| VC-backed IPOs are booming, yet public performance this year is lagging | | Has 2021's ramp-up in IPO activity been a rush to the exits prior to a change in the market cycle? Is it just the new normal? Time will tell, but one thing is certain: US VC-backed IPOs have broken all kinds of records this year, unlocking more than $500 billion of liquid value. The median company valuation at IPO is nearly 60% greater than its last private valuation. However, our VC IPO index has shown relative underperformance against the S&P 500 since the beginning of 2021.  | | The steep decline relative to the S&P 500 began around March | Long-term performance still shows above-market returns, but inflationary pressure and the increased expectations of interest rate hikes in the coming year have introduced more volatility in the market for these freshly public companies. These swings have been especially potent in the software space, which represents nearly 50% of the total weight of the IPO index, as the lofty valuation multiples placed on those companies have received a reality check in the face of rising discount rates. While the majority of the underperformance came earlier in the year, it remains top of mind given the signs of increased market uncertainty—which have been amplified by fresh pandemic-related concerns. This represents a significant threat to the sustainability of the IPO volumes we've seen over the last couple of years, as negative price performance or just general uncertainty will discourage IPO plans for certain startups, especially if they have access to other financing and liquidity options. We will maintain vigilant coverage of this space as we expect IPOs and their performance to be a leading indicator on the health of the VC industry, as public markets have facilitated the majority of exit value over the last two years. For more data and analysis, click to download our free Index of Venture-Backed IPOs. Feel free to reach out with any feedback or questions, or if you would like to discuss the research. | | | | | | | |
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SUPPLY CHAIN TECH: Chaos still reigns across the global supply chain.
Yet a growing number of VC-backed startups are ready to help tackle the challenge, boosted by $24.3 billion in aggregate capital raised this year through Q3—already up nearly 60% over 2020's full-year total.
In our latest sector research, our analysts break down the latest numbers and identify emerging opportunities across supply chain tech: - Middle- and final-mile delivery aggregators are helping provide one-stop shops for shippers and carriers.
- Innovation in maritime transportation tech is beginning to come into focus.
- Sustainable supply chain startups are helping corporations track and manage their sustainability mandates.
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We hosted a webinar this week on the current state of private fund performance, with insights into market performance across asset classes and strategies.
Other highlights: - A spotlight on performance across VC strategies, including a detailed comparison of established and emerging fund managers
- A deep dive on sector specialist fund manager performance
- Deal-level returns as seen through our original research
Watch the replay | | | | | |
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AI & machine learning analyst Brendan Burke weighs in on Samsara after the company filed for what would be a multibillion-dollar IPO:
"Samsara has established a strong market position in fleet management and has potential to become a diversified IoT platform vendor.
"Samsara provides an AI-enabled industrial IoT platform that combines hardware, software, and cloud computing designed to bring real-time visibility and analytics to industrial operations.
"In its S-1, the company reports that at least 87.7% of Q3 2021 ARR derives from Video-based Safety and Vehicle Telematics.
"Video-based Safety uses AI-integrated cameras to detect high-risk driver behavior and Vehicle Telematics uses sensors to monitor vehicle location and performance.
"The company faces headwinds from telematics integration by automakers, which is limited currently but we expect to reach 50% of new vehicles over the next three years.
"While Samsara relies on hardware sales for telematics, the company's gross margins migrated from 57% in Q1 2019 to 72% in Q3 2021 due to additional applications layered on top of existing hardware and workforce reductions resulting from the COVID-19 pandemic.
"Even so, Samsara may need to prove that its software can expand outside of fleet management before the company is treated as a high-growth SaaS vendor by public markets.
"For further analysis of Samsara's market position, see the preview of our Q3 2021 AI & ML VC Update."
| | Brendan Burke
Senior Emerging Technology Analyst
AI & Machine Learning | | | | | |
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Our insights and data featured in the press: - Venture capital funding for crypto companies is surging. [NYT]
- "The fact that you're making millions of vehicles right now comes at a cost, and it's the cost of having invested so much in internal combustion. … [Rivian and Lucid are] unencumbered by these challenges." [NPR]
- About 85% of check-writing general partners at venture capital firms are male. [Fortune]
- "At a time when people everywhere are demanding technologies to increase connectivity and presence, most have concluded that AR/VR did not yet fit the bill." [MarketWatch]
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 recent research:
Market updates Thematic research Emerging Technology Research Coming next week (subject to change) - Quantitative Perspectives: US PE's Recovery and Beyond
- ETR: Agtech
- A side-by-side comparison of VC trends in medtech versus biotech
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| | Since yesterday, the PitchBook Platform added: | | 265 Deals | 902 People | 229 Companies | 25 Funds | | | | | | |
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