The pandemic didn’t hit stateside full force until March, marking the second quarter as the first period of purely coronavirus-impacted data for the venture industry.
The bottom line: While venture capitalists are open for business, it’s most certainly not a typical year. Deal activity in the second quarter slowed to $34.3 billion across 2,197 deals, a 23.2% decline in deal count from the first quarter of 2020, according to PitchBook and NVCA’s Venture Monitor, which released Tuesday.
Looking at the granules, the pandemic created a funding environment with no comparison.
Early on, investors expected late-stage company valuations to take a hit in a slowdown, as many companies nearing an exit have their valuations tied to those of public firms. But, perhaps as a result of a strong level of dry powder and the market’s rapid bounce back this time around, late-stage activity is on track to surpass 2019.
Late-stage mega deals, which the report defines as raises of over $100 million, grew to over 100 in the first half of 2020. That comes as investors double down on companies bulging at the seams as COVID-19 puts consumers online (think the likes of online grocery delivery company Instacart) or seek out companies they think are currently trading at a discount but will emerge from the virus (think home-sharing company Airbnb). Some 175 deals closed in all of 2019.
Other notable takeaways:
- In the past, corporate venture investors were among the first to bow out in financially difficult times. Not so this time around: Corporate venture capitalists participated in 26% of all U.S. deals, setting a new high. Private equity firms participated in 13.9%, another record.
- But not everything is rosy. Exits of venture capital-backed companies are on pace for their lowest since 2011—which could mean lower liquidity for Limited Partners. “An extended economic decline would change some longer-term behaviors around commitments to venture capital,” per the report.
Going up against Tesla: Instead of raising in private markets, Fisker, an electric SUV maker, decided to merge with a Special Purpose Acquisition Company backed by Apollo Global Management. This isn’t founder Henrik Fisker’s first rodeo. He designed cars for BMW and Aston Martin, and took a fall when his first EV effort, Fisker Automotive, filed for bankruptcy a decade earlier.
So why go public? “Having done this before, I just don’t feel it’s a good idea to try and raise so much capital in private rounds,” Fisker told my colleague, Aaron Pressman. “One round can be delayed, for whatever reason, and that means your product launch gets delayed, which then means you need to raise more money. I just don’t feel this works.” Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURES DEALS
- Oatly, a Swedish oat milk maker, raised $200 million. Blackstone Growth led the round. Other investors include Oprah Winfrey, Roc Nation, Natalie Portman, Howard Schultz (Starbucks), Orkila Capital and Rabo Corporate Investments
- Karma Kitchen, a UK-based cloud kitchen, raised £252 million ($318 million) in Series A funding. Investors include Vengrove Asset Management. Read more.
- Medly Pharmacy, a New York-based digital pharmacy, raised $100 million in Series B funding. Volition Capital and Greycroft led the round and were joined by investors including Horsley Bridge and Lerer Hippeau.
- Skydio, a U.S. producer of autonomous drones, raised $100 million in Series C funding. Next47 led the round.
- Pricefx, a cloud-native pricing software, raised $65 million in Series C funding. Apax Digital led the round and was joined by investors including Digital+ Partners.
- Lattice, a San Francisco-based human resources platform, raised $45 million in Series D funding. Tiger Global led the round and was joined by investors including Frontline Ventures, Founders Fund, Khosla Ventures, Thrive Capital Partners, Fuel Capital, and Y Combinator.
- Nasuni, a Boston-based cloud file storage company, raised $25 million from investors including Family Offices, Venture Capital and Corporate Venture.
- Traceable, an application security monitoring platform launched by AppDynamics CEO Jyoti Bansal, raised $20 million in Series A funding from Unusual Ventures and BIG Labs.
- TileDB, Inc., a Cambridge, Mass.-based data engine, raised $15 million in Series A funding. Two Bear Capital led the round and was joined by investors including Uncorrelated Ventures, Nexus Venture Partners, Intel Capital, and Big Pi Ventures.
- Movano Inc., a Pleasanton, Calif. Health tech company for those with chronic health conditions, raised $10 million in a bridge round led by Tri-Valley Ventures.
