| Everything you need to know about seeding and anchoring PE funds | | Raising a first-time PE fund is difficult.
Although there have never been more high-quality firms entering the market—and although institutional investors' appetite for PE is only growing—established managers are taking bigger and bigger slices of the fundraising pie.
Many prospective first-time GPs are interested in taking anchor or seed capital to kickstart their fundraising process. And some institutional investors and fund seeders are seeding and anchoring to save on fees or enjoy increased upside potential.
But there's a problem: The world of seeding and anchoring is opaque and difficult to navigate.
Definitions vary across the industry, and market standard terms are virtually nonexistent.
That's why my colleague Wylie Fernyhough and I created an in-depth guide to seeding and anchoring PE managers. In the report, we… - define anchor commitments and seed deals.
- detail common commitment structures and the range of possibilities, including fee discounts, revenue shares, and tapering mechanisms.
- profile the five principal seed/anchor LP types: sponsors, large institutional LPs, funds of funds, family offices, and endowments.
- discuss recent developments in diversity-focused seed/anchor programs.
- review the trade-offs GPs and LPs must consider when entering into seed/anchor arrangements.
Read our free research: "Seeding and Anchoring PE Managers"
If you're raising a first-time fund, an allocator interested in seeding or anchoring, or just want to learn more, please feel free to email me or our institutional research group.
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Private debt fundraising kept a steady course in the first half of 2021.
Low interest rates, subdued default rates, and the longer-term pivot toward alternatives aided allocators in committing $72.5 billion across 81 vehicles, according to our latest Global Private Debt Report.
A few key takeaways: - Direct lending continues to stand out, accounting for half of all capital raised, but opportunities for distressed debt may be hard to find due to the lack of distress in the market.
- Private debt fund performance has been up QoQ for the past several quarters, but early data suggests Q1 will drop below H2 2020 levels.
- Venture debt has emerged as a major source of financing for high-growth startups that have traditionally opted for equity funding.
| | | | | | Our Quantitative Perspectives reports let the data do the talking.
And for our most recent research, we set out to capture how the US venture capital industry has fared in its recovery from the pandemic (hint: it's been unfathomably strong).
In addition to our core datasets, we bring in several macroeconomic datapoints like interest rates and public market performance to provide a more holistic narrative around the record-setting pace we're seeing across VC investment and fundraising.
Check out our visual storytelling on topics like: - Is the current environment more startup- or investor-friendly?
- How much does nontraditional investor dry powder factor into overall capital supply?
- How have SPACs and direct listings changed the exits game?
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2021 European Private Capital Outlook: H1 Follow-Up
Have SPACs in Europe met our expectations from January?
How about Brexit's impact on the UK as a venture hub?
Our London-based analysts recently revisited their six 2021 predictions from the start of the year—and the results, so far, are varied.
Some full-year projections have already been met, others are on track to come true, and one has played out very differently than we projected: | | | | | |
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INFORMATION SECURITY: Startups are ahead of incumbents when it comes to cloud security and developer-focused security.
At least that's what record exit sizes are showing, as seen with SentinelOne's $9 billion IPO and Auth0's $6.5 billion acquisition by Okta.
Other takeaways from our new research: - The $16.6 billion in exit value last quarter was by far a record and 2021's total has already surpassed past years.
- Recent cyberattacks are encouraging medium-size enterprises and industrial companies to adopt advanced infosec tooling, which is driving industry growth and elevated VC activity.
- One standout product category driving funding growth: passwordless authentication tech.
| | | | | | MOBILITY TECH: After a rush of public listings, several mobility companies have no doubt had a rough ride recently.
Stock prices have plummeted. SPAC deal valuations have been cut sharply. Nikola, Lordstown Motors and Canoo are facing federal investigations.
This turbulence hasn't constrained private investment in the space, however, as high demand for low-cost, convenient and environmentally oriented solutions persists. Highlights from our new research: - Venture investors poured $23.1 billion into mobility tech startups in Q2—putting the year on pace to break a record.
- While late-stage valuations have risen in tandem with the public markets, attractive terms can still be found at the early stage.
- Emerging opportunities we've identified include teleoperations startups and battery tech.
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 | | Click to view a larger version of this slide. | | | "Don't forget that this is only the first six months of 2021 and not a full-year chart."
That quote from this week's webinar could've summed up a lot of the trends we covered across US VC dealmaking, exit activity, fundraising and beyond.
So, will this pace continue in H2? What sectors are the hottest? What are the latest developments in tax policy and antitrust concerns?
We discussed it all with our panelists from the NVCA and Silicon Valley Bank: watch the replay. - Save the date! We're hosting a webinar on Aug. 18 with our Emerging Tech Research team covering trends in information security, mobility tech and foodtech: register here.
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Mobility tech analyst Asad Hussain weighs in on recent developments in the delivery space, including a Gopuff's $1 billion funding round:
"We have noted an uptick in investment in last-mile delivery services. So far in 2021, $7.6 billion in venture capital has been invested in last-mile delivery startups in North America and Europe.
"An increasing focal point for investors is ultrafast delivery. By delivering in narrow radiuses around dark stores in dense cities, delivery companies can maximize deliveries per route and generate positive unit economics.
"Ultrafast is the future of delivery. Just as consumers have become accustomed to on-demand ridehailing and same-day delivery, ultrafast delivery will become the new expectation.
"As ultrafast delivery becomes more widespread, increased car traffic from couriers will likely lead to concurrent heightened noise, congestion, and emissions in residential areas. Solving this problem will require looking beyond cars to multimodal transportation solutions such as micromobility.
"Going forward, we anticipate growth in ultrafast delivery to lead to significant investment in fleets of e-bikes and e-scooters for couriers.
"One startup leveraging this model is United Arab Emirates-based Fenix, which operates a scooter sharing service. In addition to one-time rentals, the company's free-floating scooters are also available through weekly or monthly subscriptions.
"Its durable e-scooters incorporate swappable batteries for greater operational efficiency. Fenix also launched F10, an app that provides ten-minute grocery deliveries using couriers who operate out of the company's network of dark stores, which serve as both charging and fulfillment centers.
"Fenix maximizes its drop rates by targeting dense cities, limiting delivery ranges to tight radiuses around the dark stores, and equipping its couriers with well-maintained, fully charged e-mopeds. The company also realizes cost synergies by sharing real estate costs between both businesses.
"Fenix dynamically allocates vehicles and labor between subscription, shared, and delivery businesses as needed to offset seasonality."
| | Asad Hussain
Senior Emerging Technology Analyst
Mobility Tech | | | | | |
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Our insights and data featured in the press: - Alternative protein startups have already raised more money this year than all of 2020. What's capturing the attention of investors, futurists and environmentalists? [Insider]
- Nontraditional VC investors were more active in Q2 than any other quarter on record. We supported a deeper dive into the trend. [WSJ]
- Insurtech startups need to show steady profitability to win over investors. High-growth companies with high loss ratios are risky. [Reuters]
If you're a media member interested in interviewing our analysts, contact our PR team. | | | | | |
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Highlights from our other research content published over the past few months:
Market updates Thematic research Emerging Technology Research (free previews) Coming next week (subject to change) - Transformative Agtech and Sustainability Challenges (sneak peek)
- Analysis of Public PE Firm Earnings: Q2
- ETR: Foodtech
- ETR: Enterprise Healthtech
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| | Since yesterday, the PitchBook Platform added: | | 351 Deals | 1131 People | 401 Companies | 24 Funds | | | | | | |
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