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In today's Daily Pitch, you'll find: - GP stakes investors have had a very active year. Our analyst note breaks down fund portfolio construction, covering return composition, volatility and more.
- Investor appetite for real estate strategies like GP co-investment is holding strong through rising inflation.
- We spoke with one LP about how VCs have recently adopted a more conservative approach to early-stage deals amid market turmoil.
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| How portfolio construction can affect returns for GP stakes funds | | GP stakes investors have had a very active year of fundraising, capital development, monetization and more. Alternatives firms are increasingly choosing to sell stakes in their management companies to fund growth initiatives. More GP stakes deals are expected to be on the way, and a weakened stock market could push managers to pursue private financing.
We break down fund portfolio construction by return composition, volatility and more in a recent PitchBook analyst note on GP stakes. Some key takeaways include: - GP stakes investment returns vary by the target GP's strategy. Unsurprisingly, a GP's return profile tends to look a lot like the strategy with which it invests.
- Well-rounded portfolios mix private equity, credit and real assets, as these are likely to perform best through all market conditions.
- Higher inflation and interest rates are poised to most negatively affect buyout and growth equity managers while providing a tailwind to credit and real assets because of stepped-up LP demand.
| | | | | | | | | Clairmont collects $110M for GP co-investment real estate fund | |  | | (ferrantraite/Getty Images) | | | Investors' appetite for unusual strategies meant to capture profits from real estate investments remains strong amid rising inflation and market turbulence.
Real estate PE investor Clairmont Capital Group, looking to capitalize on this interest, is seeking to raise $150 million for its fourth GP co-investment fund.
This new vehicle will help fund the capital GPs are required to contribute in JV real estate transactions. In exchange, Clairmont earns a percentage of promote distributions, known as carried interest in the non-real estate world. | | | | | | | |
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| A message from the National Science Foundation | | |
| | Creating a gene circuit platform with DNA sequences, Senti Bio hopes to develop cancer treatments. The biotech company announced a SPAC merger valued at $601 million.
Senti Bio (NSF-1747250) is one of hundreds of deep tech startups annually funded by the 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 annually investing roughly $200 million in startups, NSF helps teams navigate the earliest stages of technology translation. In the past five years, these companies have gone on to raise billions in follow-on capital, and the portfolio has had 200+ exits.
Learn more about NSF funding at seedfund.nsf.gov | | | | | | | |
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| The market correction has come for Series A and seed startups | |  | | (DNY59/Getty Images) | | | After months of relative immunity to market turmoil, Series A and seed deals are starting to feel pricing pressure.
Valuations for best-in-class Series A deals have dropped as much as 58% in recent months, according to Michael Kim, an LP whose firm Cendana Capital invests in dozens of prominent seed funds. Seed-stage startups are likewise seeing valuation declines.
VC firms, including Sequoia, are also starting to demand that companies show more robust revenue before seeking a Series A round.
But pricing for crypto and Web3 deals remains high. "On the crypto side, it's crazy," Kim said. | | | | | | | | | Breakthrough AI innovations stand out amid chillier market conditions | | VC investment in AI startups slumped around 21% quarter-over-quarter to $23.9 billion in Q1. However, the total remained in line with quarters prior to Q4 2021, and median late-stage valuations rose more than 11% to $100 million.
While most of the categories within AI and machine learning are on pace to decline in VC funding this year, standout sectors including accounting automation, autoML, genetic analytics and supply chain optimization continued to grow.
On the exit front, PitchBook analysts predict that an uptick in AI mega-exits will be pushed out until market conditions improve and acquirers can bear the high operating costs of building sophisticated AI models.
Our recent AI & ML Emerging Tech Research update deep dives into the vertical's investment activity and trends, comprehensively assessing emerging opportunities in conversational AI, silicon photonics and revenue operations. | | | | | | | | | | As the business of book buying has migrated online, it's gotten harder to sell works by lesser-known authors. Some startups are trying to reproduce the serendipity of walking into a bookstore and discovering something new—with mixed results. [The New York Times]
How some real estate companies are competing to sell buyers on a fractional lifestyle. [The Information]
The surreal case of one hot-headed coder who's been accused of exposing the CIA's hacking arsenal. [The New Yorker] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 489 Deals | 2131 People | 574 Companies | 25 Funds | | | | | | |
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| 2017 Vintage Global PE Funds with more than $1B | | | | | | |
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| Lessons from a CEO: 4 ways to protect revenue during a downturn | | Take action now to protect your revenue and get ahead of the market: - Create an impact thesis about how macroeconomic conditions impact the most important dimensions of your revenue.
- Look for signals for downward pressure on your renewals and churn.
- Calibrate the 3 C's: Coverage, Capacity, and Conversion.
- Pressure test your big deals. Move now on the sequence of events for your make-or-break deals to assess risk and upside against the plan.
Read 4 CEO Lessons on How to Protect Revenue During a Downturn to get the detailed playbook. | | | | | | | |
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| Envision Digital secures $210M | | | Envision Digital has raised a $210 million Series A led by Sequoia China, with support from GIC. The Singapore-based company offers an AI and internet of things operating system for customers to manage smart devices and reduce their carbon footprints. | | | | | | | Pintu banks $113M Series B | | | | | | | | Nfinite brings in $100M Series B | | | Nfinite has raised $100 million in a round led by Insight Partners. The company offers a 3D merchandising platform for brands to display and manage product visuals. | | | | | | | | | | | | | | Ion Storage Systems picks up $30M | | | | | | | | Hammoq raises $24M in equity and debt | | | Hammoq has raised $24 million in an equity and debt round led by Sierra Ventures. Based in Phoenix, the company offers a platform designed to help ecommerce sellers digitize resale operations and automate online listings on marketplaces. | | | | | | | | | San Diego-based modular home builder Dvele has raised $15 million in a round co-led by Crescent and Marvin. The company plans to use the funds to complete its automated homebuilding technology. | | | | | |
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| Frazier Healthcare Partners acquires Apollo Intelligence | | | Frazier Healthcare Partners has acquired Apollo Intelligence, a provider of real-time data and insights to the healthcare and life science industries. Established in 2019, the company's services are used by 2 million physicians, patients, caregivers and other healthcare stakeholders globally. | | | | | | | PE-backed Mercer Global Advisors lands Fure Financial | | | | | | | | LLCP offloads Hand & Stone to Harvest Partners | | | | | | | | Antelope buys Diggin' Your Dog and Super Snouts | | | Alpine Investors-backed pet wellness specialist Antelope has acquired Diggin' Your Dog and Super Snouts, a supplier of pet CBD supplements, health products and treats. | | | | | | | One Equity to acquire ACI's online banking unit | | | One Equity Partners has agreed to acquire the corporate online banking solutions division of ACI Worldwide, a provider of real-time payments software. The unit's technology enables banks around the globe to process over $1 billion in payments daily. | | | | | |
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"Carveout activity ballooned in Q1, with €20 billion invested, which is pacing to be a record year by some distance. Q1's carveout deal value has already eclipsed all annual figures except for 2018, and we still have three quarters of the year left. The two largest deals of the quarter certainly buoyed carveout deal value, however, the trends of portfolio revamps, redefining core competencies, reducing leverage, and exiting non-core assets will continue to accelerate in this more hawkish policy environment."
Source: PitchBook's 2022 France & Benelux Private Capital Breakdown | | | | | |
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