Reminder: Join senior EMEA analysts Nalin Patel and Dominick Mondesir on Sept. 28 as they cover how and why the European VC and PE markets are booming.
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| If anyone is still wondering, sustainability is indeed a big deal | | While there are still skeptics about sustainable investing, ESG, and impact investing, our 2021 survey of investors and their advisors shows that this is a movement that's only growing. The pandemic did not stop the progress and many of the old arguments against are losing relevance. Few are worried about the cost anymore, as they realize that ignoring ESG risks in the short term can ultimately be more costly than identifying and mitigating them.  | | 906 respondents completed at least a portion of our survey. |
47% of responses came from outside North America, allowing us to report with a global and regional lens. Overall, priorities are similar around the world, as environmental and social concerns were often given as reasons to start a sustainable investing program.
Interestingly, many also said improved long-term investment results also influenced their program development.
Well over half of allocators and their advisors assess the ESG risk factor frameworks of asset managers during due diligence. For those GPs struggling to fundraise, it would be a shame to alienate so many prospects with little to nothing to offer in this space.
We were able to isolate the views of VCs in this edition, allowing us to find that compared to non-VC GPs, VCs were less likely to select environmental concerns for the sustainable investment programs, but more likely to be interested in improving employee engagement and recruitment.
Respondents from all geographies and types were clear that the top challenges facing sustainable investing are defining and measuring impact outcomes, the lack of robust data on ESG factors for private companies, and difficulty benchmarking nonfinancial goals.
The industry is slowly converging on standards and frameworks for this space, but it will still take some time before everyone is marching to the same beat.
And finally, for those concerned that this is a touchy-feely exercise where sustainably-minded investors are sacrificing financial returns in their pursuit of values-based goals, our investors ranked the importance of performance versus sustainability on a sliding scale (see the chart below).
 | | Click for a larger version: performance vs. sustainability | Most came out somewhere in the middle, recognizing that both are important and may in fact be complementary. There's much more to unpack in the full report: Click to download our 2021 Sustainable Investing Survey. (It's free!) Feel free to reach out with any questions or feedback, or if you would like to discuss the research. | | | | | | | |
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VC Varies by Ecosystem
In our reports, it's not uncommon for the entire US venture market to be expressed in a single datapoint.
"The median early-stage deal size is X. The median late-stage valuation is Y."
After a closer examination, it becomes apparent that much of the rapid growth of the market has been driven by four metro areas—the Bay Area, New York, Boston and Los Angeles—where more than half of all US activity occurs.
And the numbers look very different when looking at the next most active regions for VC: | | | | | | Emerging Startups Enable LGBTQ Healthcare
VC-backed healthtech companies are increasingly developing solutions to better serve the LGBTQ community.
While we couldn't find any specific LGBTQ-focused startups prior to 2019, we now count 11 that have collectively raised $48.7 million in disclosed funding.
Our research dives into this emerging opportunity, highlighting the key companies in the space and analyzing areas like investment trends, market size, and how government regulation and legislation could both hinder and drive the industry.
PitchBook clients also have access to a market map: log-in here for the premium version of the note: | | | | | |
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| How employee alignment drives healthcare services returns | | How can private equity-backed providers engage and incentivize practitioners when they join a platform?
What technological and operational value-adds can meaningfully improve the physician experience?
How can platforms retain and develop care staff in this unprecedented labor market? And how do these best practices drive bottom-line returns?
On Oct. 7, PE analyst Rebecca Springer will moderate a discussion with industry deal and operating veterans: Holly Buckley, Partner and Healthcare Practice Chair at McGuireWoods; Taylor Dalby, Vice President at The Bloom Organization; and Stephen Scott, Partner and Managing Director at Bailey Southwell & Co.
Register here! | | | | | | | |
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Mobility tech analyst Asad Hussain weighs in on this week's Ford-Redwood Materials partnership around the recycling of battery materials for electric vehicles:
"The partnership between Ford and Redwood Materials is indicative of a broader trend in which automakers are taking a more active role in development and production of battery cells and have announced partnerships and joint ventures with battery-makers, such as Tesla/Panasonic, GM/LG Chem, and VW/Northvolt.
"They are also investing billions of dollars in battery plants and production facilities. This could create the conditions for more startups to seek out valuable partnerships with industry incumbents similar to the Ultium Cells/Li-Cycle agreement.
"EV manufacturing faces a major supply chain crunch by mid-decade as demand for battery materials is forecast to outstrip supply. Much of this shortage is due to the limited number of mining, refining, and processing facilities.
"Battery recycling could help alleviate this mismatch by meeting a substantial portion of the EV industry's need for lithium, cobalt, and nickel. … [It] could also help domestic EV makers reduce their reliance on foreign suppliers.
"We believe an eagerness to reduce foreign supply chain exposure (from both governments and OEMs) is creating a favorable environment for domestic battery recycling startups.
"In a June announcement, the US Department of Energy presented a framework to scale up domestic manufacturing of advanced battery materials to position the US as a leader in EV manufacturing.
"We expect the market for battery recycling to grow from $2 billion in 2021 to $27.3 billion in 2030, representing a CAGR of 33.8%.
"Near-term growth will primarily be driven by increases in battery manufacturing scrap as automakers scale up production of EVs, while over the long-term we see a large opportunity in recycling end-of-life EV batteries."
| | Asad Hussain
Senior Emerging Technology Analyst
Mobility Tech | | | | | |
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Our insights and data featured in the press: - An unprecedented year for private equity is spilling into the middle market. [Forbes]
- Just how much PE and VC money is going to the booming space sector? [WSJ]
- In coverage of our new research highlighted at the top, both LPs and managers are taking ESG more seriously as interest in sustainable investing continues to rise. [Institutional Investor]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team. | | | | | |
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Highlights from our other research content published this quarter:
Market updates Thematic research Emerging Technology Research (free previews) Coming next week (subject to change) - France & Benelux Private Capital Breakdown (sneak peek)
- Quantitative Perspectives: Fund Flows in the Pandemic
- European Unicorns are Booming
- Vertical Snapshot: AR & VR (client only)
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| | Since yesterday, the PitchBook Platform added: | | 338 Deals | 1339 People | 411 Companies | 25 Funds | | | | | | |
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