PitchBook is providing ongoing coverage of the coronavirus outbreak and its effects across the private markets and the economy.
- Investor appetite for mobility stays strong despite shutdowns
- In Visible Capital: Examining how US economic uncertainty is impacting VC
- PitchBook Report: Despite a pandemic, VC activity booms in Europe
Unemployment drops in July, but US economy still has a long road aheadThe US added 1.8 million jobs in July, according to data released Friday by the Labor Department, the third straight month that hiring increased. However, unemployment remains above 10%, and the economy has recovered less than half of the jobs lost due to the pandemic; including the recent recovery, the US still has 13 million fewer jobs than in February. —Kate Rainey, 1:48 p.m. PDT
Fintech can expect a bright future after bumpy 2020Venture investors closed 360 fintech deals in Q2, the lowest quarterly total in three years, yet capital invested in North America and Europe remained roughly on pace with Q1, topping $6 billion. The pandemic's effects on different corners of the industry have been similarly incongruent, with some segments hammered while others thrive.
Overall, this year will likely see a slowdown in VC fintech activity. But the long-term opportunities for startups in the space remain significant, according to PitchBook's Q2 installment of fintech Emerging Tech Research. Key takeaways from the report include:
- Consumer finance companies continued their momentum after a record 2019, bringing in nearly $3.6 billion in the first half of the year
- Fintech VC exit activity also stayed strong, with multiple exits of at least $1 billion announced in Q2
- Regulation remains the main obstacle to startup growth, driving new partnerships with incumbents
Breaking down the problems with PPPThe US government's Paycheck Protection Program was designed to help small busineses affected by COVID-19 by providing low-interest and forgivable loans. But billions of dollars have also gone to privately backed companies—including those with deep-pocketed investors.
With the PPP set to expire on Saturday, PitchBook executive editor Alexander Davis and senior financial writer James Thorne joined the "In Visible Capital" podcast to discuss the program's impact on the private markets. Topics include:
- How VC- and PE-backed companies qualified for loans and how they justified accepting the funds
- The preferential tax treatment that PE and VC investors already enjoy
- How to treat the unreliable data from the Small Business Administration, which many companies have already disputed
Coronavirus crisis sends TechHub into bankruptcyTechHub, the London-based provider of a flexible workspace for tech entrepreneurs and startups, has gone bankrupt. The company has struggled amid COVID-19 as members have worked from home, leading to a 75% revenue loss, according to the Financial Times. TechHub's landlord rejected its rescue plan that was agreed upon by its funders, advisors, directors and employees.
Set up in 2010, TechHub has been home to around 5,000 startups, with its tenants reportedly raising more than $1 billion in total funding. Its notable members include Divide, the developer of an app allowing users to switch between their personal and work smartphones, and telehealth startup Babylon Health. —Leah Hodgson, 11:00 a.m. PDT, August 3
KKR reports record fundraising amid profitable Q2KKR returned to profitability in the second quarter of the year after a disastrous Q1. The firm also set a quarterly record by raising $16.4 billion in new capital in Q2, driven in part by healthy investor demand for buyout and infrastructure strategies in Asia.
The New York-based firm reported $698.6 million in net income during its Q2 earnings report Tuesday, reversing from a net loss of nearly $1.3 billion in Q1 that was driven by slumping public equity prices in the early days of the pandemic. That new figure marks a year-over-year increase of nearly 36%. KKR posted distributable earnings for the quarter of $325.6 million, or 39 cents per share, topping reported analyst estimates of 36 cents per share and nearly equaling its earnings from Q2 2019.
KKR had $221.8 billion in assets under management as of the end of Q2, up 7% from the prior quarter and up 8% YoY. After the quarter's fundraising push, the firm now has nearly $67 billion in uncalled commitments. Stock in KKR closed Tuesday up about 1%. —Kevin Dowd, 3:40 p.m. PDT, August 4
RedBird Capital cooks up XFL takeover with The RockLast week, RedBird Capital Partners teamed up with famed baseball executive Billy Beane to launch a new blank-check company that will seek to buy a professional sports team. Now, the private equity firm is partnering with a professional wrestler turned movie star to acquire an entire league.
A group comprising RedBird, actor Dwayne "The Rock" Johnson and businesswoman Dany Garcia has agreed to pay $15 million for the assets of Alpha Entertainment, the parent company of the XFL, a fledgling professional football endeavor that shut down and filed for bankruptcy this spring in the midst of its first season because of the pandemic. The investors plan to relaunch the league in some capacity.
