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In today's Daily Pitch, you'll find: - An analysis of why blistering growth in GP stakes deals hasn't torched opportunities.
- A look at how SoftBank's pause in China could speed the firm's push into other global markets.
- An introduction to Turkey's first decacorn.
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| Why the rise in GP stakes deals doesn't mean a decline in opportunities | |  | | (quickshooting/Getty Images) | | | GP stakes deals have surged in popularity over the past five years, with tens of billions of dollars flowing into the strategy. Yet the blistering growth has some industry observers questioning its future—and what investment prospects may remain.
Plenty, as it happens. GP stakes deals are in a lush opportunity landscape, with $100 billion-plus in potentially available value, PitchBook analysts argue in our recent research note. Among the takeaways: - The middle market offers the best supply-and-demand dynamics compared to larger or smaller GPs, with less than $10 billion currently targeting the space and over $40 billion in capacity.
- Buyout firms have long been the favored choice for GP stakes investors, yet growth equity targets have become increasingly attractive based on their return profiles, fees and holding periods.
- Private capital managers are opting for more IPOs, signaling a change in how they view outside ownership. More may be willing to sell stakes—or the top end may have less capacity than expected if firms go straight to the public markets.
| | | | | | | | | | China woes could hasten SoftBank's global expansion | |  | China's regulatory crackdown under President Xi Jinping has prompted global investors to rethink deals in the country.
(Kevin Frayer/Getty Images) | | | SoftBank's decision to halt investments in China is likely to add fuel to the investment firm's push into less developed markets around the world. - Chinese startups have long been a cornerstone of SoftBank's portfolio, but their influence is waning. Just one in 10 new deals have come from the country this year.
- The Japanese investor remains significantly exposed to Chinese tech. Regulatory headwinds from Beijing have battered the stocks of portfolio companies like Beike and Full Truck Alliance in recent months.
- In the long term, SoftBank CEO Masayoshi Son is bullish on the potential for Chinese innovation, especially in artificial intelligence.
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| A message from Lincoln International | | |
| Pets and animal health: Unpacking companion animal investment opportunities | | Pet ownership has been steadily rising in recent years as people around the world brought companion animals into their homes. Against the backdrop of the COVID-19 pandemic, even more consumers became pet parents.
At the same time, a growing public interest in health and wellness has spilled into the animal world, and humanization of pets is on the rise. Pet and animal health sector valuations are up as a result, and for private equity and strategic buyers in the space, competition for assets is at an all-time high. For many, a buy-and-build strategy brings advantages of geographical diversification, an ideal channel mix or economies of scale within specific subsectors.
Read Lincoln's perspectives on navigating the investment opportunities in pet and animal health. | | | | | | | |
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| Fanatics valued at $18B after investment from MLB, Silver Lake and others | |  | | (AndreyPopov/Getty Images) | | | Sports merchandise website Fanatics has reportedly reached an $18 billion valuation following a new funding round that continues a trend of investors willing to wager on sports media and sports-betting companies. - Fanatics landed the $325 million from existing backers like Major League Baseball, SoftBank's Vision Fund and Silver Lake, as well as new investors including Jay-Z and his entertainment company, Roc Nation, The Wall Street Journal reported.
- The Jacksonville, Fla.-based company reportedly plans to use the new funding to create a digital umbrella platform with multiple business channels, including ticketing, media, sports betting and internet gambling.
- The financing highlights a recent trend of deals in the sports-betting sector. Within the past week, sports-betting giant DraftKings reportedly struck a deal for Golden Nugget's online gaming business for $1.56 billion, and Penn National Gaming agreed to purchase Score Media and Gaming (TheScore) for $2 billion in cash and stock.
Related read: Dyal's deal for Phoenix Suns shows private equity wants winners | | | | | | | | | | Trendyol becomes first Turkish decacorn with $1.5B round | |  | | (damircudic/Getty Images) | | | Ecommerce platform Trendyol has raised $1.5 billion at a valuation of $16.5 billion, making it Turkey's first decacorn. - The round was led by General Atlantic and SoftBank's Vision Fund 2. Princeville Capital and two sovereign wealth funds, Qatar Investment Authority and the UAE's ADQ, also participated.
- Trendyol has more than 30 million users and delivers over 1 million packages per day including groceries, clothes and electronics. It also offers logistics and payment services. The company, founded in 2010, also raised $350 million in March from Alibaba.
