In Partnership with Collision 2022, North America’s fastest-growing tech event, PitchBook recently surveyed 105 venture capitalists about their views on investment strategies and outlooks amid market volatility, rising inflation and shifts in the talent market. We gleaned insights on their approaches to creating impact, their criteria for investing and their thoughts on potential emerging tech disruptors.
The quiz below is comprised of the same questions we asked venture capital investors at Collision between June 20–23, 2022. Test yourself to see how well-familiarized you are with VC investor sentiment as we head into the second half of 2022. READ MORE
5 Things To Know About Sunny Balwani, The Former Theranos Executive On Trial
Former Theranos executive Ramesh “Sunny” Balwani’s fraud trial is coming to a close, months after founder Elizabeth Holmes was found guilty of defrauding investors.
Balwani was the now-defunct company’s chief operating officer, and was charged along with Holmes with mischaracterizing the company’s blood testing technology’s efficacy and business performance, according to The New York Times. Balwani and Holmes both pleaded not guilty, but Holmes was convicted on four of the 11 charges. READ MORE
Here’s One Un-Bearish Indicator: Series B Is Holding Up
Amid a broad and often punishing bear market for tech, U.S. Series B dealmaking is holding up pretty well.
So far in 2022, investors have poured a bit over $24 billion into Series B deals, per Crunchbase data. That’s higher than the full-year total for three of the past five calendar years, as laid out in the chart below: READ MORE
Surviving Down Rounds
Founders spin a vision to attract investment dollars, then race to turn that vision into reality.
But what if the tide goes out faster than you expected? That’s happening right now for a lot of startups because of the capital markets. Inflation is up, valuations are down and the VCs are about to see you’re behind. READ MORE
Private Equity Managers Prioritizing ESG Over New Deals
Private equity fund managers intend to direct most of their capital to setting up impact funds or investing in targets with ESG-focused themes, according to new research.
Audit and consultancy group BDO’s Spring 2022 Private Capital Pulse Survey polled 200 US private equity fund managers and found that impact funds and ESG strategies are becoming more of a priority than new deals for managers. READ MORE
Buyout bosses prepare for the storm
Despite the sunny weather, the outlook was less rosy this week in Berlin, where the private equity industry met for its annual industry summit.
In a week when the S&P 500 stock index fell into a bear market and both the US Federal Reserve and Bank of England raised interest rates, buyout bosses met in the German capital to discuss soaring inflation, geopolitical tumult and recessionary fears. READ MORE
Private Equity Pass No More: Antitrust Enforcers Look to Increase Scrutiny on “Roll Up” Acquisitions
The two top federal antitrust enforcers, in contemporaneous interviews, recently highlighted a new target for antitrust enforcement for their respective agencies: private equity firms and their acquisition strategies. Jonathan Kanter, Assistant Attorney General (“AAG”) for the Antitrust Division of the Department of Justice (“DOJ”), in an interview with the Financial Times, indicated that he intends the DOJ to conduct “a fuller assessment” of private equity deals, especially in situations where firms are engaged in transactions that are “rolling up” companies in the same, or competitively adjacent, industry segments.1 Kanter, in the interview, stated that “’[s]ometimes [the motive of a private equity firm is] designed to hollow out or roll up an industry and essentially cash out. That business model is often very much at odds with the law, and very much at odds with the competition [the DOJ] is trying to protect.’” READ MORE
Founders: It’s time to look beyond VCs, and approach angel investors
Global VC funding reached $143.9 billion in the first quarter of 2022 — down 19% from the previous quarter.
Amidst the current recession and looming uncertainty, VCs seem to be pulling out of the market, which means that startups need to turn to alternative sources of funding — like angel investors and funds. READ MORE
VC market faces 'rational reality' reset, investors warn
Venture investors expect a widespread reset in investment activity as the market shifts to favor sustainability over growth.