This was the second version of the XFL attempted by Vince McMahon, the founder of World Wrestling Entertainment, following a prior rendition that played a single season in 2001. Johnson was one of WWE's biggest stars during the 1990s and 2000s. —Kevin Dowd, 3:25 p.m. PDT, August 3
Carlyle, Apollo both back in the black after grim Q1The Carlyle Group and Apollo Global Management both returned to profitability in the second quarter of the year, with double-digit appreciation in the firms' private equity portfolios keying a rebound from massive first-quarter losses that came after the pandemic caused markets to plummet in March.
Carlyle reported 13% growth in its private equity portfolio during its Q2 earnings report on Thursday, compared to an 8% decline in Q1. Apollo, meanwhile, announced an 11.7% appreciation for its PE assets in its own earnings report, a reversal from a 21.6% dip in Q1.
Still, both firms expect to continue experiencing considerable upheaval in the foreseeable future, driven by the pandemic and a host of other events that are turning 2020 into an unprecedented year. —Adam Lewis, 10:52 a.m. PDT, August 3
Billionaire to pay $700M+ for AS RomaDaniel Friedkin, the billionaire leader of The Friedkin Group, has agreed to buy a controlling stake in Italian soccer club AS Roma in a deal worth €591 million (about $702 million). The American businessman was reportedly set to pay €750 million for the club in December, but the deal fell through due to the pandemic. —Leah Hodgson, 2:00 p.m. PDT, August 6
Lord & Taylor files for Chapter 11Department store pioneer Lord & Taylor and its owner, Le Tote, have reportedly filed for Chapter 11 bankruptcy protection in Virginia. The companies had reportedly been operating out of 38 brick-and-mortar locations, which were temporarily shut down in March due to the pandemic. Le Tote, a San Francisco-based clothing rental startup that's backed by Andreessen Horowitz, Lerer Hippeau and others, purchased Lord & Taylor from Hudson's Bay for C$99.5 million (about $75 million) in November. —Vishal Persaud, 3:21 p.m. PDT, August 3
Pandemic presents challenges, opportunities for private debtMost publicly traded private equity firms marked down their credit portfolios by double digits during the first quarter of the year. And the worst could be yet to come, with the pandemic putting private debt funds on track for their poorest year of performance since the global financial crisis.
But that's not the whole picture. As outlined in PitchBook's H1 2020 Global Private Debt Report, the coronavirus crisis has also inspired a wave of new distressed debt and special situations funds from investors eager to capitalize on new opportunities—led by Oaktree Capital Management and its plans for a record-breaking $15 billion vehicle. Among the report's other key takeaways:
- Investors closed 53 private debt funds in H1 2020, compared to 160 for all of 2019
- A slowdown in buyouts has also reduced deal opportunities for direct lending
- The pandemic should continue to create distressed investing opportunities into 2021
Demand for digital innovation will drive growth in enterprise healthtechVenture investment in the enterprise health & wellness tech industry slowed last quarter amid economic headwinds created by the pandemic. Yet as the era of patient-driven care propels demand for digital health technologies, the future remains bright.
Our Q2 installment of Emerging Tech Research on the sector breaks down the enterprise side of health & wellness tech into four categories, explores core drivers of startup success, and includes market maps and long-term forecasts. Key takeaways include:
- The enterprise health & wellness tech industry is projected to reach $1.3 trillion by 2025
- VC investment in the space totaled $1.9 billion in the first half of 2020, down 30% year-over-year, but the decline is expected to be temporary
- The coronavirus outbreak is likely to drive significant investment in companies focused on fighting future outbreaks
Did you miss any of our continuing coverage of COVID-19? Find our previous updates below:
- Coronavirus effects on private markets (July 27-August 2)
- Coronavirus effects on private markets (July 20-July 26)
- Coronavirus effects on private markets (July 13-July 19)
- Coronavirus effects on private markets (July 6-July 12)
- Coronavirus effects on private markets (June 29-July 5)
- Coronavirus effects on private markets (June 22-June 28)
- Coronavirus effects on private markets (June 15-June 21)
- Coronavirus effects on private markets (June 8-June 14)
- Coronavirus effects on private markets (June 1-June 7)
- Coronavirus effects on private markets (May 25-May 31)
- Coronavirus effects on private markets (May 18-May 24)
- Coronavirus effects on private markets (May 11-May 17)
- Coronavirus effects on private markets (May 4-May 10)
- Coronavirus effects on private markets (April 27-May 3)
- Coronavirus effects on private markets (April 20-April 26)
- Coronavirus effects on private markets (April 13-April 19)
- Coronavirus effects on private markets (April 6-April 12)
- Coronavirus effects on private markets (March 30-April 5)
- Coronavirus effects on private markets (March 23-March 29)
- Coronavirus effects on private markets (March 4-March 22)