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In today's Daily Pitch, you'll find:
Our latest analyst note explores existing investors' impact on the fundraising process, deal size, valuation step-ups and overall returns for VC firms and startup founders.
Chart of the day: VC fintech exit activity, from our Retail Fintech Report.
Today's Top Stories
Existing investors help startups land bigger checks with insider-led rounds
Existing investors are some of the most effective resources in VC fundraising. Investors offer insightful advice, provide access to their networks and influence the due diligence process—all actions that can ultimately produce valuation step-ups in subsequent financing for startups and signal a strong preliminary investment track record to VCs' prospective LPs.
In 2022, new financing rounds led by existing investors—known as insider-led rounds—had a median deal size of $14.1 million, nearly triple that of the non-insider-led round median of $5.5 million.
In our latest analyst note, Who Benefits from Insider-led Rounds?, we explore the influence of existing investors on the fundraising process, deal size, valuation step-ups and overall returns for VC firms and startup founders.
Market Map: Tech investors work to untangle the supply chain
(Travel mania/Shutterstock)
While the supply chain continues to untangle, geopolitical issues ranging from China's recently relaxed zero-COVID policy to the war in Ukraine have prevented a complete return to normal.
American investment in China has also plummeted as a result of new policy in the US, raising questions as to how the supply chain will adapt going forward, given previous reliance on Chinese manufacturing and labor.
Explore our Supply Chain Market Map to find out how VCs are investing through the uncertainty.
Signature research: The Future of Diligence in Private Equity
Private equity's approach to diligence is evolving. The process is becoming more sophisticated as firms increasingly use data to improve efficiency with acquisitions. West Monroe's latest report analyzes the state of diligence in private equity and how investors are adapting to a digital future.
West Monroe surveyed 100 U.S. private equity leaders and found:
68% say they will use more technology and tools vs. people to get the job done
67% of respondents say their current approach to ESG diligence is consistent across targets, and only 40% say they will maintain that consistency
27% say "recommendations aligned to the investment thesis" is the most valued part of diligence today, but 40% say it will be the most valued part in the future
Our phones can write our texts, our email clients can craft our replies, and our word processors can quietly fix our grammar. Now, machine learning algorithms can write code.
Or at least, they're getting there. While code-completion tools are still a long way from commercialization, their early success promises to help developers save time and eventually steer clear of tedious troubleshooting.
Our latest emerging space brief sizes up VC activity for AI-powered code completion and breaks down how these tools work, some of their limitations, and what the future holds for the nascent sector.
TripActions lands $400M credit as rivals feel growing pains
(Olena Yakobchuk/Shutterstock)
TripActions, a corporate travel and expense-management specialist, has raised a $400 million credit facility, less than two months after closing an equity round at a $9.2 billion valuation—a significant jump from the $7.5 billion it garnered a year prior.
TripActions' revenue evaporated at the start of the pandemic, and the company was forced to lay off staff. Unlike many of its rivals, TripActions has likely operated in a more efficient manner since then, said Rudy Yang, a fintech analyst at PitchBook.
Mind the GAAP: How investors can assess earnings quality
(wrangler/Shutterstock)
When it comes to earnings, both quality and quantity matter. And while investors know what they're getting with standardized metrics, non-GAAP earnings can be a useful tool for investors—provided you know what to look for.
In a recent report, Morningstar analysts lay out how to assess non-GAAP earnings, with commentary on common red flags as well as useful data that can inform investment choices.
The great chip war—and the challenge for global diplomacy. [Financial Times]
When might air travel return to pre-pandemic levels? Here's the forecast. [Visual Capitalist]
While many crypto exchanges may be collapsing, asset managers like Hamilton Lane, KKR and Apollo are betting that the underlying tech—blockchain—will persist. [The Wall Street Journal]
Year to date, PitchBook's newsletters have over 161 million impressions and over 744,000 report downloads. Partnering with PitchBook Media is a way to feature your firm's insights in one of the most popular venues for timely and relevant PE and VC articles, news, asset class reports and custom white label reports.
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VC Deals
Customcells soars with $63M
German battery maker Customcells has raised a $63 million Series A. The round was led by World Fund, a climate-focused VC, and carmaker Porsche.
UnaBiz has raised an additional $25 million for its Series B led by Sparx Group, bringing the round's total to $50 million. The Singapore-based startup offers internet-of-things services, including SigFox, which it acquired in April.
American Express Ventures, the VC arm of the credit card giant, has invested an undisclosed amount in Selfbook. The hotel booking SaaS company closed a $40 million Series A last year led by Tiger Global.
The crypto market has lost some of its luster since its resurgence in 2021, with values dropping and companies and investors alike leaving the industry. But there is still ongoing VC interest, and we predict a significant amount of deployed capital in the next few years.
Join our webinar to get the perspectives of industry investors and PitchBook emerging tech senior analyst Robert Le on how this technology can move forward. Key topics include:
How this crypto bear market is different from past downturns.
What investors are avoiding in this market and where they see opportunities.
Viewpoints on risk management, security flaws, regulations and other crypto trends.
CPPIB-backed company secures $150M offshore wind lease
Golden State Wind has agreed to spend $150 million on an offshore lease near central California following the first US federal offshore wind lease auction for the West Coast. Newly created Golden State is a joint venture of the Canada Pension Plan Investment Board and Ocean Winds, itself a joint venture of Engie and EDP Renováveis.
Power Sustainable Lios has joined in a C$150 million (about $110 million) round of growth equity funding for GoodLeaf Farms, a Canadian vertical farming company. McCains Foods, a Canada-based frozen food producer, also invested in the round.
Oaktree Capital Management-backed brand manager WHP Global has struck a deal with clothing retailer Express. The companies agreed to form a joint venture that contains parts of Express' intellectual property, to which WHP will contribute $235 million for a 60% stake. WHP also agreed to buy a 7.4% stake in Express for nearly $25 million in a PIPE deal.
No-code software developer Airtable is cutting 20% of its staff and losing its chief revenue officer, chief product officer and chief people officer, TechCrunch reported. Just last year the company garnered an $11 billion valuation.
Plaid, a fintech startup that connects bank accounts to financial applications, is laying off about 20% of its workforce. In a message to Plaid employees, CEO and co-founder Zach Perret said, "Revenue growth did not materialize as quickly as expected." Last year, the company raised a $425 million Series D that raised its valuation to $13.4 billion.
Marketing startup Banzai has agreed to go public via a merger with blank-check company 7GC & Co. Holdings. The company will trade on the Nasdaq with a combined enterprise value of $380 million. After the merger is completed, Banzai has agreed to acquire advertising startup Hyros for $110 million. Banzai is backed by investors including Tribe Capital and DNX Ventures.
IBM has agreed to acquire Octo, a US federal contractor that provides IT modernization and digitization, from Arlington Capital Partners, which acquired Octo in 2019. IBM plans to fold the company into its consulting business.
Sentinel Capital Partners has closed two of its funds—Sentinel Capital Partners VII, an equity fund, and Sentinel Junior Capital II, a structured capital solutions fund—on $4.3 billion and $835 million, respectively. The equity fund closed above its hard cap.
VC firm Union Square Ventures has closed its second fund targeting climate-focused startups on $200 million, The Information reported. Union Square was an early backer of Twitter and Etsy, and previously raised $162 million for its first climate vehicle.
First Mode to nab $200M investment from Anglo American
London-based mining company Anglo American has agreed to merge part of its business with Seattle-based First Mode, creating a company valued at $1.5 billion that will supply Anglo with hydrogen fuel cell vehicles. Anglo also said it would invest $200 million in First Mode.
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