With church services temporarily banned, Gertrud Schop arranges candles in the shape of a cross to honor each of Germany’s more than 3,800 COVID-19 victims. (Jens Schlueter/Getty Images)
PitchBook is providing ongoing coverage of the coronavirus outbreak and its effects across the private markets and the economy.
Latest news on the coronavirus In case you missed it:
Critics say UK is unwilling to ‘pick up the cost’ in new coronavirus loan program Record European venture activity set to abate European venture activity soared to record levels over the past several years. But now, all that is set to change.
PitchBook’s latest research note dedicated to European venture details how the COVID-19 pandemic will affect the dynamics between startups, GPs and LPs across the continent’s venture ecosystems. A host of ramifications seems likely, including delayed exit plans and deal terms shifting in favor of investors.
—Nalin Patel, 6:56 p.m. PDT, April 16 Stripe pockets $600M as business and consumer confidence plummets The economy is spiraling into a recession, but payment processing companies are loading up with record amounts of cash.
On the one hand, the pandemic has shattered business and consumer confidence, causing spending—and the transaction fees it generates—to dwindle. On the other hand, lockdowns have created an unprecedented need for ecommerce and digital payments.
Stripe announced Thursday that it has secured $600 million in new funding, the largest round to date for a US-based online payments startup. The financing comes from existing investors
Andreessen Horowitz,
General Catalyst and
Sequoia, and values Stripe at an estimated $36 billion, according to PitchBook data—a significant step-up from its reported $22.5 billion valuation in January 2019. The new funding is an extension of the company’s Series G round, which initially raised $250 million in September.
—James Thorne, Priyamvada Mathur, 6:42 p.m. PDT, April 16 Fed’s stimulus offers relief to private equity despite critics’ objections Over the past couple of weeks, the private equity industry has lobbied hard to be included in the $2 trillion US stimulus package. But most PE-backed companies didn’t qualify for the $350 billion loan program that the Small Business Administration launched at the beginning of the month.
Last week, the Federal Reserve launched the $2.3 trillion Main Street Lending Program, which promises up to $600 billion in loans to small and medium-sized companies with much fewer restrictions on companies that qualify. As a result,
many private equity-backed businesses will soon be eliglible for federal bailouts despite the objections of critics worried they could misuse the money.
—Adam Lewis, 5:22 p.m. PDT, April 16
Coronavirus effect on startups AI-driven ID startup Onfido wraps up $100M round Onfido, a startup developing so-called immunity passports for people who have had COVID-19, has secured $100 million in a round led by TPG Growth. The San Francisco-based company, which raised $50 million just over a year ago, specializes in AI-based ID verification services chiefly aimed at fraud prevention.
—Leah Hodgson, 11:00 a.m. PDT, April 15 VCs see online forums as crucial support for young founders As startup founders grapple with a lack of face-to-face support during the coronavirus pandemic, venture capital firms are
providing them with online support communities to encourage communication, knowledge sharing and emotional support.
“It’s a lonely job being a startup leader,” said Teddie Wardi, managing partner at New York-based Insight Partners. “There’s a lot of anxiety on the fact that it’s not clear what’s going on and even now we’re not seeing all the impacts that [coronavirus] will have. … Bringing people together can create a lot of ideas and lead to the kind of innovation we need to get through this crisis.”
The startups that survive the crisis will be determined by more than the amount of capital they bring in. Even large VCs like Insight Partners, which has around 200 investments, may not be able to write more checks to their portfolio companies. An online community can provide value far beyond the capability of a firm’s individual partners by offering a network of experts in every category. Other founders can offer advice, and investors can see what areas are of most concern.
—Leah Hodgson, 4:58 p.m. PDT, April 14
Coronavirus effects on venture capital Mega-funds thrive despite hard times for small and first-time VCs Venture capital’s biggest firms are heading into a recession with a slew of newly raised mega-funds, while smaller firms face a slump in fundraising. Lightspeed has raised
three funds totaling $4.2 billion, following in the footsteps of NEA, Flagship Pioneering and General Catalyst, which all announced new mega-funds since March.
Mega-funds of $1 billion or more claimed nearly half of all capital raised by US VCs in the first quarter, compared with less than a third of the total in normal years, according to the latest PitchBook-NVCA Venture Monitor. The success of large firms flies in the face of what the International Monetary Fund predicts will be the world’s worst downturn since the Great Depression.
