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| In today's Daily Pitch, you'll find: | | | | | |
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| Fundraising funk hits up-and-coming firms hardest | | Raising private capital became more difficult in Q3. Aggregate fundraising across the private investing universe was down 7.7% to $1.35 trillion in the 12 months leading up to Sept. 30, as only those funds focusing on venture capital and real assets managed to surpass year-ago levels.
But as some GPs—particularly emerging firms—get nervous, institutional investors have gained leverage in discussions around fund terms, DEI mandates and ESG data.
Our Q3 2022 Global Private Markets Fundraising Report (formerly known as the Global Private Fund Strategies Report) explains how each private strategy survived—or thrived—while fundraising this autumn. Key takeaways include: - November PE fund marketing rule changes from the SEC could add to the burdens of small GPs as they work to comply.
- Investors are seeking safety in North America-based funds as they consider the strong dollar and distance from the war in Ukraine.
- High inflation has spooked even real estate investors, whose commitments to funds declined 19% from the prior year through Q3.
| | | | | | | | | PE firms may slow down hiring in 2023, but layoffs are unlikely | |  | | (Vitalii Vodolazskyi/Shutterstock) | | | Executive recruiters and compensation consultants expect a slowdown in private equity hiring, but they don't anticipate mass layoffs. Amid declining fundraising figures and a difficult dealmaking environment, PE firms, which are already largely fully staffed, are showing signs of holding off on their new hires.
The market downturn is having much less of an impact on PE than on other asset classes. With ample dry powder, longer-term investment horizons and steady income from management fees, PE firms might slow down growth, but they won't stop it. | | | | | | | |
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| A message from PitchBook Media | | |
| PitchBook's 2023 Media Kit released | | Year to date, PitchBook's newsletters have over 161 million impressions and over 744,000 report downloads. Partnering with PitchBook Media is a way to feature your firm's insights in one of the most popular venues for timely and relevant PE and VC articles, news, asset class reports and custom white label reports.
The brand-new 2023 Media Kit contains all the details to help your firm position itself in front of a VC or PE audience.
Click here to download it today or to speak to someone on the media team. | | | | | | | |
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| Move aside, crypto: Generative AI takes tech VC attention in Q3 | | Hype around text-to-image AI models in Q3 2022 helped draw rapid VC investment in the generative AI space. But this did not stop deal activity from falling for the overall AI and machine learning vertical, where deal value declined 46.7% quarter-over-quarter.
Our latest report on AI and machine learning tracks 68 product categories, and only 20 are on pace to grow in VC funding in 2022—led by intelligent robotics, supply chain optimization and conversational AI.
The report maps out the market and notes the emerging opportunities and startups to watch. Generative AI, neural search and inference semiconductors are finding traction and scooping up deals in the current market. Company spotlights on AI unicorns Databricks and DataRobot show their evolving M&A and partnership priorities. | | | | | | | | | SaaS cost-management startups draw VC dollars as recession looms | |  | | (Gorodenkoff/Shutterstock) | | | When the world locked down at the start of the pandemic, companies flocked to cloud-based tools for help with the shift to remote work.
More than two years later, many organizations are realizing that they may have overloaded on software licenses. Startups like Zylo, which just raised a $31.5 million Series C, are helping companies rein in bloated software budgets. | | | | | | | | | European unicorn creation holds steady | |  | | (Niphon Subsri/Shutterstock) | | | A total of 40 European startups gained a €1 billion-plus valuation in the first three quarters of this year, already making 2022 Europe's second biggest year for newly minted unicorns.
While deal count for these prized companies has remained strong despite the downturn, investors are writing smaller checks for Europe's unicorns. | | | | | | | | | Is it time to thin the unicorn herd? | |  | | (Jenna O'Malley/PitchBook News) | | | Nearly a decade after the term "unicorn" was coined, venture capital's best and brightest companies may have finally outgrown what the ecosystem can sustain. Their rise was a product of business models that engineered growth with cheap money, and the financial conditions that made this model possible have changed profoundly.
Starting in 2021 and continuing for much of this year, the top 10% of US startups could reliably expect a unicorn valuation. Not anymore. The rate at which new unicorns are being formed globally has dropped precipitously after a truly exceptional 2021, in which 584 VC-backed companies secured a valuation of $1 billion or more.
