Coronavirus updates (Oct. 12-Oct. 25): Coronavirus effects on private markets

The British government announced a new three-tiered system of ranking the severity of local coronavirus cases. Liverpool was among the cities ranked "very high," forcing its restaurants, bars and gyms to close. (Christopher Furlong/Getty Images)

PitchBook is providing ongoing coverage of the coronavirus outbreak and its effects across the private markets and the economy.

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Rise of remote working entices startups to flee big tech hubs

Since pandemic lockdown measures took effect seven months ago, some early-stage startup founders have physically moved parts of their companies away from expensive startup hubs like San Francisco and New York.

How will those new geographies work in a post-pandemic world? We spoke to several founders and investors to find out. —James Thorne, Oct. 22

Breaking down Blackstone’s $14.6B BioMed Realty bet

Last week, Blackstone announced a $14.6 billion recapitalization of BioMed Realty, a real estate investment trust that owns 11.3 million square feet of life sciences real estate spread across several industry hubs. After less than five years of ownership, Blackstone will log a $6.5 billion profit on the move, marking the third most profitable deal in the firm’s history.

Our latest analyst note examines every angle of this massive transaction, one that illustrates several key trends currently playing out in both private and public markets:

The move is the latest sign of momentum for GP-led secondaries deals, allowing fund LPs to maintain exposure or cash out
PE and VC investment in life sciences has grown in 2020 against the backdrop of the pandemic
The deal demonstrates how Blackstone’s thematic strategy in real estate has differed from that of fellow market leader Brookfield

—Zane Carmean, Oct. 21

Shift to remote care pushes healthtech investment to new heights this year

Startups that help patients access healthcare remotely are driving a wave of healthtech investment in 2020. VC investors in the US and Europe injected $10 billion into healthtech companies in the first three quarters of the year, according to Silicon Valley Bank.

The interest has ignited a string of mega-rounds for startups that could energize fields like medication management and remote patient monitoring. —James Thorne, 8:30 a.m. PDT

Coronavirus effects on venture capital

Driven by pandemic demand, mental health startups surpass 2019 funding

As Americans struggle with mental health conditions exacerbated by COVID-19, VC investment in virtual care services has taken off—increasing more than fourfold since 2015.

Mental health startups logged a series of mega-rounds in the first three quarters of this year alone. And with meditation app maker Calm reportedly eyeing a $150 million round at a $2.2 billion valuation, the sector’s funding haul is set to keep growing. —James Thorne, 10:01 a.m. PDT, Oct. 15

Roblox files confidentially to go public

Gaming company Roblox has confidentially filed with the SEC for a public offering, teeing up another major exit for the sector after its competitor Unity Software raised a $1.3 billion IPO in September.

The offering could value Roblox at $8 billion and come in the form of a traditional IPO or direct listing, Reuters reported earlier this month. The company was valued at $4 billion in February with a $150 million Series G led by Andreessen Horowitz, according to PitchBook data. Roblox has also received backing from investors including Greylock Partners, Tiger Global and Meritech Capital Partners.

San Mateo, Calif.-based Roblox’s monthly user base grew by 38% to 164 million from January through July, according to RTrack, a website that monitors Roblox data. Its platform, which allows developers to create their own games, is popular with children and has gained a following with teachers who use educational games for remote classes, according to Bloomberg. —James Thorne, 8:15 a.m. PDT, Oct. 14

AMD nears $30B+ deal to acquire rival chipmaker Xilinx

Advanced Micro Devices is in late-stage talks to buy rival Xilinx in a deal that could be valued at more than $30 billion, according to The Wall Street Journal. If the companies come to an agreement, it may be one of the biggest semiconductor deals this year.

AMD’s shares have risen considerably this year, elevating the company’s market cap to over $100 billion. That could influence the Santa Clara-based chipmaker to use its stock as currency in a deal, the WSJ reported. A potential Xilinx acquisition will reportedly give AMD the firepower to take on Intel, its main rival.

AMD’s success in 2020 has largely been due to pandemic-driven demand for PCs, gaming consoles and other devices that use its chips. It raised its annual revenue outlook in July, with sales expected to grow about 32% compared with 2019.

Xilinx hasn’t fared as well this year, as the company has dealt with stock volatility tied to the pandemic and trade tensions between the US and China. The San Jose-based company makes microchips called field-programmable gate arrays, an area AMD is looking to enter since Intel is reportedly the other major player in that market.

