Coronavirus

Live coronavirus updates: Coronavirus effects on private markets

March 27, 2020
The USNS Mercy Navy hospital ship arrives in the Port of Los Angeles on Friday. (Mario Tama/Getty Images News)

PitchBook has been providing ongoing coverage of the coronavirus outbreak and its effects on different areas of the private markets and the broader economy:

Latest news on the coronavirus

In case you missed it:

Gig workers take back power amid unprecedented challenges

Even as gig economy workers face unprecedented challenges, they are notching early wins in negotiations with politicians and employers.

The $2 trillion aid package that was signed into law on Friday grants unemployment benefits to self-employed workers who normally don’t qualify. Meanwhile, Instacart shoppers are planning a strike to start Monday that will test the efficacy of collective action for gig workers.

The shift in power could have long-term consequences for tech companies whose businesses rely on large pools of self-employed workers. —James Thorne, 5:26 p.m. PDT

More startups announce layoffs due to coronavirus

In the latest round of coronavirus-related job cuts, two more startups have let go of employees. E-scooter startup Bird laid off around 30% of its staff on Friday, according to TechCrunch. In a memo, Bird CEO Travis VanderZanden reportedly said the layoffs were necessary to help the company stay solvent until the end of 2021 as Bird struggles with the financial and operational impact of the pandemic.

Car-sharing unicorn Getaround laid off around 100 employees in the US, according to The Information. The San Francisco-based company announced its first wave of layoffs in January in an effort to reduce costs and has now reportedly shed nearly half of its workforce.

While the ongoing layoffs mark a grim reality for the mobility sector, the industry could ultimately emerge from the pandemic in a strong position as the economy recovers. Micromobility startups could draw urban commuters away from public transit, as e-bikes and e-scooters may be compelling options for those wary of sharing space, according to PitchBook's analyst note on the effects of the coronavirus outbreak on emerging technologies. —Priyamvada Mathur, 2:33 p.m.

US stocks fall but end whipsaw week higher

US stocks closed lower on Friday but ended a wildly volatile week with a gain of 10%, as the House passed a $2 trillion relief package. The Dow Jones Industrial Average ended a three-day winning streak by closing down 915 points, or 4%, at 21,636.78. The Standard & Poor's 500 Index fell 3.4% but ended the five-day stretch up 10.3% at 2,542.47. The S&P earlier in the week closed at 2,237. —Alexander Davis 1:15 p.m. PDT

What $2T in stimulus does—and doesn't do—for private markets

The House was expected to weigh in Friday on a $2 trillion rescue package that passed the Senate on Wednesday. The sprawling document consists of both broad and targeted assistance for companies and individuals amid the coronavirus outbreak.

Here are the main considerations for private equity and venture capital, including aid for small businesses and targeted relief for different industries. —James Thorne, 6:07 p.m. PDT, March 26

VC firms develop initiatives to support home-bound student entrepreneurs

Before becoming tech titans, Microsoft and Facebook were once just ideas hatched by Harvard students with free time on their hands.

Now, a new generation of would-be upstarts created by students is working away on the next big thing. Seizing on campus closures and the overall disarray sweeping colleges across the nation, a group of US-based VC investors is racing to help those student entrepreneurs in a bet that coronavirus-related upheaval may help spur innovation. —Eliza Haverstock, 5:33 p.m. PDT, March 26

Coronavirus effects on startups

Airbnb plans to house 100,000 healthcare workers

Airbnb is waiving fees and encouraging hosts to offer their homes for free as a way to provide housing for healthcare workers and others involved in tackling the coronavirus outbreak. The company aims to help 100,000 medical workers find free or subsidized housing around the world. —James Thorne, 4:08 p.m. PDT, March 26

France launches €4B support package for startups

The French government is rolling out a support plan worth €4 billion for startups, in order to address cash concerns brought on by the spread of COVID-19. The sovereign wealth fund Bpifrance is putting up €80 million that companies can use to bridge the gap between previously planned funding rounds. Startups can borrow as much as two years of payroll for employees based in France or 25% of annual revenue as part of a €300 billion liquidity support plan for all businesses affected by the virus. The government will also speed up tax returns and public support payments. —Leah Hodgson, 11:00 a.m. PDT, March 25

