Business Blog: A year after SVB, who filled the void?

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The Weekend Pitch

March 10, 2024

Presented by the U.S. National Science Foundation

(Julia Midkiff/PitchBook News)

One year after Silicon Valley Bank's implosion, the venture debt market has yet to crown a new king.

When the bank, which held accounts for almost 50% of VC-backed tech and life science companies in 2022, collapsed on March 10, 2023, the impact saw widespread financial panic among startups and in related markets.

VC-backed companies were left uncertain about whether to stick with SVB, which was taken over by First Citizens Bank, or to borrow from another kind of venture debt player: the non-bank lender.

Unlike banks, which issue loans using customer deposits, non-bank lenders use LP capital to issue venture debt to VC-backed companies. For example, business development companies (BDCs) are typical non-bank lenders that originate loans to venture-backed companies.

In the immediate aftermath of SVB's fall, many startups turned to non-bank lenders to sidestep similar risks of collapse at other banks. But with some time to digest the new normal, private companies are now turning back to banks.

This is The Weekend Pitch and I'm Jessica Hamlin. You can reach me at jessica.hamlin@pitchbook.com or on X @jessicaAhamlin.

A message from the U.S. National Science Foundation

Invention to impact

Adialante is working to make MRI systems more affordable and accessible to all – especially the underserved communities. They are developing more compact, affordable, and child-friendly MRI machines. Adialante (NSF-2323231) is one of the hundreds of deep tech startups funded annually by the U.S. National Science Foundation (NSF), a government agency that plays a central role in accelerating discoveries into the marketplace.

Each startup can receive up to $2 million to support translational research & development. By investing more than $200 million in startups annually, NSF helps teams navigate the earliest stages of technology translation. These companies have gone on to raise billions in follow-on capital, and the portfolio has had 300+ exits. Learn more about NSF funding at seedfund.nsf.gov/next/.

Trivia

(Javier Ghersi/Getty Images)

While German startups have been struggling, venture investment did pick up a tad in Q4 of 2023, according to our Q4 2023 Germany Market Snapshot. How much capital did German startups raise in Q4, according to PitchBook research?

A) €1.7 billion
B) €2.8 billion
C) €1.1 billion
D) €896 million

Find your answer at the bottom of The Weekend Pitch.

20 companies that may IPO in '24

(Traffic_analyzer/Getty Images)

It's looking pretty likely that the IPO market will come back in late 2024. In anticipation of this mass liquidity event, our Emerging Tech Research analysts plotted the 20 VC-backed companies most likely to IPO in our latest analyst note.

Among our top picks are renewable battery company Northvolt, cybersecurity darling Rubrik and, of course, fintech giant Stripe. Try to guess the rest, then read our IPO pipeline report.

Female founders gain in share of VC fundraising

(Ryan McVay/Getty Images)

Female founders in the US and Europe notched record-high shares of VC capital raised in 2023, even as a decline in deals made the business of raising money the toughest it's been in years, according to a pair of reports published this week:

US All In: Female Founders in the VC Ecosystem, sponsored by Deloitte, Pivotal Ventures and Wilson Sonsini.

Europe All In: Female Founders in the VC Ecosystem, sponsored by UBS, Shoosmiths and Enterprise Ireland.

Dismal 2023 fundraising could work in LPs' favor in 2024

(Rudall30/Getty Images)

Last year was a dismal year for private market fundraising. A lack of portfolio exits and VC valuation fluctuations spooked LPs and led to a fund count drop of 48.4% from 2022.

Our 2023 Annual Global Private Market Fundraising Report shows that the difficult fundraising environment may begin to dissipate this year as the on-paper denominator effect breathes its last few breaths. In 2024, LPs will hold the keys to the fundraising kingdom.

Quote/Unquote

Jerome Powell
(Win McNamee/Getty Images)

"When we do get that confidence—and we're not far from it—it'll be appropriate to begin to dial back the level of restriction."

—US Federal Reserve Chairman Jerome Powell as he answered questions from senators last week on when interest rate cuts might begin.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

Q4 2023 Insurtech Report
Enterprise SaaS Future Report: Human Resources Tech
Q4 2023 Enterprise SaaS Report
Emerging Space Brief: Geothermal Energy
2023 Southeast Asia Private Capital Breakdown
Q4 2023 UK Market Snapshot

Trivia

Answer: A)

Germany-based startups raised €1.7 billion (around $1.9 billion) in Q4, a slight tick upward, but nowhere near levels seen at the start of the year. You can read more about the trends going on in German venture here.

This edition of The Weekend Pitch was written by Jessica Hamlin, Madeline Shi, James Thorne, Rosie Bradbury and Jacob Robbins. It was edited by Heather West and Ron Prichard.

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