One of the most well-known data providers used by private equity professionals is Pitchbook.  They’re out with their take on the top 9 trends in US-based private equity activity right now.

Before looking at the list, which topics would you guess show up?  Take your guess now – the top 9 list follows.

#1: 2018 is on pace for a record

The first trend Pitchbook mentions is overall deal value.  With a flurry of $1 billion and above deals closed so far in 2018, the year is on pace to be a very good year for total deal value.  Interestingly, of the total deal value, a large chunk comes from just one deal – the $21 billion buyout of Dr Pepper Snapple Group by JAB Holding and BDT Capital Partners.

1 Source: Pitchbook

#2: 2018 may end up being the year of the buyout

One of the more intriguing Pitchbook observations is that deal add-ons as a percentage of total buyouts is on track to be the highest ever.  Should the Pitchbook data prove-out for the remainder of 2018, the percentage of total private equity buyouts that are add-ons may approach 70%.  Amazing.

2 Source: Pitchbook

#3: Business to Consumer and Energy Gets Outpaced by IT and Healthcare in 2018

This observation is probably completely unsurprising.  Should current trends continue through the end of 2018, deal counts for the IT and Healthcare sectors will outpace Business to Consumer and Energy.

3 Source: Pitchbook

#4: Smaller deals are losing favor

The fourth observation is that smaller deals – those with an aggregate value of $25 million or less – are making up a smaller percentage of total private equity activity in 2018 than any year since 2010.  This is interesting given the incredible strength of the small business sector over the past few years.  That growth has either not attracted private equity interest or has less interest in private equity.

4 Source: Pitchbook

#5: The number of exits are down, but exit value may reach 2017′s healthy figure

The fifth observation out of Pitchbook is that the number of exits is down in 2018, but exit value could potentially reach the healthy levels of 2017.  Overall, a very good, but not unsustainable year, for private equity exits.

5 Source: Pitchbook

#6: Financial services and energy look to be the darling in 2018

Pitchbook’s sixth observation is that initial public offerings (IPO) are more likely in financial services and energy in 2018.  This is somewhat unsurprising given the immense interest in fintech and the rise of clean energy.

6 Source: Pitchbook

#7: Median IPO size is down slightly in 2018

It’s been a relatively eventful year in the public markets, and that might be showing up in IPO sizes.  The most recent estimate has IPO size down slightly in 2018 compared to 2017, although still relatively healthy.

7 Source: Pitchbook

#8: Fundraising is down a lot

Perhaps the most surprising point in Pitchbook’s list is that fundraising is down significantly in 2018.  Private equity fundraising reached almost $224 billion in 2017.  As of now, 2018 fundraising has only garnered $121 billion.  Not pretty, but at least better than the doldrum days of 2009 through 2012.

8 Source: Pitchbook

#9: Bigger funds gain favor

The last observation from Pitchbook’s list is that investors shifted attention to mid-large funds in 2018.  Mid-large funds ($1 billion to $5 billion) have accounted for about half of all private equity fundraising in 2018 so far.

9 Source: Pitchbook

Conclusion

Overall, there’s a flurry of private equity activity going on right now.  Part of this is driven by historically low interest rates.  Another part is driven by a booming economy.  And others parts are driven by stronger expected returns from private equity funds relative to other financial vehicle managers.  All in all, it’s a good time to be working in private equity.

{ 0 comments }

In an almost interesting fashion, Pitchbook, the private equity data provider, is out with a look at the 2018 startup graveyard.  The tally reviews companies that died in the year of 2018.

Before looking at the list, which companies would you guess are on the list?  Does a certain blood-testing company come to mind?  Perhaps one with a female founder who was accused of fraud, along with her ex-boyfriend?  What other companies would you guess went down in flames in 2018?  Here’s the list.