Compass lays off 375 employees

Real estate startup Compass has laid off 15% of its staff, or around 375 employees, Business Insider reported. The move comes amid fears that a severe economic slowdown will soon hit real estate. Proptech companies Redfin, Opendoor and Zillow have been curbing costs by suspending home-flipping programs. SoftBank-backed Compass raised $370 million last summer at a $6.4 billion valuation. James Thorne, 4:05 p.m., March 23

Coronavirus effects on venture capital

Facing disaster, corporate venture capital to undergo key stress test

After driving much of the venture capital market's hyper-growth in recent years, corporations are poised for a decisive stress test of their zeal for funding startups. Heading into 2020, it wasn't unreasonable to forecast another record year for VC financing involving corporate venture capital arms, such as those of titans Intel, Salesforce and Google.

But that was before the coronavirus outbreak brought the world economy to a standstill. And now turmoil spurred by the global health emergency has given rise to a new mantra for business decision-makers: Hit pause. —Alexander Davis, 6:18 p.m. PDT, March 24

White House says self-swabbing kits available 'sometime this week', elevating regulatory confusion for startups

In contradiction to the FDA's recently updated guidance, the White House said Monday night that coronavirus self-collection swab tests will be available this week. The source of these tests was not shared. "There was a breakthrough today, and I think we'll see that from the FDA, for all of those who are waiting for self-swabbing options, those are going to be available sometime this week," said White House coronavirus task force leader Dr. Deborah Birx at the briefing.

On Saturday, the FDA specifically disallowed companies from offering mail-order self-swabbing kits for processing in commercial labs, increasing the scope of a previous directive that only blocked in-home tests. As a result, a series of biotech startups were forced to abandon their product plans. Some of these companies, including Carbon Health, EverlyWell and Nurx had sold or were on the verge of selling their at-cost kits. —Eliza Haverstock, 2:24 p.m. PDT, March 24

Changing FDA rules leave startups in limbo over at-home COVID-19 tests

Regulatory confusion is leaving biotech startups in limbo as they race to unveil COVID-19 sample collection kits, underlining a scattered federal response that has left the US far behind other developed countries in testing capability.

At the root of the confusion is rapidly changing guidance from the FDA, which on February 29 issued an emergency use authorization to allow select private laboratories to run novel coronavirus tests—something only the CDC could previously do. Soon, a series of medical testing startups with private lab partnerships began to swiftly develop at-home swab sample collection kits for polymerase chain reaction (PCR) tests, which can detect specific genetic material contained in the virus that causes COVID-19.

On Saturday, the agency updated its guidelines for private labs, prohibiting them from collecting sample swabs via mailed-in home kits—just as several venture capital-backed companies prepared to bring them to market. As a result, at-home sample collection no longer appears a viable solution to the nation's testing lag. —Eliza Haverstock, 4:08 p.m. PDT, March 23

Coronavirus effects on private equity

Silver Lake-backed Endeavor announces layoffs

Endeavor, the operator of a Hollywood talent agency and provider of other sports and entertainment offerings, has laid off around 250 employees across its various businesses due to impacts from the coronavirus, according to Variety. A majority of the cuts will reportedly affect IMG Academy, a boarding school and sports training facility in Florida, as well as support staff at the WME talent agency. Silver Lake first invested in WME in 2012 and has been the majority owner of Endeavor since its creation in 2014 upon the merger of WME and IMG. —Adam Lewis, 5:29 p.m. PDT, March 25

Coronavirus claims Spanish PE pioneer

José María Loizaga Viguri, one of the founding fathers of Spanish private equity, has died of COVID-19. The news was confirmed by Spanish infrastructure giant ACS Group, where Loizaga, 84, was vice president and a board member.