If AMD and Xilinx reach an agreement, it would continue a year of consolidation for the semiconductor market. In July, Analog Devices agreed to buy Maxim Integrated in an all-stock deal; last month, Nvidia paid $40 billion for British designer Arm Holdings. —Vishal Persaud, 1:47 p.m. PDT, Oct. 13

Coronavirus effects on private equity

Retail bankruptcies are piling up—but PE firms are still mining for deals

Private equity and the retail industry have endured a turbulent relationship over the years. And the COVID-19 crisis has made matters more complicated.

A slowdown in consumer spending coupled with social distancing guidelines and lockdown orders have contributed to a batch of PE-backed bankruptcies in 2020, with more likely on the horizon.

But that doesn’t mean some of private equity’s big players aren’t still striking deals in the space. —Adam Lewis, 2:00 p.m. PDT, Oct. 13

PitchBook reports on the coronavirus impact on private markets

Reopened economies cause European PE activity to roar back

In Europe, private equity dealmakers closed on 972 transactions during the third quarter of the year, a leap of nearly 33% from the quarter prior. As economies across the region began to reopen from mass lockdowns caused by the coronavirus crisis, investors were eager to get back to work.

But despite last quarter’s activity, the European market should still expect an uneven and uncertain recovery from the worst ravages of the pandemic, according to PitchBook’s Q3 2020 European PE Breakdown. The report takes a data-driven look at the bounce-back in deal activity and several other key trends, including:

The tech sector proved to be one of the biggest drivers of Q3’s dealmaking push
Annual PE exit count in Europe is on pace for a 10-year low, a sign of continued caution from sponsors
On the other hand, PE fundraising figures in Europe are on track to reach their second-highest annual total this decade

mdash;Dominick Mondesir and Andrew Akers, 9:58 a.m. PDT, Oct. 15

Vaccine hunt drives ongoing VC demand for life sciences and commercial lab space

As companies such as Moderna and Novavax search for a COVID-19 vaccine, VC interest in the life sciences space has never been higher: Venture capitalists invested more than $15 billion in the sector during the first half of 2020, on pace for the highest annual total on record.

But the intrigue was building long before the onset of a pandemic—and the growth of many well-funded companies in the industry over the past several years has generated skyrocketing demand for lab space. Our latest analyst note investigates these twin trends, offering a look at how increasing investment in biotech and pharmaceuticals is shaking up the world of commercial real estate. —Wylie Fernyhough, Joshua Chao and Zane Carmean, 9:00 a.m. PDT, Oct. 15

Despite pandemic uncertainty, VC deal value is ticking up in 2020

On the whole, venture dealmaking in the US remained surprisingly steady during the first six months of the coronavirus crisis: In both the second quarter and the third quarter of 2020, VC deal value was higher than in any quarter from 2019.

But the pandemic has still been reshaping the venture landscape in many ways, both big and small.

The Q3 2020 PitchBook-NVCA Venture Monitor, sponsored by Silicon Valley Bank and Certent, deploys all our latest data to paint a picture of how the VC scene has shifted during the spring and summer. The report examines a boom in interest for the life sciences sector, fundraising challenges for founders from underrepresented backgrounds, and a number of other key trends, including:

Public listings from Snowflake, Palantir, Asana and more helped drive VC exit value to its second-highest quarter ever
VCs have raised $56.6 billion for new funds through Q3, already topping 2019’s full-year total
Significant long-term changes in consumer and business behavior could lay the groundwork for future unicorns

—Nizar Tarhuni, James Gelfer, Cameron Stanfill, Kyle Stanford, Joshua Chao and Van Le, 8:22 a.m. PDT, Oct. 14

Tech deals buoy private equity as the crisis recovery continues

Thanks to the coronavirus crisis, the rate of US private equity dealmaking in 2020 continues to lag well behind past years. But there are reasons to think the market is beginning to bounce back after bottoming out during the second quarter—a recovery that’s been driven in part by a stream of tech buyouts that not even a pandemic could halt.

Our Q3 2020 US PE Breakdown examines the industry’s insatiable appetite for tech deals, plus 2020’s ongoing SPAC frenzy and other trends defining this time of transition across private equity. Key takeaways include:

PE firms have capitalized on a swift recovery for public equity markets with a string of multibillion-dollar exits via IPO
New government guidelines and a potential change to the tax code could lead to an uptick in dealmaking
Current signs point to a feverish finish to the year for PE fundraising

—Wylie Fernyhough, 6:48 a.m. PDT, Oct. 9

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