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| Join us! What are the emerging technologies that will drive growth opportunities in the years to come? Our analysts are hosting a free webinar Thursday to discuss Web3 & DeFi, the startups building metaverse products, and more. Register here. | | | | | |
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| Here for a good time, not a long time: an early look at 2022 VC fund returns | | A suddenly sour macro environment took its first victim in unprofitable growth stocks. Next came broader indices falling into bear market territory along with a flight from fixed income markets. Now, LPs' VC portfolios may be the next target of persistent inflation, rising interest rates, and slowing economic growth. VC funds saw a nearly unprecedented run of strong returns from the pandemic-induced lows to the end of 2021, helping the asset class outpace all major private fund strategies over recent history. However, almost two-thirds of the quarterly returns for VC from Q2 2020 through Q3 2021 have come from unrealized values on average; a period only surpassed by the dot-com run-up. With the comp sets of tech companies in public markets seeing a reset in valuations over the last year, it's highly probable that current fund net asset values see a haircut soon. Our first, way-too-early look at VC fund returns suggests some of that haircut has started. Preliminary data for Q1 2022 indicates that 68.1% of reporting VC funds had a drop in valuations from their 2021 peak, a multi-year high mark. Of those funds with a markdown, the median drop was -7.8%.  | | Click for a big version of this chart on VC fund markdowns. | If the data holds after further collection, a material slump in LPs' allocations will be likely for the $1.4 trillion in unrealized VC fund value from the end of 2021. Further markdowns are probable given that the market environment has continued to deteriorate through the second quarter as well. The VC dealmaking environment will present a headwind for current startup valuations the longer the liquidity crunch lasts. Startups are tightening belts to avoid down rounds, but when the cash from a prior fundraise dwindles, stale valuations from last year will be tested. Fortunately, a normalization of deal terms and valuations is probably healthy for the market in the long run. If recessionary pressures dissipate sooner than anticipated, a dawn of a new cycle is likely on the horizon. Our new research on the current macro environment dives into these themes in detail. Download the free note: Did VC Fly Too Close to the Sun? Don't hesitate to reach out if you have any questions or would like to discuss further. | | | | | | | |
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Private market investors are increasingly turning to real assets as inflation and rising rates continue to shake markets worldwide.
Our new Global Real Assets Report explains how this is due to the stability and protection that these assets offer during periods of volatility: - North American core infrastructure assets drew strong investor interest, likely due to the policy landscape that has helped prime some infrastructure investments for success.
- Oil & gas fundraising has represented less than 2% of real assets fundraising since the beginning of last year, but we expect that to change with the impact of the macroeconomic tailwinds.
- Funds targeting Europe and North America have led real assets fundraising in recent years at the expense of Asia.
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Private Equity's Opportunity in Supply Chain Technology
Supply chains are only getting more complex due to globalization and ecommerce.
But there are many ways PE firms can benefit from investing in technology that services the industry.
As we build out our coverage on PE and software, our latest analyst note explains how investors can drive scale and value in a fragmented space: - Global supply chains have buckled under labor shortages, distortions to demand, and constricted capacity of manufacturing and logistics services.
- Technology is crucial to strengthening the resilience of supply chains by improving efficiency, flexibility, and visibility.
- Logistics and transportation are core subsegments of supply chain tech in which their potential can drive significant long-term growth.
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Despite a pullback in other industries, VC investment in agtech has remained strong this year—with $3.3 billion deployed across 222 deals in Q1, led by the agrifinance & e-commerce segment.
Regenerative agriculture is gaining momentum as a potential solution to farm challenges. And while it isn't a technology, it describes a set of sustainable farming practices that are a growing thematic driver of agtech investment.
Elsewhere, the data shows VC funding has been steadily increasing for female founders, but not at the same rate as agtech's overall growth.
Our new research breaks down a strong quarter for the sector and how macroeconomics events, like the war in Ukraine, are exacerbating long-term challenges around food security: | | | | | |
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How are startups across AI, IoT, and information security leveraging modern data architectures to achieve rapid growth?
Why is database management M&A indicating key innovation themes in AI analytics across use cases?
In our webinar this week, we discussed the recent growth of industries like AI, IoT and infosec—and how they're capitalizing on software innovation trends: watch it here - June 28: Senior VC analyst Kyle Stanford will join Now CFO's webinar on venture capital investment trends. More details here.
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Our insights and data featured in the press: - VC firms funneled $9 billion into climate tech startups in the first quarter of this year, down from the $11 billion per quarter average during 2021. [Forbes]
- "The global venture capital market is really at a pivotal moment." [BNN Bloomberg]
- The model that led to the rise of ultra-fast delivery services only works best when the markets are stable and VC funding is plentiful. [Quartz]
- New data shows just how much Tiger and other deep-pocketed late-stage investors have pulled back so far this year. [The Information]
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) - Fintech VC & Public Company Valuation Guide
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| A message from Allvue Systems | | |
| Access a comprehensive list of ESG KPIs | | Institutional investors’ embrace of ESG has taken hold in the private capital space, and fund managers are sure to feel the shift.
But ESG is a broad, evolving concept. To be able to meet the needs of their investors – especially when holding a diverse portfolio across various industries – managers need to be able to have a complete picture of the ESG landscape. And to do that, they first need an extensive understanding of ESG KPIs.
Allvue Systems’ comprehensive ESG KPI list gives managers just that. Download the list now for a full picture of the ESG landscape, industry by industry. | | | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 364 Deals | 1805 People | 438 Companies | 51 Funds | | | | | | |
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