The Postdigital Era: As everyone looks for the next big thing in tech, our research looks ahead to what could be the next supercycle. Socioeconomic and political circumstances along with new tech infrastructure all have the chance to remake society—again. Read it here.
The push to net zero: With corporations focused on mitigating emissions, our Emerging Space Brief lays out the landscape for carbon offset trading platforms, including key tech opportunities, limitations, and a broader outlook for the segment. Read it here. | | | | | |
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| PE will have to adapt to a new normal in the new year | | | In 2022, nirvana ended for the PE world.
That blissful state of declining interest rates and expanding valuations as far as the eye can see was shattered by the fastest tightening cycle in 40+ years.
As we approach year-end, PE deal borrowing rates have pushed well into the double digits and are twice what they were at the start of the year. The LBO has a decidedly smaller "L" and PE firms are scrambling to find more ways to juice returns and keep the good times rolling.  | | PE's margin as the biggest strategy here could well shrink. | We believe 2023 will be another year of transition for the private equity industry. From outperforming public equities to underperforming in the short term. From dominating fundraising to sharing the wealth with other private market strategies that promise more stable cash-flow streams. From using the bank channel for large buyouts to now using non-bank direct lenders almost exclusively, or not using debt at all. Not all trends will reverse themselves. The highly popular take-private strategy of the last two years will continue, in our view. However, we see it migrating away from mega-deals to sub-$1 billion deals. There is an enormous overhang of companies in this strike zone as a result of the take-public craze of 2020-2021. Many are down 75% or more in price and are prime targets for a different type of take-private wave. In lieu of leverage to augment returns, buying public companies a steep discount remains as compelling as ever. These are some of the predictions that we make for private equity. To dive into these and more for the new year, please download our 2023 US Private Equity Outlook. | | Enjoy the read!
Tim Clarke
Senior Analyst, Private Equity | | | | | | | | | Expect another VC slowdown in 2023, but the outlook isn't all dour | | 2022 marked a major shift in both the narrative surrounding VC as well as the mechanics of dealmaking. No longer was "growth at all costs" an acceptable model for expansion. The market made a pivot to again seek profitability—or at least a path toward it. While the change was a healthy one, it has left many companies scrambling for runway, as raising more equity capital quickly became more difficult.  | | Demand for capital is way up at all stages. | Looking back at US VC's swift growth in 2020 and 2021, maybe it's easy to believe that last year's retraction was foreseeable, or inevitable. But not every VC stat followed the same slowdown. Fundraising reached a new annual high this year, surpassing 2021's figure in just three quarters. Each of the 10 most active markets surpassed 400 deals for just the second time, despite the slower dealmaking market. Going into 2023, the outlook for the venture market is still a bit murky. Dry powder remains extremely high, but dealmaking has continuously slowed on a quarterly basis throughout the year. The public market looks inhospitable to VC-backed companies, yet there should be a long line of companies waiting—or needing—to go public. We expect that 2023 will be another year of slowdown, especially regarding the top end of the venture market. Unicorns and growth-stage venture should be in for a grind, yet seed may remain resilient to some standard. Our outlook takes a data-driven approach to see into the future. However, past results are no guarantee of future returns. Download our free 2023 US Venture Capital Outlook. | | | | | | | |
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Industry and Technology Outlook
What's next for 12 emerging tech verticals in 2023?
Our tech analysts have compiled forecasts across all areas of their coverage, including AI, crypto, climate tech, and much more. A few examples: - Consolidation will increase in the digital banking sector and across mobility tech.
- Areas like robotics & smart field equipment (agtech), cultivated protein (foodtech), and livestream commerce (e-commerce) will get record VC funding.
- Investment will slow in areas like insurtech and the smart home IoT segment.
There's more data and analysis in the full outlook: | | | | | |
European Private Capital Outlook
European VC dry powder will hit a new record.
VC deal activity with participation from US-based investors will reach an all-time high.
PE take-privates are in store for a big year.
These are just a few of the forecasts made by our EMEA private capital analysts for the coming year.
There's much more to unpack in the full outlook, including carveouts, PE exits, and venture growth: | | | | | |
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The State of Cross-Border M&A
The market for cross-border M&A has held steady.
Activity by North American acquirers has fully recovered from 2020 lows and closed slightly higher in value despite a decline in the overall M&A market.
|  | | Geographic diversification is one area we explore. | | | |
Buying overseas companies has always involved a higher degree of risk due to unexpected changes in currencies, foreign regulations, and geopolitical tensions, but companies that successfully navigate these challenges can reap large gains.
In our research, we take region-by-region snapshots of the market and explore where potential headwinds could lead: | | | | | |
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Insurtech startups are floundering in a fragmented market.
While insurance giants carry on, many recently listed insurtech companies have struggled, indicating that they were overvalued before going public.
Now, these corrections are catching up with the private markets—VC exit value for the year is roughly zero—and we foresee a challenging market ahead.
Our new Insurtech Report breaks down the vertical's rocky Q3 and spotlights opportunities in geospatial intelligence and specialty insurance for new markets: | | | | | | Extreme weather events, geopolitical turmoil, supply chain disruptions—2022 has been a crazy year.
And the crazier it's gotten, the more apparent it has become that investors should be focusing on what really matters: food.
While macroeconomic factors have battered other sectors, they've buoyed agtech investment, making Q3 the vertical's third-strongest quarter for deal value. However, the sector isn't immune to other funding challenges.
Our new Agtech Report unpacks the latest trends in VC activity, explores emerging opportunities in weeding robots and regenerative agriculture software, and spotlights innovative startups driving forward insect production and farmland investing: | | | | | |
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How are PE firms adapting to a higher interest rate environment?
Who will be the fundraising winners in the increased competition for capital?
On January 11, our PE analysts will discuss what's on the horizon in 2023 and how dealmakers can navigate what's expected to be a challenging market:
Register here | | | | | |
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Our insights and data featured in the press: - Despite the boom in investment, meat alternatives are seeing disappointing sales growth and are feeling the pressure of market volatility and inflation. [Business Insider]
- VC investors pulled back on fintech dealmaking this year compared to 2021 (but still more than all prior years). [Axios Pro]
- In the crypto world, more VC deals are getting done in areas like infrastructure and metaverse gaming, while there's been a huge decline in backing centralized crypto services, wallets, and exchanges. [Yahoo Finance]
- VCs pumped $461 million into price comparison and shopper loyalty tools so far this year, up 62% from a year ago. [Bloomberg]
- Clean energy investments may close 2022 hitting new heights. [TechCrunch+]
- VC funding for the supplements sector has skyrocketed in recent years. [NBC News]
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
Industry and technology research
Coming next week (subject to change) - 2022 recap: Our best research of the year
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| | Since yesterday, the PitchBook Platform added: | | 450 Deals | 1734 People | 612 Companies | 19 Funds | | | | | | |
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