO Meg Whitman concluded they had run out of options. Rather than try to ride it out, Quibi elected to return $350 million to shareholders, a group that included major entertainment studios like Warner Bros. and 21st Century Fox.
The deal of the year that wasn't: TikTok
By now, TikTok was expected to be in the hands of Oracle and Walmart. But it appears that we'll end 2020 without a firm answer on whether ByteDance, TikTok's Chinese parent, will get the green light to sell the app.
The Trump administration let a Dec. 4 deadline for the sale lapse after it had been extended several times. Since August, after President Trump ordered ByteDance to sell TikTok or face a ban, questions and intrigue swirled around who would buy the thriving social video app and how a deal could possibly get finalized in the original 45-day timeline. Nearly five months after Trump's executive order, details of the sale remain unclear. And it's likely that an ongoing legal battle over Trump's push for the ban will spill over into 2021.
| |  | The $11.3 billion deal for Dunkin' Donuts' parent company was one of the most notable private equity transactions in 2020.
(Michael M. Santiago/Getty Images) | | | Roark bets big on donuts and coffee
Inspire Brands, a restaurant franchising group backed by Roark Capital, has spent billions the past few years buying up brands like Arby's, Buffalo Wild Wings and Sonic. But its biggest deal to date came earlier this month, when Inspire closed its $11.3 billion acquisition of Dunkin' Brands, the parent company of the Dunkin' breakfast chain and ice cream chain Baskin-Robbins, bringing the company back into private equity ownership—Bain Capital, The Carlyle Group and Thomas H. Lee Partners owned it from 2006 to 2011.
Now, Inspire and Roark are betting Dunkin' will be able to weather the remaining months of the pandemic before continuing to gain market share as independent coffee shops struggle to stay afloat.
SPACs meet sports
In 2020, SPACs were everywhere. And private equity firms showed ongoing interest in pro sports. These two trends intersected in August, when RedBird Capital Partners teamed with famed baseball executive Billy Beane to form a SPAC with the intent of buying a stake in a pro sports team. It didn't take them long to find a high-profile target. The Wall Street Journal reported in October that the SPAC was in talks to merge with Fenway Sports Group—the owner of the Boston Red Sox and Liverpool Football Club—in a possible $8 billion deal.
A buyout baron's record-breaking SPAC deal
The year's SPAC boom reached its peak in September, when a blank-check company backed by Alec Gores agreed to acquire United Wholesale Mortgage in a $16.1 billion deal. It was the largest reverse merger with a SPAC of all time, and it was also a sign of how ludicrously profitable some blank-check mergers can be for the executives involved: Gores reportedly turned an initial $25,000 investment in the SPAC into $80 million. With the potential for profits like that, it's little wonder investors are flocking to SPACs.
Patience pays for Providence in exit to Microsoft
Thirteen years between an initial investment and an exit is a long time for a private equity firm. But the wait was worth it for Providence Equity Partners, which agreed this September to sell its stake in ZeniMax Media, the parent of video game developer Bethesda Softworks, to Microsoft for $7.5 billion, one of several high-profile investments this year in the video game industry. Providence logged a six-fold return on its exit from Bethesda, which is behind famous titles such as "Fallout," a reminder that the typical investment timelines of PE aren't always set in stone.
Blackstone buys Ancestry.com for $4.7B
The biggest firm in private equity can now play a role in helping learn about your family history. In August, Blackstone agreed to acquire a majority stake in Ancestry.com, a provider of genetic testing services, from Silver Lake, GIC, Spectrum Equity and others in a deal that values the company at around $4.7 billion, including debt.
The buyout immediately raised privacy concerns, given Ancestry's trove of highly personal data about its customers. However, Blackstone has said it won't have direct access to user DNA or other aspects of their family history. | | | | | | | | Why Blackstone and other private equity giants are gobbling up warehouses | |  | Blackstone has been purchasing warehouses for the past decade, and it's shown no signs of slowing.
(Scott Olsen/Getty Images) | | | Private equity gets lots of attention for gobbling up assets of all types, from fast-food chains to red-hot tech companies. Less fanfare, perhaps, has followed the industry's growing hunger for, of all things, warehouses and other industrial real estate.
With ecommerce sales booming, private equity firms have been on something of a buying binge, snatching up tens of millions of square feet of warehouse space.
Here's why Blackstone is among those leading the charge. | | | | | | | | Silicon Valley's banner year on Wall Street reshapes IPO landscape | |  | | (Spencer Platt/Getty Images) | | | Highly valued tech companies have used their clout to rewrite the rules of IPOs, a shift underscored earlier this month by a spectacular lineup of multibillion-dollar offerings.
The value of VC-backed IPOs hit a decade high, but their most lasting impact will be on the structure of traditional IPOs and the creation of alternative paths to the public markets blazed by intrepid startups. | | | | | | | | SPACs meet GP stakes in a $13B deal |  | | A collision of SPACs and GP stakes is causing investors to see dollar signs. (MirageC/Getty Images) | | | | Dyal Capital Partners is one of a few names driving a recent surge among private equity firms acquiring minority stakes in other asset managers. Dyal holds so-called GP stakes in more than 40 different investors. That has effectively turned its portfolio into a sort of privately held index for a not-insignificant chunk of the PE industry, with a piece of investors such as Vista Equity Partners and Silver Lake.
What if that portfolio were traded on a public market? What if that could happen through a merger with a special-purpose acquisition company? What if that SPAC were sponsored by one of the PE firms Dyal already holds a stake in? And what if the deal also involved merging with a third firm in which, again, Dyal is already an investor?
Our editor Kevin Dowd spoke with Wylie Fernyhough, GP stakes connoisseur and a senior analyst here at PitchBook, to pick his brain about what it all means. | | | | | | | | CVC sea change: Corporate venture
on the rise |  | | (Cavan Images/Getty Images) | | | | Corporate venture capital looks very little today like it did a decade ago.
Underscoring that contrast, CVC investors have been some of the most enduring players in the pandemic-shaped deal landscape of 2020.
Through Q3, corporate investors were involved in roughly 26% of this year's US venture deals, according to a recent PitchBook research note, and those rounds together made up more than half of all venture dollars invested in the period: | | | | | | | | | | | | | Since yesterday, the PitchBook Platform added: | | 21 Deals | 32 People | 15 Companies | | | | | | | | | | | | | | |
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