Talking behavioral health: We're hosting a live panel discussion Tuesday on the key factors contributing to the behavioral health crisis, how to design a replicable model for provider-payer collaboration, and more. Register here.
Sneak peek: For weekend readers, here are two new research releases that the wider market won't get until Monday: Accounting for the Overcapitalization of VC, Healthcare Services Report.
Dashboard updates: For an early look at where PE returns are headed, check out our PE Barometer. To see which segment of the venture market is turning slightly more founder-friendly, visit our VC Dealmaking Indicator. | | | | | |
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| Down rounds at a high for US VC since 2017 | | Despite the US economy showing continued signs of strength, marked by easing inflation and healthy consumer and business spending, 2023 has continued to be challenging for the venture ecosystem. Dealmaking and valuation figures have stagnated or declined across nearly all VC stages, perpetuated by a lifeless IPO market that continues to trap value. This trapped value has been negatively impacting investor sentiment for nearly a year now, particularly nontraditional investors, leading to a starved capital environment that is the least startup-friendly we've observed in over a decade. While many startups are hopeful their existing runway will allow them to wait out these formidable conditions, not all have managed to evade an unfavorable outcome. About 15% of all funding rounds completed during the second quarter of the year have been down rounds, the highest quarterly figure since Q4 2017.  | | Velocity of value creation (VVC) is down across all stages. | Value creation between rounds has also been heavily impacted, meaning GPs will have a tougher time raising their next fund. Median velocity of value creation (VVC) and relative velocity of value creation (RVVC) figures have fallen rapidly across the ecosystem, including a 99% YoY VVC reduction at the venture-growth stage. The turmoil within venture is especially concerning for nontraditional investors, who were the first to pull away from VC when the economy started to tilt downward, and as expected, many have remained on the sidelines. During the first half of this year, only $62.9 billion of US VC deal value involved a nontraditional investor—roughly half the $122.4 billion observed in the first half of 2022. As we've noted in the past, the absence of these investors is especially concerning given the amount of capital they've poured into the VC ecosystem in recent years; without their return, it is unlikely that venture will reach the highs of 2021 in the near future. Without a doubt, the remainder of 2023 will be challenging for most founders, investors, and other VC participants. But is the worst of it behind us or has it yet to come? Until we know what the future holds, you can get more data and analysis in our Q2 US VC Valuations Report. | | | | | | | |
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A difficult 2022 has given way to a more upbeat 2023.
Equity markets have rebounded, the economy appears to be on firmer footing, and inflation has continued to slow.
At the same time, tight credit conditions and a yield-curve inversion suggest headwinds still exist. The venture capital environment is challenged and the IPO market remains relatively closed.
However, market dislocation will offer opportunities for the patient capital allocator.
In this edition of US Market Insights, we offer a bird's-eye view of alternative markets through a macroeconomic lens, providing many of the key metrics our team tracks across equity markets, real estate, real assets, and fixed income: | | | | | | New fund data shows performance has picked up.
Our Private Capital Indexes update returns data from previous quarters to give a more accurate risk assessment and, in Q1, positive performance was recorded across all our tracked asset classes for the first time in four quarters.
Check out the average returns across private equity, venture capital, real estate, real assets, private debt, funds-of-funds, and secondaries funds: | | | | | |
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Has the generative AI balloon begun to pop?
Despite the buzz, investors are growing impatient with a lack of revenue growth from generative AI innovators.
No longer are big tech stocks going up after new product or partnership announcements, putting pressure on startups, according to our new AI & Machine Learning Report.
Still, there are opportunities within generative AI like startups working toward automation in the legal industry and ways to make large language models better: | | | | | | PE and VC healthcare specialist GPs are defying a difficult fundraising environment.
Historical outperformance by PE healthcare specialists may be contributing to fundraising success, while the track record of VC healthcare specialists has been mixed.
Our inaugural Healthcare Funds Report compiles the H1 2023 fundraising status of 450 healthcare and life-sciences specialist managers by strategic style: | | | | | | Enterprise fintech has been hitting the brakes from its highs in 2021 and 2022.
Even counting Stripe's mega-deal of $6.9 billion, total VC deal value for Q2 2023 decreased 11.9% year-over-year.
Our latest Enterprise Fintech Report covers this trend and identifies new opportunities for investors, especially in applying generative AI tech to segments such as fraud and compliance, sales, and productivity: | | | | | |
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Allocators employing quartile-based benchmarking methodologies for private fund managers face challenges in clearly understanding historical performance.
These techniques don't capture performance variability within each quartile and also fail to offer a simple way to aggregate and compare performance across strategies.
On August 23, our analysts will discuss a new framework for analyzing manager performance that addresses these issues: register here - VC in 2023: If you missed our webinar on the latest venture data and key trends impacting US VC, you can watch the free recording.
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Our insights and data featured in the press: - "Health care specialist PE fundraising has not slowed down since 2021. That's an incredible statement to be able to make." [Axios Pro]
- Why the rapid grocery delivery segment isn't coming to an end, but it is contending with a growing list of challenges. [TNW]
- US venture capital investment in China has plummeted by about 80% over the past year. [CNN]
- Startups are selling off their assets on the cheap—and that could spell a big opportunity for competitors and VCs. [Fortune]
- Valuation compression hits early-stage venture capital. [Institutional Investor]
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) - European VC Valuations Report
- Earnings for Public BDC Lenders
- UK Tear Sheet
- Agtech Report
- Medtech Report
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| | Since yesterday, the PitchBook Platform added: | | 287 Deals | 2358 People | 628 Companies | 27 Funds | | | | | | |
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