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| In today's Daily Pitch, you'll find: | | | | | |
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| VCs say goodbye to all that for Q4 2022 | | For VC in 2022, it was the best of times, and it was the worst of times. Momentum from the 2021 highs carried through many areas of the venture market, even as figures faded throughout the year. While fundraising reached record highs, nearly 75% of the commitments were closed in Q1 and Q2. Fourth quarter deal count was roughly 25% lower than Q1, yet it remains higher than any quarter prior to the 2021 mania.
The latest PitchBook-NVCA Venture Monitor, sponsored by Insperity, J.P. Morgan and Dentons, details the data behind these dizzying trends: - Q4 exit activity topped off at $5.2 billion, the lowest quarterly total in more than a decade, capping off a staggering 90.5% decline in annual exit value.
- Fundraising reached annual highs, exceeding $160 billion, despite a lull at the end of 2022.
- Early- and late-stage deal activity both continued their slides in Q4, while venture debt remained high.
| | | | | | | | | Startup life expectancy expected to fall | |  | | (ShutterOK/Shutterstock) | | | Company failure rate was extremely low during the last boom cycle. But investors expect that to change this year, in a big way.
High-profile shutdowns in the crypto sector could be a sign of things to come across the tech landscape, investors say. VCs are getting stingier with existing funds and are unlikely to support weak portfolio companies. | | | | | | | |
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| A message from Silicon Valley Bank | | |
| SVB survey reveals fundraising expectations | | SVB's data analysis and fund CFO survey indicate that despite a market slowdown, the private equity industry shows strong momentum. Dry powder levels remain near record highs, and investment levels are above pre-pandemic levels. On the fundraising side, 44% of surveyed fund CFOs expect fundraising to reach 2021 levels within 1 to 3 years.
In fact, downturns have historically brought great opportunity, with funds raised during recessions outperforming those of surrounding years.
Nevertheless, industry-specific challenges proliferate, such as persistently elevated valuations and the denominator effect. Fund managers and limited partners are grappling with these and other issues in an increasingly difficult environment.
Read our report every quarter to stay on top of private equity trends CFOs need to know.
Download the report | | | | | | | |
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| Health equity takes center stage at JP Morgan conference | |  | | (Gorodenkoff/Shutterstock) | | | PitchBook senior healthcare analyst Rebecca Springer reports that health equity was the watchword on day three of JP Morgan's healthcare conference.
While value-based care enablers, primary care aggregators and strategics have rushed after Medicare Advantage margins, Equality Health sees opportunities in Medicaid-managed care—despite heterogeneity in state policy and the sophistication of managed care organizations. Cityblock and Unite Us also touted replicable models and accelerating growth.
PitchBook analyst Aaron DeGagne is also tracking efforts in genomic health equity, such as Illumina's participation in the All of Us program to increase racial and ethnic diversity in genomic sequence databases.
We expect more investment in health equity as population health matures and data on outcomes gets better, which will illuminate the cost savings of improving care for underserved communities. | | | | | | | | | Blue Owl ups bet on GP stakes with nearly $13B in new commitments | |  | | (Sam_H/Shutterstock) | | | Minority equity positions in private equity funds are proving attractive to investors in Blue Owl's latest fund, Dyal Capital Partners V. The vehicle closed with $12.9 billion in committed capital on Wednesday.
Minority—or GP—stakes in PE houses could help smaller and emerging managers fill out their balance sheets amid a difficult fundraising environment. | | | | | | | | | BioNTech to join push into AI drug discovery with InstaDeep deal | |  | | (Courtesy of BioNTech) | | | German biotech company BioNTech is set to spend up to about $683 million on InstaDeep to bolster its AI capabilities.