Flush with cash from recent boom times, unicorns have avoided down rounds and are extending financial runways by cutting costs. Serious damage has been limited to a small handful of companies, but Klarna's 85% valuation haircut earlier this year showed how tenuous these former valuations can be. For now, these companies are in a kind of limbo, increasingly shunned by the crossover investors they rely on for cash and unable to access public markets.
A new suite of indexes from PitchBook and Morningstar captures how resilient unicorns have been, but all signs point to a coming reckoning. The population of unicorns, which symbolizes a fantasy of perpetual growth, may soon shrink. | | | | | | | | | | Regulators circle Microsoft's planned acquisition of Activision-Blizzard in an example of how the gaming industry is changing. [The Economist]
Mapping carbon dioxide emissions around the world. [Visual Capitalist]
One area where there's still demand—and hope—for NFTs' enduring commercial use is among artists. [Sifted] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 373 Deals | 1792 People | 664 Companies | 16 Funds | | | | | | |
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| 2015 Vintage Global Debt Funds | | | | | | |
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| Locus Robotics nears $2B valuation | | | | | | | | Pearpop hits $300M valuation with Series A | | | | | | | | Cajal Neuroscience raises $96M | | | | | | | | Volta Trucks adds $62M to Series C | | | Stockholm-based Volta Trucks has raised an additional €60 million (about $62 million) for its Series C from existing investors, bringing the round's total to €290 million. The startup builds fully electric commercial trucks. | | | | | | | Rgenta Therapeutics brings in $52M | | | | | | | | Deepgram extends Series B with $47M | | | Automatic speech recognition specialist Deepgram has raised an additional $47 million for its Series B, bringing the round's total to $72 million. Madrona led the latest funding. | | | | | | | | | Greenwood, which offers a banking app for Black and Latino communities, has raised a $45 million round led by Pendulum. | | | | | | | Saltbox takes in $35M for flexible warehouse space | | | Saltbox, which runs a network of flexible warehouses for small ecommerce businesses, has received a $35 million Series B co-led by Cox Enterprises and Pendulum. This round brings Saltbox's total funding to $56 million. | | | | | | | Post News gets a16z backing | | | Post News, a new social media platform created as a Twitter rival, has raised an undisclosed amount of funding from Andreessen Horowitz as well as New York University professor Scott Galloway, TechCrunch reported. A16z also backed Elon Musk's purchase of Twitter. | | | | | |
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| PitchBook webinar: Insights into investment firms' compensation | | Join us to discuss Q2 and Q3 findings from the 2022 Thelander-PitchBook Investment Firm Compensation Survey results. Topics include data on salary increases, carried interest and more for every role, from entry-level analysts to managing general partners.
Register now to secure your spot. | | | | | | | |
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| Rubicon Carbon launches with $300M from TPG | | | TPG has invested $300 million in newly launched Rubicon Carbon, which will serve companies involved in voluntary carbon credit markets. Rubicon is aiming to raise $1 billion in total. Planned co-investors include Bank of America, JetBlue Ventures and the energy transition arm of NGP. | | | | | | | Infrastructure investors back Caliche II with $268M | | | | | | | | Audax acquires clinic operator Medi-Weightloss | | | | | | | | Shell to buy PE-backed Nature Energy for $2B | | | | | | |
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| Indoor farming startup to cut half of workforce | | | Berlin-based urban farming company Infarm has announced plans to cut its workforce by around 500 employees, more than half of its team. The company is shifting its strategy toward profitability and seeking to reduce costs due to rising energy and material prices. Infarm, which is backed by investors including Balderton Capital and Atomico, has also proposed downsizing its operations in the UK, France and the Netherlands. | | | | | |
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| Scania raises $189M VC fund | | | Sweden's Scania has launched a new investment vehicle, Scania Growth Capital II, which will be managed by East Hill Equity. The 2 billion Swedish kronor (about $189.4 million) VC fund will target B2B tech companies and entrepreneurs. | | | | | | | Adams Street closes $1B+ fund | | | Adams Street Partners has held the final close of Adams Street 2022 Global Fund Program on $1.1 billion. The portfolio's strategies include primaries, secondaries, co-investments, growth equity and private credit in North America, Europe and Asia. | | | | | |
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