- VC activity in Turkey was largely stable over the past decade, but a handful of big deals have driven 2021 to record levels for capital invested. Aside from Trendyol, rapid grocery delivery startup Getir raised two mammoth rounds that reportedly totaled over $850 million in the first half of the year. Mobile games developer Dream Games also closed a $155 million Series B in June.
| | | | | | | | | | More and more people are flocking to the once-exclusive world of angel investing as part of a wider boom in ever-riskier investments. [The New York Times]
Cruise companies, cinema operators and retailers are watching their bond prices fall as US investors back away from debt in light of Delta variant concerns. [Financial Times]
One writer questions whether fintech companies are really as ethical as they may seem. [Forbes] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 477 Deals | 1346 People | 366 Companies | 18 Funds | | | | | | |
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| 2019 Vintage Global Venture Funds | | | | | | |
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| US private debt market passes its test | | COVID-19 was billed as the first big test for the private debt market. Pre-pandemic, the market had grown so fast that many were worried it was turning into a bubble.
In partnership with PitchBook, UMB Fund Services has released A growing asset class, an in-depth report on the US private debt market and its growth prospects in the years ahead. PitchBook figures show that, despite the pandemic, private debt deal value and fundraising totals increased in 2020. Sustained discipline and closer access to information helped buoy the market in a turbulent year, and LP enthusiasm has only grown as a result.
To download the report, click here. | | | | | | | |
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| PitchBook Webinar: Security and sustainability through emerging tech | | So far, 2021 has been a breakout year for tech, with many sectors experiencing a convergence of increased VC activity, technical advances and new challenges.
Join our panel of experts on Wednesday, Aug. 18 at 10 a.m. PT/1 p.m. ET for an Emerging Technology Mid-Year Update, where they will detail key insights from the first half of the year and dive into the information security, mobility tech and foodtech sectors.
Register here to secure your spot. | | | | | | | |
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| Arboretum's Dan Kidle named managing partner | | | Arboretum Ventures has promoted Dan Kidle to managing partner of the healthcare-focused early-stage firm. He joined Ann Arbor, Mich.-based Arboretum in 2011 as an analyst and became a partner last year. Founded in 2002, Arboretum invests in companies across the medical devices, life sciences and tech-enabled care delivery sectors, with a focus on the US Midwest. | | | | | |
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| OwnBackup secures $240M Series E | | | OwnBackup has raised $240 million at a nearly $3.35 billion valuation in a round co-led by Alkeon Capital and B Capital. The Englewood Cliffs, N.J.-based company offers cloud-to-cloud backup and recovery services designed to restore lost data. OwnBackup, which collected a $167.5 million round in January, has now raised some $500 million in total private funding. | | | | | | | | Reify Health snags $220M to make clinical trials more accessible | | | | | | | | | FreshBooks lands $130M+ in debt and equity | | | FreshBooks has raised $80.75 million in Series E financing led by Accomplice and $50 million in debt funding. The fundraise values the Toronto-based company at more than $1 billion. FreshBooks is a developer of cloud accounting software that's used by small businesses in over 160 countries for billing, payments, client engagement and more. | | | | | | | | Tulip Interfaces brings in $100M | | | Tulip Interfaces has raised a $100 million Series C led by Insight Partners. Based in the Boston area, the company offers a no-code platform for use in industries including manufacturing, warehousing and biotechnology. Tulip was valued at $191 million in 2019, according to PitchBook data. | | | | | | | | Tiger Global leads $65M round for Hologram | | | Hologram has raised a $65 million Series B led by Tiger Global, with participation from Bullpen Capital, NextView Ventures and Mucker Capital. Founded in 2014, the Chicago-based company is the developer of a cellular connectivity platform enabled by SIM cards that automatically switch network access to the best coverage across more than 470 carriers. | | | | | | | | Pave picks up $46M Series B | | | Pave has raised $46 million at a $400 million valuation in a round led by YC Continuity Fund. Founded in 2019, the San Francisco-based company is the developer of a compensation management platform intended to help employers communicate payroll information to workers and access industry benchmarks in real time. Existing investors Andreessen Horowitz and Bessemer Venture Partners also participated in the funding. | | | | | | | | Bright Power raises $24.5M | | | Bright Power, an energy and water management services provider for apartment buildings, has raised $24.5 million in a Series B round. The deal was led by BMO Financial's Impact Investment fund and Generate Capital. | | | | | |
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| PE-backed HVAC company strikes add-on deal | | | | | | | | | Palladium buys Health Connect America | | | | | | |
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| PE-backed Appriss to offload Appriss Insights to Equifax for $1.8B | | | | | | |
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