Axios Pro Rata: A really ugly Q2 for VC

Plus: Starbucks mulls change in UK | Monday, July 18, 2022

Open in app View in browser     Axios Pro Rata By Kia Kokalitcheva · Jul 18, 2022 Hello, readers! As Dan mentioned on Friday, he's taking a bit of time off, so I'll be your deal news captain for the next two weeks. As always, send me all your scoops, news, and comments replying to this email or on Twitter @imkialikethecar.     Top of the Morning Illustration: Sarah Grillo/Axios   New data tells us something we already knew or at least suspected — last quarter was absolutely brutal for public listings. "The IPO window was virtually shut in Q2 2022, and VC-backed public listings reached a 13-year quarterly low with eight completed," PitchBook notes in its latest VC report. Why it matters: Anyone looking around at the market these last few months has noticed that things have changed from the pandemic boom times. But PitchBook's numbers give important context on just how deeply they have. Flashback: There were 183 VC-backed IPOs in 2021 and 108 in 2020, per PitchBook — the latter happening despite the onset of the pandemic initially rattling global markets. The first half of 2022 had only 22 close. The big picture: Q2 saw the lowest quarterly exit value since Q4 2016, while exit count remained fairly high. Between the lines: This means that we're seeing an uptick in smaller acquisitions, with startups running to shelter via mergers, and acquirers are taking advantage of the bargains. In fact, the median acquisition size is the only exit category showing a year-over-year increase. Meanwhile, exits of $500 million and over are seeing their first year-over-year decline since 2018. What we're watching: Two things: When the IPO window opens up again. Not long ago, optimistic insiders banked on after Labor Day, now it's hard to imagine anything earlier than Q4 — if at all this year. The same report also found that VC fundraising is on track for its second-highest record year, but a lack of exits (and thus, distribution) can't keep this music playing for much longer, can it?     The BFD Illustration: Brendan Lynch/Axios   Starbucks is examining a potential sale of its U.K. business, having hired Houlihan Lokey as an adviser, according to the Financial Times. Why it's the BFD: Even the premiere coffee on-the-go brand isn't immune to shifting consumer habits since the pandemic started. Details: Starbucks has about 1,000 stores in the U.K., 70% of which are franchises while it owns the rest. It employs about 4,000 people, and generated a pre-tax profit of £13.3m on sales of £328m for the 12 months ending in October 2021, after reporting a loss of £40.9m the prior year. The bottom line: "Food chains have increasingly opted to sell off stores, preferring to go with a more asset-light model, which also happens to be higher margin."— Axios' Kimberly Chin notes.     Venture Capital Deals 🚑 Delfi Diagnostics, a Baltimore and Palo Alto, Calif.-based liquid biopsy company, raised $225m in Series B funding led by DFJ Growth, with Eli Lilly and Company, Point72, Brown Advisory, Point Field Partners, Initiate Ventures, Open Field Capital, PTX Capital, Cowen Healthcare Investments, Foresite Capital, Menlo Ventures, OrbiMed, T. Rowe Price Associates, Inc., Northpond Ventures, Samsara BioCapital, Rock Springs Capital, AV8 Ventures, Illumina Ventures, Osage University Partners, and Windham Venture Partners also participating. www.delfidiagnostics.com • Great Minds, a Richmond, Va.-based education curriculum company, raised $100m in primary and $50m in secondary financing from A-Street Ventures. www.greatminds.org • Stori, a Mexican credit card startup, raised $50m in new funding at a $1.2bn valuation led by BAI Capital, GIC and GGV Capital, with Lightspeed Venture Partners, General Catalyst, Vision Plus Capital, Goodwater Capital and Tresalia Capital also participating. http://axios.link/sxef • Syrius Robotics, a Chinese autonomous warehouse robots startup, raised 50m yuan ($7.4 million) in additional Series B funding from Harvest Capital. http://axios.link/yiQg 🚑 Healshape, a French breast reconstruction startup, raised €6m in seed funding led by Go Capital and Demeter, with WinEquity, BPI, Credit Agricole Creation and Angels Santé also participating. www.healshape.com     A message from Axios Get a free preview of Axios Pro     Discover how Axios Pro empowers thousands of professionals every day with deeper reporting, granular analysis, exclusive scoops and more. We'll get you smarter, faster on the deals, trends and companies transforming your industry. Get your free preview today.     Private Equity Deals • Ligentia, backed by Equistone Partners Europe, agreed to merge with VGL Solid Group, a Polish freight and logistics provider. www.ligentia.com • Deutsche Telekom agreed to sell 51% of its GD Towers unit to Brookfield Asset Management and DigitialBridge. http://axios.link/vzq0 • Clearlake Capital invested in Crash Champions, a Chicago-based collision repairs provider. http://axios.link/dLkD 🚑 TA Associates invested in Intelerad, a Montreal and Raleigh, N.C.-based medical imaging software company backed by Hg and ST6. http://axios.link/yjPi • Epiris acquired Sepura, a U.K.-based digital radio systems company. http://axios.link/8KqI 🚑 Berkshire Partners invested in MedOne, an Israeli provider of colocation data center infrastructure backed by the van Rooyen Group and Taavura. www.medone.co.il 🚑 CVC Capital Partners invested in Spectrum Medical Group, a U.K.-based chain of multi-specialty medical providers, at a £1bn valuation. www.spectrummedical.com • Mill Rock Packaging Partners, backed by Mill Rock Capital, acquired Impressions, a St. Paul, Minn.-based specialty packaging and printing company. www.i-i.com • Euromoney Institutional Investor accepted a £1.7bn takeover bid from Astorg and Epiris. http://axios.link/vmLQ • Warburg Pincus invested in El Car Wash, a Miami-based car wash company. www.elcarwash.com     Public Offerings 🚑 Everside Health Group, a Denver-based primary health care company, withdrew its plans for an IPO, citing market conditions. http://axios.link/sLE2     More M&A • Acast acquired Podchaser, an Oklahoma City-based podcast database, for $34m. http://axios.link/reTA     Fundraising • Oxford Science Enterprises, an investment firm partnered with Oxford, has raised an additional £250m ($300m) in new funds. www.oxfordscienceenterprises.com • Banneker Partners, a San Francisco-based private equity firm focused on software, has raised $550m for its second fund. www.bannekerpartners.com ⛽️ Kimmeridge Energy Management Company, a New York-based energy investment firm, raised $500m for a potential $1bn activist fund, per Buyouts. http://axios.link/DQ5b     It's Personnel • Partech has promoted Andrew Whiting to partner, Laetitia Marcadé and Luis Zarate to senior associate, and Alexis Lancien to associate. www.partechpartners.com ​​ • 500 Global has hired Saskia Howard as head of strategic relations early this week. She was previously a director of external relations at SoftBank Investment Advisers. www.500.co • Clearlake Capital has promoted Arta Tabaee to partner and managing director, Paul Huber to managing director, Nate Mejías to principal, and Sean Courtney, Dilshat Erkin, Ben Kruger and Emily Mullins to senior vice presidents. www.clearlake.com • Welsh, Carson, Anderson & Stowe has hired Travis Cameron as operating partner. He was previously the strategic partnerships lead at Tealium. www.wcas.com     Final Numbers Data: YCharts; Chart: Axios Visuals Buy now, pay later's hype has subsided since the pandemic euphoria. Check out the BNPL deep dive we put together in our Markets newsletter, led by Felix Salmon.     A message from Axios Get a free preview of Axios Pro     Discover how Axios Pro empowers thousands of professionals every day with deeper reporting, granular analysis, exclusive scoops and more. 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