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Has the VC music stopped? Market uncertainty in 2023 has only worsened following the sudden demise of Silicon Valley Bank. We're hosting a free webinar Wednesday to review the macroeconomic factors impacting VC and what to expect going forward. Register here.
The value of carbon: Our latest research explores the novel carbon dioxide uses that have captured VC attention and the differing viabilities of those technologies and markets. Read it here.
Join us! We're hosting our Private Credit Forum this Tuesday in London, where you can learn about the latest trends in private credit and network with peers and experts. To register and view the agenda, see more details here. | | | | | |
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| SVB was an integral piece of VC—its failure will have a large impact | | Few banks are going to survive when a quarter of their deposits are pulled in a single day.
That's what happened to Silicon Valley Bank after $42 billion worth of withdrawals during a startup-led bank run last week.
The collapse of the VC market's trusted partner was a harbinger of the troubles that the venture industry is now staring down. A key concern for the bank was the continued high cash burn of VC-backed companies, leading to a large decline in deposits.
SVB was more than a bank to the tech sector.
Over 40 years, it had developed a product suite tailored for the industry—mortgages to executives, credit lines for VC funds to keep capital flowing, and venture debt to startups deemed uncreditworthy by larger lenders. It also wasn't limited to US startups, with offices around the world.
In its Q4 earnings, SVB noted that it was a banker for 50% of the tech and life sciences startups in the US. Maybe that was an indicator of the problems ahead everyone missed. As the venture market goes, so goes Silicon Valley Bank.
The venture industry was already facing a slowdown; deal value fell roughly 60% from Q4 2021 through Q4 of last year. This quarter isn't looking much stronger, but at least depositor guarantees are helping startups continue normal operations—for the time being.
There would never have been a good time for the bank to fall, but this is another major pressure on the market that will accelerate the pricing correction in VC. It will likely lead to a quicker bifurcation between the winners and the rest, as equity and debt are increasingly reserved for companies built on strong fundamentals, rather than the high CAC models of the past few years.
If the market ever needed a signal to slow cash burn, I doubt there would be any clearer than the collapse of Silicon Valley Bank.
For more analysis from our full venture team, download the free research: The Collapse of Silicon Valley Bank
| | | | | | | | | Digital health is everything, everywhere | | The COVID-19 pandemic led to an explosion in digital services throughout the healthcare system, from telehealth to online care navigation and digital pharmacies. Our new Digital Health Report, as we launch full-time analyst coverage of the vertical, highlights that VC investment fell by half in 2022 compared to its 2021 peak. Innovation remains strong in digital health, as startups find new ways to deliver care through home health programs, digital therapeutics, virtual reality, and hybrid care models. But the industry is also encountering significant point solution fatigue among payers and employers. And startups also face the prospect of customers critically evaluating spending, a headwind for both direct-to-consumer and employer-facing business models.  | | PitchBook clients get access to the full market map. | Startups that offer ways to lower the cost of care with improved convenience while demonstrating a path to profits are likely to emerge stronger on the other side of the current environment. And as healthcare systems continue to become more expensive and more complicated, care coordination services are becoming an increasingly important tool in the toolbox. Looking ahead, the digital health vertical is unlikely to lead the way on the IPO front, but we anticipate many startups will be looking to make the jump to the public markets when the tide turns. We are also keeping an eye on new digital health unicorns given the high bar for funding. News that Headway is in talks to raise $100 million at a $1 billion valuation is a sign of robust VC investment to come in behavioral health. PitchBook clients can access the full version of our Digital Health Report. Non-clients can download a free preview. | | | | | | | |
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By several metrics, PE deals got smaller in 2022.
In Q4, middle-market deals accounted for their largest quarterly share of US PE deal count in five years, showing early signs of sponsors shifting down market.
Add-on deals, the building block of inorganic platform growth, captured their largest-ever portion of overall US PE activity in 2022. Even take-private deals shifted into middle-market territory as public valuations deflated.
Our 2022 US PE Middle Market Report looks at a full year's worth of deals, exits, valuations, and fundraising, outlining the ways that middle market funds are outperforming mega-funds: | | | | | | There's a lot to digest when it comes to the state of VC.
It's hard to know the trends and how big the gains and slumps are—simply put, understanding the data, let alone visualizing it, is a task unto itself.
Our latest Quantitative Perspectives report breaks it all down, visualizing historical information and trends to help you make sense of the direction of VC.
Key takeaways include a low point for valuation multiples since 2016, headwinds for mature startups, and quantifying how investor-friendly we find the current market: | | | | | | Private debt assets proved resilient amid a challenging macroeconomic environment last year.
GPs enjoyed robust fundraising momentum and demand for private debt loans has continued to grow, according to our 2022 Annual Global Private Debt Report. Key takeaways include: - Funds dedicated to private debt raised over $200 billion last year.
- Preliminary data shows a rebound in the performance of private debt funds, making this the third-best-performing private market strategy.
- The popularity of mezzanine funds grew, driven by high demand for paid-in-kind loans, which help borrowers preserve cash.
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Extreme weather and the Russian invasion of Ukraine captured the world's attention in 2022, and agtech investors were no exception.
Although VC investment dipped to $10.6 billion last year—from $12.3 billion in 2021—investors anticipate a coming bloom of entrepreneurship to tackle global food insecurity and climate change.
Our 2022 Agtech Overview dives into the innovative tech solutions and investment opportunities that could change the game, from custom plant biotech to aquaculture and weeding robots: | | | | | | Virtual reality is on the cusp of revolutionizing healthcare, as the tech has driven innovation in pain management, anti-anxiety, and exposure therapy on the patient side.
For medical students, VR immersion has the potential to transform the effectiveness of surgical training as well as boost their understanding of conditions like dementia.
Our Emerging Space Brief dives into how virtual reality is reimagining medical training and patient care. But obstacles remain across regulatory uncertainty, affordability, data privacy, and addiction risk: | | | | | |
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Key Takeaways from European Private Market Conferences
Shrinking venture valuations, shifting private equity dynamics, and muted exit markets were among the key topics highlighted at IPEM and SECA, a pair of conferences we attended in Q1.
Our analyst note recaps the main takeaways on challenges and opportunities within Europe's private markets, including disadvantages compared to US VC, energy as a focal point, and why PE firms are prioritizing add-ons: | | | | | |
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Our insights and data featured in the press: - Despite last year’s slowdown, venture debt continues to gain favor amid growing investment in private credit. [Institutional Investor]
- For digital health, the growing sense of gloom follows a bleak 2022 during which VC investment in the vertical fell by more than half. [Politico]
- Why the fall from 2021's VC highs was a necessary correction. [MarketWatch]
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 & tech research
Coming next week (subject to change) - Greater China VC Report
- Real Estate Report
- ETR: E-Commerce
- ETR: Mobility Tech
- Vertical Snapshot: Generative AI
- CVC & M&A in an Economic Downturn
- Gaining an Edge in VC Investment Selection
- Autonomous and Remote-Controlled Heavy Equipment
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| Data is your biggest asset - Gulp Data lets you borrow against it | | It should be easier for companies to leverage the financial value in their data to access funding. Trouble is, data doesn’t sit on the balance sheet, and try finding a bank that will lend against it (especially this week). That’s why Gulp Data is pioneering data-backed lending - helping organizations of all kinds transform their intangible data assets into operating capital.
Gulp Data provides fast, dilution-free loans backed by your data. Its ML models value your datasets in hours, its process is always encrypted and secure, and your original data never leaves your server.
Learn more about unlocking data as an asset TM at gulpdata.com | | | | | | | |
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