The Top Death of 2018

The following figure has the list of the top company to meet an untimely demise in 2018.  Which company was the worst death of 2018?  Without question, the answer is Theranos.  The blood-testing company saw $9 billion in value disappear out of thin air, as regulatory scrutiny brought down Elizabeth Holmes’ path to billionaire.  Instead of running a darling of the venture capital industry, Miss Holmes is now dealing with the aftermath of alleged fraud.

Along with the $9 billion in valuation went $810 million in venture capital raised funding.  May Theranos’ goals of advanced drug testing live in peace, and potentially be achieved some day.  That day, though, is not 2018.

 

theranos Source: Pitchbook

The Other Members of the Death List

What other companies show up on Pitchbook’s 2018 startup graveyard list?  As depicted in the following tombstone, eleven other companies show up on the list.

The list includes Rethink Robotics.  The company made robots designed to work alongside humans.  The demand, or perhaps more so the competition, led to the downfall of the technology company.  With its demise went a whopping $291 million in value and $150 million in venture capital raised.  Too bad this Boston-based company failed to make it to see the Red Sox play in the World Series.

Another massive company that breathed its last breath in 2018 was Shyp.  The San Francisco-based company provided on-demand shipping services, a long-held goal for many internet companies.  Before Shyp died, the company had at once reached a valuation of $275 million, with $62 million in venture capital raised.

The fourth member of the top five companies to die in 2018 is Apprenda.  The New York-based company provided software to developers.  With its death went $90 million in paper wealth and $56 million venture capital funding.

The last member of the top five deaths in 2018 is Airwave.  The drone analytics provider failed to generate enough revenue for its services, and with it disappeared $59 million in value and $104 million in venture capital raised.

The other companies on Pitchbook’s list include Primary Data, Caresync, Bluesmart, Lantern, Raden, Fieldbook, and Alta.

startupgraveyard Source: Pitchbook

How Much Money Went Down the Tube?

With the list of 12 companies that went down the tube now established, one might ask – How much money was actually lost with the deaths of these companies?  The answer: $1.4 billion in venture capital funding.  That’s a massive amount, although not nearly enough to discourage venture capital investors from looking for the next big thing.

Conclusion

In a fascinating look at the startup companies that died in 2018, on top of the list of most prominent deaths is Theranos.  The company once reached a valuation of $9 billion before going belly-up in early 2018.  Other top companies to end up in the 2018 trash bin include Rethink Robotics, Shyp, Apprenda, and Airware.  May they rest in peace this Halloween.

{ 0 comments }

Private equity data provider Pitchbook is out with a fascinating new look at the most valuable startups by U.S. state.

Before looking at the results, take a guess.  Would you guess the most valuable startup is headquartered in Massachusetts, with its biotechnology-centered cluster?  What about California?  Silicon Valley certainly has some very valuable startups.  Perhaps New York has the most valuable startup?  Perhaps a sleeping giant is out there that’s not headquartered in Silicon Valley or one of the other well-known technology clusters?

Switching to companies, which companies would you guess show up at the top?  Perhaps Uber, and its massive freelancer workforce?  Perhaps the most valuable startup is a company we’ve never heard of?  Perhaps a virtual reality company, such as MagicLeap?

Take your guesses, because the answers follow.

The States Where The Most Valuable Companies are Headquartered

Here’s the broad map of the largest startup in each state.  With this map as the background, do you want to update your guess?

On top of the list is a well-known startup headquartered in California – Uber.   Uber has a private valuation of approximately $72 billion.

In second place is WeWork.  The New York-based company has a valuation of about $21 billion.

Third place belongs to Moderna Therapeutics.  With the valuation of $7.1 billion, the company is far behind the top two, but nowhere near small money.

In fourth place is Magic Leap.  The Florida-based virtual reality company has a private valuation of $6.4 billion.

Rounding out the top 5 is Qualtrics.  The Utah-based consumer research company has a valuation of approximately $2.5 billion.

startupmap Source: Pitchbook

The Remaining Top Companies (i.e. the Other 45)

What about the remaining startup companies?

The remaining states in the top 10 are contained in the following infographic.

Sixth place belongs to Uptake Technologies.  The Illinois-based company has a private value of approximately $2.3 billion.

Seventh place goes to AvidXchange.  The technology company is headquartered in North Carolina and has a valuation of about $1.4 billion.

Either place belongs to OfferUp.  The Washington-based company has a valuation of $1.4 billion.

Ninth and tenth places belong to Butterfly Network in Connecticut ($1.2 billion valuation) and Kabbage in Georgia ($1.2 billion).

Two other states have top companies with valuations of $1 billion or more.  They are Missouri (Essence Group Holdings, $1.1 billion) and Ohio (Root Insurance, $1.0 billion).

Top Startups in Each State Sources: CBInsights, Econometric Studios, LLC

State on the Bottom End of the Valuation Spectrum

What about states on the bottom end of the valuation spectrum?  The states with the “lowest” highly valued private companies are West Virginia (Liberty Hydo, $4 million), Alaska (ADS-B Technologies, $4 million), and South Dakota (Immutrix Therapeutics, $8 million).

Conclusion

In a fascinating look at the most valuable startups in each U.S. state, Pitchbook shows companies headquartered in California, New York, Massachusetts, Florida, and Utah as the most valuable privately valued companies in the U.S.

{ 0 comments }

Are the Heydays of Private Equity Over?

October 1, 2018

Private equity data provider Pitchbook is out with an interesting question – “Is declining fund performance a sign that PE’s good times are over?“. It’s a question worth asking whether you’re in the private equity sector, or whether you’re an investor seeking to maximize your returns. Before looking at the return data for private equity […]

Read the full article →

Where is Financial Employment Booming?

September 17, 2018

Every now and then we review how the financial sector is doing.  Before looking, which U.S. state would you guess is #1 for financial sector employment?  Would you guess New York – the home of Wall Street?  Perhaps Chicago (Illinois), with its heavy focus on insurance services?  What about California, with its heavy focus on […]

Read the full article →

Which Universities Produce the Most Venture Capital-Backed Companies?

September 3, 2018

Private equity data provider Pitchbook is out with their annual report on which universities produce the most venture capital (VC)-backed companies?  Before looking, which universities would you guess show up on the list? Would you guess Ivy League schools, with their highly ambitious, academically fresh graduates?  Perhaps you’d guess universities in places where the state […]

Read the full article →

Where and Who are the Top Private Debt Companies?

August 20, 2018

Private equity data collector Prequin is out with a fascinating look at the top 100 private debt companies.  Which companies would you guess show up on the list?  Where would you speculate the majority of private debt companies are headquartered?  Make your guesses now, because the answers follow. Where the Top 100 Private Debt Companies […]

Read the full article →

How is Financial Employment Doing Compared to Other Sectors?

August 6, 2018

The economy is booming.  Last week’s GDP figure – a measure of how large and strong an economy is – came in at $20.4 trillion.  This was the first time nominal GDP had come in above the $20 trillion mark.  On a year-over-year basis, GDP is growing at a 5.4% click.  Healthy, very healthy. Employment […]

Read the full article →

How Did Fundraising Look in the First Half of 2018?

July 23, 2018

The past few years have been quite good to private equity managers, with fundraising and pay reaching levels not seen in a decade (in some cases ever).  With this backdrop, Private Equity International (PEI) recently released its fundraising report for the first half of 2018.  How does the fundraising picture look?  Is private equity fundraising […]

Read the full article →

China’s Newest Unicorns

July 9, 2018

Pitchbook, the private equity data provider, is out with a fascinating new look at the companies headquartered in China with a valuation of $1 billion or more.  These companies are entities that surpassed the $1 billion valuation mark sometime in 2018. Before looking, take a guess at which companies you think would show up on […]

Read the full article →
Real Time Web Analytics