Practice rounds began this week for the U.S. Open golf championship in New York with new safety precautions and restrictions in place. (Jamie Squire/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:
Flywheel to shut down as COVID-19 continues to upend fitness industry Flywheel Sports, a New York-based operator of boutique spin studios that received prior backing from L Catterton and others, has filed for Chapter 7 bankruptcy and will permanently close all its locations, according to reports, the latest sign of how the pandemic has changed the fates of companies across the fitness industry.
The news comes seven months after Flywheel settled a patent lawsuit brought by Peloton, which resulted in Flywheel admitting it had copied some of its would-be rival's technology and shutting down its own in-home bike offering. In the months since, the pandemic has provided a tailwind for many in-home fitness companies. Peloton's stock price has roughly quadrupled. Mirror lined up a $500 million sale to Lululemon. And on Tuesday, Apple announced the launch of Fitness+, a subscription platform geared toward at-home fitness.
Many brick-and-mortar fitness companies, meanwhile, have struggled with shutdowns and store closures. Both Gold's Gym and 24-Hour Fitness have filed for bankruptcy amid the pandemic.
In January, shortly before Flywheel settled its Peloton suit, owner Kennedy Lewis Investment Management agreed to sell the company to fellow New York-based fitness studio chain Town Sports for $25 million. But Town Sports canceled the deal in April as the effects of the pandemic kicked in; earlier this week, the company filed for Chapter 11 bankruptcy protection. As that deal crumbled, Flywheel found other means to stay afloat, taking out a Paycheck Protection Program loan of between $1 million and $2 million in April. —Adam Lewis, 5:52 p.m. PDT Opendoor to go public in merger with Social Capital SPAC Opendoor has agreed to merge with Chamath Palihapitiya's special-purpose acquisition company, Social Capital Hedosophia Holdings Corp. II, in a deal that gives the real estate tech business an enterprise value of $4.8 billion. Opendoor was valued at $3.8 billion last year, according to PitchBook data.
The merger will provide the San Francisco-based company with around $1 billion in cash, including a $600 million PIPE investment from new investors BlackRock and the Healthcare of Ontario Pension Plan, as well as existing Opendoor shareholders. The company's existing investors, which include NEA, GGV Capital and Norwest Venture Partners, will roll their equity stakes into the new entity.
Opendoor operates a digital platform that streamlines the process for buying and selling homes. The company expects revenue to fall 48% to $2.5 billion this year, down from $4.7 billion in 2019, according to an investor presentation. It also has plans to expand operations from 21 US real estate markets to at least 100 markets across the nation.
The SPAC deal marks a change of fortune for Opendoor, which reportedly laid off 35% of its staff in mid-April. The business paused new home purchases in March due to the pandemic and resumed with modified operations in May. —James Thorne, 5:40 p.m. PDT How the pandemic is accelerating digital transformation and DevOps adoption The coronavirus outbreak and subsequent shelter-in-place restrictions are increasing the pressure to continuously develop digital products and services, as developed societies place more value on the ability to work, learn and communicate remotely.
Companies with sophisticated IT capabilities are thriving in this new environment, but legacy non-technology businesses face significant risks for disruption, according to our Q2 Emerging Tech Research report on Cloudtech and DevOps. Other highlights include:
—Paul Condra, 3:49 p.m. PDT Klarna now Europe's most valuable fintech startup with $650M round Swedish payments startup Klarna has reached a $10.65 billion valuation with a $650 million investment led by Silver Lake.
—Leah Hodgson, 3:07 p.m. PDT, Sept. 15 On the podcast: European VC plows ahead despite COVID-19 The COVID-19 pandemic has left no part of the global economy unscathed. But the European VC landscape has remained surprisingly resilient, driven in large part by continued investment in tech and a proliferation of sizable late-stage rounds.
PitchBook analyst Nalin Patel joins the latest episode of "In Visible Capital" to break down the current state of the European venture scene, including:
—Adam Lewis, 2:48 p.m. PDT, Sept. 15 PitchBook reports on the coronavirus impact on private markets Digital therapeutics' prescription for growth The digital therapeutics industry is expected to be worth $6.9 billion by 2025, as the promise of more effective, efficient healthcare helps drive new growth. These medical treatments can make it easier and more economical to customize, monitor and scale care to many patients, creating a large market opportunity for VC investment.
Our latest analyst note centers on emerging healthcare products and services that rely on software and data. Among the findings:
—Kaia Colban, 12:10 p.m. PDT, Sept. 14 Pandemic pushes automation as AI & ML investment tops $12B in Q2 Venture investors poured $12.6 billion into artificial intelligence & machine learning companies in Q2, with mega-deals in late-stage unicorns in the US and China accounting for most of that total. Valuations spiked in H1 relative to full-year 2019, with median valuations at the early and late stages up nearly 45% and 38%, respectively.
The pandemic has driven demand for AI & ML products and encouraged automation across the economy, according to PitchBook's newest Emerging Tech Research report. But budgets aren't rising in tandem, pushing companies to do more with less in order to add AI capabilities. Other takeaways include:
—Brendan Burke, 1:00 p.m. PDT, Sept. 9
Did you miss any of our continuing coverage of COVID-19? Find our most recent updates below: