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Talking VC: The US venture ecosystem is still under stress, as dealmaking and fundraising continued to struggle in Q2. We're hosting a live discussion Wednesday that dives into the data and all the most pressing trends. Register here.
Sneak peek: We'll give a wide release to our latest Carbon & Emissions Tech Report on Monday, highlighting opportunities in recycling tech and voluntary carbon markets. You can access a preview of the research here.
July returns data: Our new Global Markets Snapshot breaks down a month of trends in the equity, debt, and commodities markets, tracking returns across a range of indexes and sectors. Read it here. | | | | | |
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| A message from Masterworks | | |
| 2,478 everyday investors shared a $1,123,615 net profit on a Monet painting | | Thanks to Masterworks, the award winning platform for investing in blue-chip art. Every single one of Masterworks’ 15 sales has returned a profit to investors, for a 100% positive net return track record. With 3 recent sales, Masterworks investors realized net annualized returns of 17.6%, 21.5% and 35%.
How does it work? Simple, Masterworks does all of the heavy lifting like finding the painting, buying it, storing it, and eventually selling it. It files each offering with the SEC so that nearly anyone can invest in highly coveted artworks for just a fraction of the price of the entire piece.
Shares of every offering are limited, but PitchBook readers can skip the waitlist with this exclusive link.
See important disclosures at masterworks.com/cd | | | | | | | |
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| Introducing PitchBook's Manager Performance Scores | | Benchmarking the performance of private capital funds is an interestingly controversial topic. Fund managers are often compared relative to a peer group based on a chosen performance metric or set of metrics. The exercise is simple enough; however, it is fraught with complications, which is why we've launched a new benchmarking tool: Manager Performance Scoring. Focusing on the benchmark metric, some prefer distributions-to-paid-in capital (DPI) because that represents cold hard cash returns. But what if it takes 12+ years to distribute all of the capital? IRR is useful because it incorporates the time value of money, but the assumptions baked into the calculation can obscure true performance. Alternatively, there are public market equivalents (PME), but there are many to choose from and each has its own drawbacks and assumptions. Then, after determining and calculating a preferred performance measurement and selecting a peer group, it is typically standard practice to denote a fund as being in one of four quartiles. The top quartile contains the best 25% of funds from the peer group, the upper-mid quartile contains the next best 25% of funds, and so on. Unfortunately, this common "quartiling" practice lacks nuance. Quartiles represent arbitrary cutoff points, allowing "top quartile" managers to become storied franchises while leaving the rest struggling to raise their next funds. However, top-quartile managers are not created equally. Likewise, a high-end second-quartile manager may well deserve better recognition. Take for example the dispersion of IRRs for the 2008 vintage buyout fund cohort (see the full chart in the report):  | | Nuance can be lost when measuring performance by quartile. | The fund earning an 18.0% IRR just ekes into the top quartile, earning an equivalent label as the funds out-earning it by 600-700 basis points. Moreover, there are several funds that barely missed the 17.9% cutoff point to be considered "top quartile." They are resigned to a second tier, despite being much closer to the 18.0% performer than that fund is to the best of the top quartile. In other words, the dispersion of returns should be an important consideration when determining a GP's track record. Not only that but how do you compare manager track records for multiple funds all at once? Simply taking the average quartile ranking across multiple funds compounds the problem of ignoring dispersion. Taken together, our Manager Performance Scoring framework seeks to alleviate the limitations of quartiling. Our Scores have several unique advantages: Interpretability: The Scores represent the degree to which a fund family has outperformed or underperformed the benchmark, whereas quartiles have limited interpretability. Incorporated uncertainty: The Scores take into consideration the uncertainty of each fund's current IRR figure. The uncertainty is a function of how much LPs have received in distributions, the fund's age, and a mean reversion term based on the extent to which a fund's IRR is an outlier relative to its benchmark. Performance aggregation: Scoring fund families allows for quick digestion of the aggregate performance. Comparability: The Scores are comparable across families even with track records made up of different vintage years and numbers of predecessor funds. Transparency: All underlying fund performance data is available to PitchBook clients on our Platform. To highlight the use cases, we've launched our inaugural rankings to present the top fund families across 10 select strategies based on our data-driven track record analysis. To see the rankings and learn more about our methodology, please download the Global Manager Performance Score League Tables. As always, please reach out if you have any questions or feedback. | | | | | | | |
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Through Q4 2022 and into Q1 2023, five of the seven fund private capital strategies we track generated a rolling one-year horizon IRR below 5%.
That's a stark shift from 2021 when every one of the strategies posted results greater than 15%.
Our latest Global Fund Performance Report explores what's driving each asset class and explains why most strategies showed weakened performance.
We also outline why there's a glimmer of hope for valuations this year: | | | | | |
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Private Capital in European Football
Over a third of European football clubs in the "Big Five" leagues have private capital backing, thanks to the region's plethora of dealmaking.
Last year had €4.9 billion worth of deals for Europe's five largest football leagues, up from just €66.7 million in 2018.
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Financial distress caused by COVID-19 and the growing AUM of PE firms has increased deal appetite for football ownership, notably from US investors.
Our analyst note delves into the rationale behind the boom in European football dealmaking and its complex ownership structures: | | | | | |
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Valuations have been on the decline for several of the largest infosec unicorns, including OneTrust and Snyk.
Our new Information Security Report dives into the latest data and explores the key trends impacting the vertical, featuring an overview of VC activity, updated market maps, lists of top companies and investors, and much more.
The research also analyzes the opportunities emerging in critical operational technology protection and machine identity management: | | | | | |
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Emerging Tech Talks: Improving behavioral health outcomes
The demand for behavioral healthcare has never been greater, and recent innovations in the space are helping enable better clinical and financial outcomes.
Our lead healthcare analyst, Rebecca Springer, will host a live panel discussion on August 15 to dive into a number of topics, including: - The pain points contributing to the behavioral health crisis and how the management of clinical outcomes is key to solving them.
- How to design a replicable model for provider and payer collaboration that puts alternative payment schemes within reach.
Register here
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Our insights and data featured in the press: - How private capital has seized on the opportunity in European football. [The Guardian]
- Why Revolut faces a tougher path than other neobanks when it comes to offsetting the crypto decline. [Sifted]
- The average monthly number of new unicorns fell to 7.3 companies in the first half of the year, down roughly 80% from 2021's full-year peak. [Nikkei]
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) - US VC Valuations Report
- Quantitative Perspectives: US Market Insights
- PitchBook Private Capital Indexes
- Healthcare Fundraising Report
- AI & Machine Learning Report*
- Enterprise Fintech Report*
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| | Since yesterday, the PitchBook Platform added: | | 331 Deals | 2085 People | 429 Companies | 23 Funds | | | | | | |
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