At the 2022 SuperVenture conference in Berlin, the impact of macroeconomic volatility on capital raising and valuations was at the forefront of the discussion, with most investors predicting tougher times ahead for startups. READ MORE
Scores of newly public companies worth less than they raised from VCs
The IPO and SPAC boom of recent years was a once-in-a-decade opportunity for investors in tech startups to cash out. Now, public investors who bought in are paying the price.
Here's a stark example of how the sell-off has played out: More than 140 VC-backed companies that went public in the US since 2020 have market capitalizations that are less than the amount of venture funding they raised, according to PitchBook data. READ MORE
Venture funding in Europe is declining faster than in the US — but causing much less panic
When venture funding started to decline globally in the first quarter, Europe initially looked like an outlier. The region recorded strong Q1 numbers and was one of the few markets to see quarterly growth over the end of last year. But since the market reached its peak in January — at least for now — Europe’s funding has actually declined at a faster rate than other regions. READ MORE
Bidding adieu to the SPAC craze
The implosion of the SPAC boom has proven a multiquarter process. We may be in the final throes of the experiment, at least from a startup perspective. READ MORE
Tech Layoffs Analysis: Late-Stage Startups Are Hit Hardest
In the brutal sweep of layoffs hitting U.S.-based tech companies this year, late-stage startups have fared the worst, according to a Crunchbase News analysis of aggregated layoff data.
So far this year, more than 21,000 employees of U.S. tech companies have been laid off, a Crunchbase News tally shows. READ MORE
SoftBank’s Vision Fund Deals Show Slowing Pace, Smaller Rounds
When SoftBank announced last month it will take a more conservative approach to selecting investments—after recording a $27.7 billion loss on its Vision Fund business segment for its fiscal year—it was another warning shot that the high times of 2021 are over for venture capital. READ MORE
Private equity faces 'crisis of value' over inflated prices
Private owners of assets face a “crisis of value”, after years of prices being driven higher by rock-bottom interest rates, according to two senior private equity figures.
“Right now in the private markets it has been a crisis of value,” Gabriel Caillaux, head of General Atlantic’s business in EMEA, said in a Bloomberg TV interview at the SuperReturn conference for investors in Berlin. “The excesses happened because valuations ran up and you had a whole new set of actors that came in who made the deal cycle a little bit too accelerated.” READ MORE
Private equity – the new kings of Wall Street
Top private equity firms are “the new kings of Wall Street”, says The Economist. Private equity refers to investments that are not listed on public markets. It usually makes the headlines when private equity firms buy a listed company and take it private – such as supermarket Morrisons’ £7bn sale to Clayton, Dubilier & Rice last October. READ MORE
SuperReturn: A party of the haves and have-nots
It was all smiles inside a Berlin conference centre last night as dealmakers from across the global private equity market descended on the city for the industry’s annual summit, SuperReturn.
But while some buyout shops were toasting stellar returns and the close of record new funds at the evening champagne reception, there was caution in the air. READ MORE
PE/VC investments in May rise 42% to $5.3 bn; dip 29% month-on-month
While investment by private equity and venture capital players continued to rise in the month of May on a year-on-year (y-o-y) basis, on a month-on-month basis the pressure of global uncertainties was evident. READ MORE
Fundraising in the feed: A new era in VC
Those not familiar with the inner workings of the venture capital industry tend to have a distorted view about how early-stage companies raise funds. Many think of Shark Tank — a group of VCs sitting around in their high-back leather chairs holding court with an unending line of CEOs pitching them for money. In reality, it’s not a parade of pitches, and being an early-stage investor isn’t like Shark Tank at all. Founders don’t line up around the block waiting to woo VCs. In fact, just the opposite is happening. VCs are lining up and begging founders to take their money. READ MORE
Down rounds, structured terms and focus on profitability are making a comeback
In February, H1, a healthcare analytics specialist, decided to raise additional capital just months after closing a $100 million Series C at a $750 million valuation, led by Altimeter.
That turned out to be a good call. H1 received commitments from insiders for a $23 million Series C extension—at the same valuation and terms most recently agreed upon. The financing was agreed to shortly before market conditions for tech stocks and pre-IPO companies took a turn for the worse. READ MORE