—James Thorne, 6:18 p.m. PDT, April 14 Coronavirus piles onto SoftBank’s losses SoftBank expects a 1.8 trillion yen (about $16.7 billion) hit to its Vision Fund portfolio of tech companies for the fiscal year ended March 31.
In a forecast of financial results, the Japanese conglomerate blamed the “deteriorating market environment” for the recent drop in the valuations of its portfolio companies. Global lockdown measures have dealt a blow to the transportation and logistics industry, which represents the majority of the Vision Fund’s investments and includes ridesharing companies like Uber, Didi Chuxing and Grab. SoftBank-backed companies in the real estate and consumer sectors, including hotel chain Oyo and brokerages Opendoor and Compass, have all had recent reports of layoffs and curtailed operations in response to the pandemic.
—James Thorne, 5:00 p.m., April 13 Layoffs at Opendoor add to SoftBank’s real estate woes Real estate tech startup
Opendoor has laid off 35% of its staff, reportedly around 600 employees, in the latest blow to the
SoftBank Vision Fund portfolio of companies.
Several of SoftBank’s other real estate investments, including online brokerage Compass and hotel chain
Oyo, have reportedly laid off or furloughed large swaths of employees. Restaurant robotics startup
Zume, also backed by SoftBank, let go of roughly 200 workers yesterday following even larger cuts last month, according to Business Insider. SoftBank expects to lose 1.8 trillion yen (about $16.7 billion) on its Vision Fund investments for the year ended March 31.
To help the affected employees, Opendoor is offering eight weeks of pay and 16 weeks of health insurance reimbursement. CEO Eric Wu has donated his annual salary to a relief fund for laid-off personnel.
—James Thorne, 6:33 p.m. PDT, April 15 Investors are cautious on private markets during shutdowns, PitchBook survey shows Private market investors are riding out the coronavirus outbreak with a wait-and-see stance, but a significant portion of them already are expecting to scale back their bets this year, according to a survey by PitchBook.
The survey, conducted on March 31 and April 1, provides an early glimpse into how the vast economic turmoil caused by the pandemic may be shaping the outlook of limited partners and investors at venture capital or private equity firms. Answers provided by the survey’s 383 respondents suggest that
investors are becoming more conservative even as they try to gauge the impact of the global health emergency.
—Alexander Davis, 5:06 p.m. PDT, April 9
Coronavirus effects on private equity Private equity firms promise millions for coronavirus relief Over the past week, some of the biggest names in private equity have proved willing to reach into their deep pockets to help first responders battling the coronavirus outbreak and aid their own portfolio companies struggling to stay afloat. Firms such as Apollo Global Management, Blackstone and KKR are all taking different approaches. KKR has made the biggest public commitment so far, pledging $50 million to a range of beneficiaries, including first responders and the firm’s portfolio companies.
The aim of helping those affected by the crisis is admirable. But critics point to the hundreds of billions of dollars these firms have under management and argue that
they are only scratching the surface of the aid they are capable of providing.
—Adam Lewis and Eliza Haverstock, 5:00 p.m. PDT, April 9
PitchBook reports on the coronavirus impact on private markets Pandemic set to disrupt a boom time for US venture capital The past two years were record-setting ones in the US venture ecosystem, with deal count and deal value both climbing to new heights. The good times continued during the early months of 2020. But now, in a world transformed by the coronavirus, startups and VCs are entering a period of transition.
The
Q1 2020 PitchBook-NVCA Venture Monitor dives into all the potential fallout for a VC industry that’s yet to feel the full effects of COVID-19. Key takeaways include:
How tech will drive the treatment of future outbreaks The COVID-19 outbreak brought the global economy to a standstill and exposed the inadequacies of the developed world’s health systems in addressing fast-spreading pandemics. Our
latest research note details the numerous startups developing technologies aimed at decreasing pandemic risk, factors driving investment in and adoption of these technologies, and our outlook for these technologies in a post-pandemic future.
—Alex Frederick, Kaia Colban and Zane Carmean, 6:37 p.m. PDT, April 15 Buyout funds in times of crisis As the world enters what may well be the worst recession since at least the global financial crisis, buyout funds won’t be immune from the pain. The
latest research note from PitchBook’s private equity analysts examines how buyout funds have acted and performed in prior periods of economic duress, homing in on capital calls, distributions and more. Some highlights:
—Wylie Fernyhough and Zane Carmean, April 9
Did you miss any of our continuing coverage of COVID-19? Find our previous updates below: