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In today's Daily Pitch, you'll find: - Our new biannual report on Greater China's VC activity explores the region's rapidly growing startup scene.
- Our latest global fund performance report breaks down which asset classes performed the best in 2020.
- Why some VCs in the UK are turning away from the classic GP/LP model in favor of the public markets.
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| How VC in China is tracking toward growth | | Venture capital deals in the Greater China region have rebounded from last year's pandemic-rattled levels, and the ecosystem is on pace to surpass $100 billion in total capital invested by the end of 2021. But immense regulatory headwinds are disrupting sensitive industries and complicating IPO prospects for VC-backed companies.
Our new biannual report on Greater China's venture activity focuses on the region's rapidly growing startup scene. Key takeaways include: - Annual exit value is tracking toward fresh highs, with $137.5 billion recorded across 99 deals in the first six months of 2021.
- Foreign investors have been a reliable source of capital, participating in nearly a quarter of the area's VC deals during the period.
- The region's growing middle class, high adoption of mobile technology and state-sponsored funds for high-tech industries continue to create opportunities for entrepreneurs.
| | | | | | | | | | PE and VC dominate global fund performance | | With COVID-19 upending the global economy, 2020 proved to be an unprecedented year for private market investors. But private equity and venture capital fund performance thrived nonetheless, according to PitchBook's latest Global Fund Performance Report, which cites data through Q4 2020 and the early part of 2021.
A few highlights from the findings: - Private equity funds recorded a rolling one-year horizon IRR of 17.7% in 2020, its second highest in the past decade, which outpaced the S&P 500 and helped the strategy avoid the collapse it endured during the global financial crisis.
- Venture capital funds peaked in Q4 2020, reaching a record quarterly horizon IRR of 14.9%. The strategy continued that momentum into the new year, with a preliminary quarterly IRR of 13.3% in Q1. The strong returns were driven in large part by a healthy exit environment, as VCs looked to capitalize on frothy valuations.
- Bogged down by office closures, real estate funds trailed other private alternative asset classes and the broader public markets, continuing two-plus years of underperformance. But investment in warehouses and data centers provides some reason for optimism as people work and shop from home.
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| A message from Grant Thornton | | |
| PE activity in manufacturing makes a comeback | | Even amid ongoing challenges related to the COVID-19 pandemic, the manufacturing sector in the US continues to exhibit signs of recovery. In tandem, private equity firms are closing deals at a faster pace, albeit still off the record levels observed in the 2010s. Grant Thornton's latest market brief, developed in partnership with PitchBook, explores the key trends shaping dealmaking across manufacturing along with insights from Grant Thornton professionals, with top findings including: - The record median buyout size of $170 million indicates ample capital supply, but a relatively lower population of quality targets thus far
- Add-ons remain popular, but primarily in the lower middle market
- PE firms have already notched nearly $20 billion in exit value via public listings alone
Read it now | | | | | | | |
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| On the podcast: Private equity's sports investing playbook | | With PE sports investing on the rise, Rob Klein of RedBird Capital Partners joins "In Visible Capital" to talk about how his firm aims to help franchises drive revenue and minimize risk through an investment strategy still in its infancy. This week's episode includes: - RedBird's blockbuster deal for a stake in Fenway Sports Group, which owns sports properties including the Boston Red Sox and Liverpool FC.
- The recent pushback from fans and players to private equity's enthusiasm for athletics and RedBird's decision to buy the XFL out of bankruptcy.
- PitchBook senior editor James Thorne also joins the show to discuss the risks facing VC investors with stakes in Chinese companies, as a regulatory crackdown looms.
| | | | | | | | | | Why some UK VCs see their future in the public markets | |  | Draper Esprit, co-founded by Stuart Chapman, went public in 2016.
(Courtesy of Draper Esprit) | | | A handful of UK-based VC firms are freeing themselves from the constraints of the traditional closed-end fund structure and opting to go public instead. - Early-stage investor Forward Partners made its debut on the London Stock Exchange last month, joining a small cohort of firms that are turning to public markets as a source of capital.
- In eschewing the LP model, public VCs are no longer limited by a traditional fund's lifespan, allowing them to more easily adopt the patient capital approach.