AI is increasingly being used to enhance drug discovery and development, with pharmaceutical companies across the globe setting up partnerships and investing in startups. | | | | | | | | | | Why laid-off tech workers are getting flooded with fake job offers. [The Wall Street Journal]
How Germany became Europe's leading Big Tech trust buster. [Financial Times]
With rising sea levels and extreme weather events, the Global North needs to prepare for mass climate migration. [Wired] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 520 Deals | 2087 People | 671 Companies | 18 Funds | | | | | | |
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| DeepL soars to $1B valuation | | | AI-powered translation startup DeepL has raised an undisclosed amount of funding at a more than $1 billion valuation, TechCrunch reported. IVP led the round for the German company. | | | | | | | Driverless vehicle startup Oxbotica bags $140M | | | | | | | | | | Israeli fintech startup 40Seas, which focuses on cross-border trade financing, has raised $111 million, composed of an $11 million seed round led by Team8 and a $100 million credit facility from Zim Integrated Shipping Services. | | | | | | | | | UK-based Hack the Box has secured $55 million in a round led by The Carlyle Group. The startup offers a cybersecurity training and upskilling platform for individuals, companies and universities. | | | | | | | | | AlbionVC has led a $45 million Series B for London-based Peppy. The startup offers employee healthcare benefits in areas including menopause, fertility, pregnancy and men's health. | | | | | | | | | Customer support AI chatbot startup Inbenta has closed a $40 million funding round led by Tritium Partners. The company counts DocuSign, LG and Skyscanner among its clients, and it plans to use its funding to hire more employees. | | | | | | | Hystar raises $26M for green hydrogen | | | Hystar, which specializes in developing hydrogen from renewable technology, has closed a $26 million Series B. AP Ventures and Mitsubishi co-led the round for the Norwegian company. | | | | | | | Telesair closes $22M round | | | | | | |
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| PitchBook webinar: Emerging technology outlook | | Join us for a webinar examining what lies ahead for emerging tech in 2023. From the fall of FTX to the rise of climate-tech investments, our analysts will dive into the findings from our recent analyst note about the industry and technology outlook for 2023, including the current trends and events that will affect spaces like crypto, AI, healthcare, and climate tech. Key topics include: - What emergent properties are likely to develop from continued innovation in foundational generative AI models.
- How the Inflation Reduction Act may be fueling an increase in climate-tech investments.
- What 2023 holds for the private market healthcare ecosystem, including the wider adoption of telehealth and the implications of lowering genomic sequencing costs on precision medicine.
Register now to secure your spot. | | | | | | | |
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| Carlyle eyes France's Groupe Lacour | | | The Carlyle Group has started negotiations to acquire a majority stake in Groupe Lacour, a French software company that supports businesses related to vehicle repair and maintenance. The firm plans to expand Groupe Lacour to additional European nations. | | | | | | | Compass Group invests in Mearthane Products | | | Compass Group Equity Partners has invested in Rhode Island-based Mearthane Products, which creates specialized formulations of polymer-based products for its manufacturing customers. Capital for the investment draws from the firm's Compass Group Fund II. | | | | | | | | | | | | | | One Equity acquires Mythics Emergent | | | One Equity Partners has acquired a controlling stake in IT services company Mythics Emergent Group, which focuses on public sector clients. MEG's founders and executives retain a minority stake in the company. | | | | | |
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| Flexport cutting 20% of workforce | | | Supply chain startup Flexport is cutting 20% of its staff, Insider reported. The Seattle-based company, valued at $8 billion, is led by former Amazon executive Dave Clark and founder Ryan Petersen. | | | | | | | |
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| Ares closes debt infrastructure fund on $5B | | | Ares Management has closed its latest debt infrastructure fund on roughly $5 billion. Fund V, which has deployed about $2 billion so far, targets subordinated investments in the digital, utility, energy, renewable energy and transportation industries. | | | | | | | Venom, Iceberg launch $1B Web3 fund | | | Venom Foundation and Iceberg Capital have partnered to launch a $1 billion Venom Ventures Fund to invest in Web3 startups, TechCrunch reported. Venom Foundation is a blockchain regulated by the Abu Dhabi Global Market. | | | | | |
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| KKR to spend additional $1B+ on commercial aircraft | | | KKR has committed to invest $1.15 billion from its credit and infrastructure funds in leased commercial aircraft, expanding an existing partnership with Altavair. Since 2018, KKR and Altavair have acquired 90 aircraft, 75% of which are leased to airlines and operators. | | | | | |
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"This combined total of 664 newly listed middle-market companies may well become a new area of focus going forward as the PE take-private machine re-tools and re-directs. ... Although many are high quality, they now lack the sponsorship and market cap to survive in public markets. Look for these companies to populate the ranks of take-privates, and for the buyout pendulum to swing back in favor of the middle-market segment."
Source: PitchBook's Q3 2022 US PE Middle Market Report | | | | | |
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