Loizaga was involved in several notable deals in the 1980s, setting up Banco Hispano Industrial and leading the restructuring and subsequent merger of the two major Spanish industrial banks: Banco Unión and Banco Urquijo. In 1985, he founded Spanish PE firm Mercapital (later N+1 Mercapital), where he was president until 2008. He was also previously listed as a senior partner at Madrid-based Moira Capital, where his son, Javier Loizaga is now chairman. —Andrew Woodman, 11:30 a.m. PDT, March 24

Thoma Bravo becomes latest to upend exit over coronavirus concerns

Citing market volatility due to the spread of the coronavirus, Thoma Bravo has canceled its auction for healthcare security company Imprivata in a possible exit that could have been worth more than $2 billion, according to PE Hub. The firm reportedly brought on Goldman Sachs and William Blair to launch a sale process for the Lexington, Mass.-based business earlier this year. Thoma Bravo took Imprivata private for roughly $544 million in 2016. —Adam Lewis, 3:11 p.m. PDT, March 23

Economic impact of the coronavirus

Senate aims to vote Wednesday on $2T stimulus package

Senate leaders say they're still aiming to vote Wednesday on a $2 trillion rescue package aimed at mitigating the economic effects of the coronavirus pandemic, but a last-minute dspute over jobless aid has been delaying a final vote, The New York Times reported. The deal, reached in the early hours of Wednesday morning after lengthy negotiations, would be the largest economic stimulus measure in modern history. The full text of the bill hasn't been released, but Sen. Pat Toomey (R-Pa.) said it would include $454 billion in funds to support emergency action by the Federal Reserve, according to Bloomberg. —Kate Rainey, 1:42 p.m. PDT, March 25

Historic rebound for stocks

US stocks rocketed higher to log their best day since 1933, as Congress and the Trump administration neared agreement on a massive stimulus package to stabilize the economy. The Dow Jones Industrial Average shot up 2,112.98 points, or 11.4%, to close at 20,704. It was the Dow's largest daily point gain in history and its biggest in percentage terms in nearly 90 years.

Negotiators are closing in on a rescue legislation that would be worth between $1.6 trillion and $2 trillion. Senate Majority Leader Mitch McConnell (R-Ky.) said an agreement could be reached on Tuesday evening. —Alexander Davis, 4:30 p.m. PDT, March 24

UK mulls equity investment to bolster businesses amid pandemic

The UK government is looking at plans to buy equity stakes in companies struggling with the impact of the COVID-19 pandemic, according to the Financial Times. Public money could be used to buy shares, which could then be sold to private investors. Airlines are reportedly among the primary targets, as UK Transport Secretary Grant Shapps has promised that the government would intervene to prevent their collapse. The country's largest carrier, British Airways, is reportedly planning layoffs. Virgin Atlantic founder Richard Branson has committed to spending £250 million to keep the airline afloat, while also calling for state aid.

The proposal comes after bankers warned the government that its previously announced measures wouldn't be enough to keep the worst affected companies afloat. Chancellor Rishi Sunak announced March 17 that £330 billion of guarantees would be made available to businesses. —Leah Hodgson, 11:53 a.m. PDT, March 23

PitchBook reports on the coronavirus impact on private markets

The ripple effects of coronavirus on emerging technologies

Venture-backed startups are facing an ever-shifting environment and a largely uncertain future amid the coronavirus outbreak. But, as our latest analyst note shows, there may be light at the end of the tunnel.

VC deal value dropped 28% during the Great Recession, but deal count fell just 5%—and it rose for angel & seed deals, suggesting that, while deals may be smaller, startups can still find investors. However, the impact of the coronavirus pandemic is expected to vary widely across different sectors of emerging tech. —Paul Condra and Aria Nikkhoui, March 26

Case studies for the coronavirus outbreak

As part of PitchBook's ongoing efforts to provide useful and actionable research amid the coronavirus pandemic, we've been combing our archives to find past analyses that are newly relevant to the current situation in the private markets. Today we're featuring two case studies from previous editions of the PitchBook Benchmarks.

The first case study explores the performance of buyout funds from 2007—a year that marked a stark inflection point in the historical arc of private equity.

VC and PE fund cash flows have deviated from historical trends as of late. Zeroing in on call-down percentages, the second case study examines how private fund managers have acted in times of distress. —Garrett Black and James Gelfer, March 25

Did you miss any of our continuing coverage of COVID-19? Find our previous updates below:

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