- "The true essence of venture is the journey," said Draper Esprit co-founder Stuart Chapman. "We wanted to match entrepreneurs' needs and wishes, and why should their decisions revolve around what is best for the investor's fund?"
| | | | | | | | | | As traditional banks scramble to stay competitive, one writer argues that it may not be fintech companies that are dealing the final blow to brick-and-mortar lenders. [Bloomberg]
New tech for making smaller chips promises to keep Moore's Law alive for years to come—but for now it won't be cheap. [Wired]
Floating wind turbines could be the next big win for renewable energy, but cost, design and opposition from the fishing industry may be standing in the way. [The Guardian] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 328 Deals | 935 People | 232 Companies | 19 Funds | | | | | | |
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| 2014 Vintage Global Secondaries Funds | | | | | | |
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| Flagship-backed Laronde nabs $440M | | | Biotech startup Laronde has raised $440 million in a Series B round backed by Flagship Pioneering, T. Rowe Price, Invus and others. The Cambridge, Mass.-based company was created within Flagship Labs in 2017 and develops programmable RNA for use in therapeutics. | | | | | | | | Whoop hits $3.6B valuation in SoftBank-led round | | | Fitness tech startup Whoop has raised $200 million in a Series F led by SoftBank. The Boston-based company was valued at $3.6 billion with the round, up from $1.2 billion last year. Whoop offers athletes a digital health coach service that combines wearable tech and analytics software. | | | | | | | | Brazil's Petlove digs up $150M | | | Petlove, the Brazil-based operator of an ecommerce platform for pet products and services, has raised a $150 million round led by Riverwood Capital, with participation from others including Tarpon, SoftBank and L Catterton. The company was founded in 1999 under the name PetSuperMarket. The new funding will go toward growing the company's subscription program and expanding its logistics network. | | | | | | | | | | | | | | | Genome Medical picks up $60M Series C | | | Genome Medical has raised $60 million in a round led by Casdin Capital. Founded in 2016, the Bay Area-based company is the developer of a telehealth platform focused on genomic medicine that provides clinical assessments, test recommendations, personalized care plans and more. Genome Medical has also announced its plan to acquire GeneMatters, a provider of telehealth-based genetic counseling and software solutions. | | | | | | | | | Origin has raised a $56 million Series B co-led by 01A, General Catalyst and Lachy Groom. Founded in 2018, the San Francisco-based company is the developer of a financial platform intended to help employees of companies including DocuSign and Zynga manage compensation, benefits and personal finances. The funding values Origin at $400 million. | | | | | |
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| Carlyle circles $3B Hexaware purchase | | | | | | | | | Centerbridge, CDPQ to acquire Medical Solutions in $2.3B deal | | | | | | | | | Tritium Partners backs online learning company Stukent | | | Tritium Partners has made a growth investment in Stukent, an Idaho Falls, Idaho-based provider of digital courseware and simulations for high schools and higher education institutions. Founded in 2013, Stukent has provided courses for over 400,000 students in 70-plus countries. It plans to use the investment to add more than 100 new jobs. Tritium typically backs companies related to tech and services. | | | | | | | | PE-backed McGraw Hill buys edtech startup Achieve3000 | | | Platinum Equity-backed McGraw Hill has acquired Achieve3000, a Red Bank, N.J.-based provider of individualized instruction and learning acceleration for pre-K-12 students. Achieve3000 offers instruction to students across the US and 49 other countries. | | | | | |
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| PE-backed Olaplex plans public debut | | | Olaplex, a hair products company, has registered for an IPO and will trade on the Nasdaq under the symbol OLPX. Bloomberg previously reported the Santa Barbara, Calif.-based business would seek a valuation of around $1.5 billion. Advent International acquired Olaplex in 2019. | | | | | | | | Advent International's Sovos Brands registers for IPO | | | Sovos Brands, a Colorado-based provider of food and beverage products, has registered for an IPO on the Nasdaq, with plans to trade under the symbol SOVO. Advent International helped launch Sovos in 2017; it has since acquired a portfolio of food and beverage brands including yogurt maker Noosa and Rao's Specialty Foods, a provider of pasta sauces and other products. | | | | | |
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| Elad Gil targets $620M for new vehicle | | | | | | | | | Susa Ventures nails down $375M across two funds | | | Susa Ventures has raised $375 million across two funds, including $125 million for its fourth seed-stage vehicle and $250 million for its second opportunity fund, the latter of which will focus on Series B and C investments. Founded in 2013, the San Francisco-based firm has backed companies including Robinhood, Flexport and Viz.ai. Susa plans to use the capital to continue investing primarily in the fintech, healthcare, supply chain and SaaS sectors. | | | | | |
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