Venture Capital

EQUIAM Sector Assessment: June 2022

July 12, 2022

EQUIAM’s proprietary selection model is a systematic and data-driven model that ranks thousands of growth and late-stage private companies using 90+ proprietary signals on over 10 million data points. Each month, we perform a sector deep-dive and study the underlying constituents.

This month we assess two sectors (CleanTech & RestaurantTech) which exhibited,

  • High capital efficiency, market share capture and, ultimately, value creation
  • Good Hiring growth, positive internal and external sentiment
  • Attractive valuation metrics (e.g. EV/Rev) and growth-adjusted valuation metrics (e.g., EV/Rev/Growth)

It is important to note that EQUIAM’s investment process tracks company and sector performance over time in order to identify companies with sustained rankings and the greatest propensity for long-term profitability. In contrast, the above model outputs are provided as of a single point in time (June 30, 2022) and do not reflect company or sector scoring over extended time periods.

CleanTech Sector Overview:

Our first private sector to watch is CleanTech. The climate change crisis and high energy prices are the primary drivers of the sector, and core reasons why CleanTech is likely to continue to attract capital, even in a recession. Over the last 10 years, $150 billion of private funding has been poured into 1,000+ companies in the sector, and 2022 shows little sign of slowing with 375+ deals year-to-date. These investments are flowing to renewable energy solutions, energy storage, sustainable materials, and software. With the ongoing climate and energy price hikes continuing to dominate headlines and geopolitical uncertainty in Europe and elsewhere, this trend is likely to continue. With all of that said, it is not surprising that the CleanTech sector is being valued at a premium in both the public and private markets. In the public sector, CleanTech companies are being traded at 19.0x revenue multiples.

Private companies such as Arcadia, Sila, and Voluts are just three of many companies that are thriving in the CleanTech industry. In the private sector, valuations are somewhat lower than public comps, with multiples being 11.0x, 11.0x, and 18.0x. Other companies also working to reduce negative environmental impacts, have shown indications of sustainable growth despite tumultuous economic conditions. EQUIAM will continue to monitor the CleanTech private sector over the intermediate to long-term.

RestaurantTech Sector Overview:

RestaurantTech has proven to be a post-pandemic winner. Many analysts believed the usage of RestaurantTech-related applications would decline as the economy shifted back to pre-pandemic habits. Instead, the restaurant industry has embraced the integration of technology and continues to accelerate in this direction. Over the last three years, the pendulum swung toward widespread adoption of digital ordering, QR code menus, and contactless payments. This year, those trends have become staples in the industry and show no signs of abatement in a tight labor market.

In the public markets, the RestaurantTech sector trades at 9.8x revenue valuations. In the private company space, the top three restaurant tech companies are valued at an average of 8.3x, and our data shows them to be some of the more capital efficient companies with some of the highest employee sentiment scores. For example, Popmenu, a private RestaurantTech company that is enabling restaurants to better utilize their own technology, is among the top rated restaurant tech companies in terms of valuation score, capital efficiency, and employee sentiment. This type of cohesion across different data metrics suggests attractiveness for the restaurant tech sector.

Disclaimer: This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by EQUIAM LLC (an offering to invest in an EQUIAM LLC fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety). Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Shachi Shah

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