- Userlane, a Munich-based software adoption platform, raised €10 million ($11.3 million) in Series B funding. Five Elms Capital led the round and was joined by investors including Capnamic, High-Tech Gründerfonds,, and Commerzbank Group.
- Pattern Bioscience, an Austin-based bacterial identification and susceptibility testing firm, raised $9 million in extended Series B funding. Illumina Ventures led the round and was joined by investors including Omnimed Capital.
- CyberSmart, a London-based cybersecurity company, raised £5.5 million in Series A funding. IQ Capital led the round.
- MadKudu, a Mountainview, Calif.-based AI-based predictive analytics and marketing firm, raised $5.5 million in Series A funding. Benhamou Global Ventures led the round and was joined by investors including Alven and Partech.
- BuyBack Booth, a Montreal-based robotics company, raised $5.2 million in seed funding. Brightspark Capital led the round.
- Liteboxer, a New York-based boxing platform, raised $4 million in seed funding. Will Ventures led the round.
- Orbital Witness, a U.K.-based proptech startup, raised £3.3 million ($4 million) in seed funding. LocalGlobe and Outward VC led the round and were joined by Seedcamp and JLL Spark.
Bbot Inc., a New York-based restaurant and hospitality tech startup, raised $3 million in seed funding. Craft Ventures led the round.
- Digital Asset, a New York-based creator of open source DAML smart contract language, raised an undisclosed amount from VMware as part of its Series C round.
PRIVATE EQUITY
- Web.com Group, backed by Siris Capital, agreed to acquire Webcentral Group (ASX:WCG), a provider of digital services for small and medium Australian businesses. Financial terms weren't disclosed.
- Wrench Group, backed by Leonard Green and Partners, acquired Tampa-based Easy A/C and California-based Service Champions North, HVAC firms. Financial terms weren't disclosed.
- Groundworks Companies, backed by Cortec Group, acquired Foundation Services Michigan, provider of foundation repair services in Michigan and the Midwest. Financial terms weren't disclosed.
- Align Capital Partners invested in WilliamsMarston, an accounting advisory and management consulting firm with offices in Boston and New York. Financial terms weren't disclosed.
- Service Champions, a portfolio company of CenterOak Partners, acquired ABC Cooling Heating & Plumbing, a Hayward, Calif.-based provider of residential air conditioning and plumbing repair services. Financial terms weren't disclosed.
- NIBC, a Dutch bank, agreed to a proposed takeover bid from Blackstone, it at €1 billion ($1.1 billion). Blackstone lowered its offer to €7 per share from a previous €9.85 per share following the pandemic.
- Madison Dearborn Partners agreed to acquire Benefytt Technologies, a health insurance technology company, for about $410 million.
OTHERS
- Google is in advanced talks to acquire a $4 billion stake in Jio Platforms, an Indian telecom company. Read more.
- Mediaocean agreed to acquire 4C Insights Inc, a data science and marketing technology company. Financial terms weren't disclosed.
- Voyager Space Holdings acquired Pioneer Astronautics, a Lakewood, Colo.-based space exploration company, in a cash and stock transaction. Financial terms weren't disclosed.
- Hewlett Packard Enterprise agreed to acquire Silver Peak Systems, a provider of SD-WAN. The deal values Silver Peak at about $925 million.
IPOs
- MultiPlan, a healthcare services provider, will merged with Churchill Capital Corp III, a SPAC run by former CItigroup banker Michael Klein. The deal gives MultiPlan an enterprise value of about $11 billion. MultiPlan is currently owned by Hellman & Friedman. Read more.
- SoftBank is weighing a full or partial sale or public offering of Arm Holdings, its British chip designer. Read more.
EXITS
- EQT VII fund agreed to sell IFS AB, an enterprise software provider, to the successor funds EQT VIII and EQT IX, as well as TA Associates for about €3 billion ($3.4 billion).
F+FS
- TrueBridge Capital Partners closed its sixth venture capital fund-of-funds with $600 million in commitments.
PEOPLE
- TrueBridge Capital Partners promoted Rob Mazzoni to partner.
- Arsenal Capital Partners added Aaron Wolfe as an investment partner. He was previously a managing director at Sun Capital Partners. It also promoted John DiGiovanni to investment partner.
