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In today's Daily Pitch, you'll find: - Our latest analyst note takes an early look at 2022 VC fund performance and the impact of growing pessimism on private market portfolios.
- US investor interest in Chinese companies could face a roadblock as Congress weighs broader federal scrutiny.
- SumUp has raised new funding at a valuation of more than $8 billion, less than half what it was reportedly seeking earlier this year.
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| A cloudy end to VC's day in the sun | | Financial markets have sustained a series of gut punches over the last two quarters. With falling growth stocks, a recent wave of layoffs and central banks scrambling to tame inflation, the tailwinds benefiting venture capital funds over the prior two years appear to have reversed.
As a consequence, fears of recession and anecdotes of dealmaking troubles have VC fund LPs wondering what will come of their outsize paper returns.
Our latest analyst note takes an early look at 2022 VC fund performance and the impact of growing pessimism on private market portfolios. Key takeaways include: - Preliminary data for Q1 suggests markdowns in net asset values have started occurring, with 68.1% of reporting VC funds showing a drop in valuations from their 2021 peaks. That puts VC funds in worse shape than other private fund strategies.
- With over $1.4 trillion in unrealized value sitting in VC funds, a sizable and sustained drop in valuation multiples could result in billions of dollars in value wiped away from LP portfolios.
| | | | | | | | | US could target tech investors' favored sectors in China | |  | | (Nicolas Asfouri/Getty Images) | | | Revived investment in Chinese companies by US firms could face a roadblock as Congress weighs imposing broader federal scrutiny of US capital flowing into China and other commercial rivals.
US investors' appetite for Chinese investments—in particular for venture deals—has bounced back in the last few years, according to PitchBook data.
In 2021, US firms participated in $44.6 billion worth of deals in China, almost double 2019's $23.1 billion. | | | | | | | |
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| A message from RBC Capital Markets | | |
| How is volatility influencing private equity M&A activity? | | Private equity M&A activity in 2021 was 50% higher than the previous record. Private equity firms executed 8,500 transactions worth over $1.2 trillion in aggregate last year and the outlook remains strong despite market volatility. The IPO backlog has grown and private equity firms are turning to M&A to deploy capital and make the right investments to drive returns.
Where are the current challenges for M&A dealmaking? How are private equity sponsors evolving their strategies? Which sectors are seeing strong growth opportunities?
Understand the evolving private equity and M&A landscape with insights from RBC Capital Markets' experts. | | | | | | | |
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| SumUp settles for $8B+ valuation as fintech startups lower targets | |  | | (Courtesy of SumUp) | | | SumUp's new funding round has raised the company's valuation to about $8.4 billion—less than half the target the UK payments specialist was reportedly seeking earlier this year.
The company isn't alone in its challenges, however. The new capital comes at a time when many startups, even in hot sectors such as fintech, are having to reconsider their valuation ambitions amid a tougher macro environment. | | | | | | | | | | How a recession could weaken the work-from-home revolution. [The Atlantic]
Titanium dioxide is the latest addition to the growing list of chemicals deemed unsafe in Europe that are still used in the US. [The Guardian]
In 2020, Varo became the first consumer neobank to secure a federal banking license. Now, it's the latest fintech to run up against financial trouble. [Forbes] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 417 Deals | 1874 People | 526 Companies | 20 Funds | | | | | | |
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| 2011 Vintage Global Secondaries Funds | | | | | | |
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| Electric Hydrogen picks up $198M | | | | | | | | Zap Energy collects $160M | | | Zap Energy has raised a $160 million Series C led by Lowercarbon Capital. Founded in 2017, the Seattle-based company is building a compact and scalable fusion reactor designed to support sustainable energy production. | | | | | | | | | Medallion has raised a $35 million Series C co-led by Spark Capital and GV. Based in San Francisco, the company provides a network management platform that offers licensing and credentialing solutions for healthcare organizations. | | | | | | | Magnetic Insight raises $17M | | | Magnetic Insight has raised a $17 million Series B led by Celesta Capital. The California-based company provides diagnostic and monitoring technology designed to help clinicians directly monitor cell therapy cancer treatments. | | | | | |
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| Red Arts Capital lands Coregistics | | | Red Arts Capital has acquired Coregistics, a Georgia-based contract packaging services provider. Coregistics operates out of 17 facilities across the US. | | | | | | | Halifax backs The Liberty Group | | | The Halifax Group has invested in The Liberty Group, a Houston-based provider of temporary staffing, executive search and employee screening services for the multifamily residential real estate industry. | | | | | | | LLCP acquires Technical Safety Services | | | | | | | | OceanSound invests in Lynx | | | OceanSound Partners has invested in Lynx Software Technologies, a San Jose-based developer of open architecture software solutions for embedded computing systems. Lynx serves customers in sectors including aerospace, defense, industrial and critical infrastructure. | | | | | | | PE-backed Florida Food Products buys Javo Beverage | | | | | | | | 3i to sell Havea to BC Partners | | | 3i and co-investor Cathay Capital have entered into exclusive negotiations for the sale of Havea Group to BC Partners. 3i originally invested in the French health and wellness products provider in 2017. | | | | | |
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| Don't miss our upcoming webinar | | Join PitchBook for a webinar discussing emerging tech highlights for early-stage investors and forecasts for the landscape in the year ahead. Our analyst will explore notable themes like Web3 & DeFi, the metaverse and others. Key topics include: - ETI deal value is down from Q4 but retained its hold, reaching $8 billion in Q1 of 2022.
- Large deals continue to surge, with 22 ETI deals valued at $100 million or larger.
- For the third consecutive quarter, crypto topped deal value, with Web3 & DeFi leading the way as the largest ETI investment area.
Register now to secure your spot | | | | | | | |
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| Vista Equity Partners sells Datto to Kaseya for $6.2B | | | Vista Equity Partners has completed its sale of security and cloud-based software solutions provider Datto to Kaseya for $6.2 billion. Vista remained the majority owner of Datto after its IPO, originally acquiring the company in 2017. | | | | | |
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"Private equity (PE) deal activity in Europe's second largest PE ecosystem has had a record start to the year. €59.1 billion in sponsor dry powder, France undergoing its fastest GDP expansion in 52 years in 2021, and willing sellers contributed to the heightened deal activity."
Source: PitchBook's 2022 France & Benelux Private Capital Breakdown | | | | | |
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