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| In today's Daily Pitch, you'll find: | | | | | |
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| PE dealmaking fatigue finally reaches the middle market | | Sluggishness in the mega-deal universe has hit the PE middle market—which saw a six-year low in deal volume and a roughly 26% quarter-over-quarter decline in exit value in Q3.
Deal multiples for PE transactions targeting small to medium-sized companies contracted from recent peaks, and fundraising also cooled, according to our Q3 2023 US PE Middle Market Report, sponsored by Antares Capital and LBMC. The report breaks down the factors driving the headwinds and explores what could get things moving. | | | | | | | | | How 4 post-SVB crisis predictions panned out | |  | | (Rebecca Noble/Getty Images) | | | How will 2023 be remembered in the tech world? - As the year that 3,200 startups and over $27 billion in venture funding turned to dust.
- As the year that saw LPs shrink away from the venture asset class.
- As the year of the country's biggest bank collapse since 2008.
The 72-hour run on Silicon Valley Bank and subsequent crisis only calmed when the FDIC stepped in to protect customer cash. And the stress of those few days compelled many founders and VCs to realize for the first time that treasury management actually matters.
But other than that, has anything really changed? Here's a look at what some people predicted in the wake of the crisis, and where we are now that the dust has settled. | | | | | | | |
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| Are new rules driving PE deals and M&A in the financial market? | | In today's environment, firms are faced with dual challenges: mounting rules and regulations increasing the requirements placed on their compliance programs compounded by markedly difficult economic factors impacting business and operations. So, how are firms adapting?
In this new report, COMPLY examines the evolution of Private Equity deals and M&A activity in recent years, analyzing how regulatory action has impacted trends in deal-making within the financial market. With detailed, data-driven insight, COMPLY assesses whether M&A strategy is in fact being driven by increased regulatory activity.
Download Regulatory-Driven M&A for insight into current market trends, the impact of broadening regulatory regimes and advancing technology, and the growth of Regtech adoption within the financial industry. | | | | | | | |
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| Mobility tech bounces back | | Driven by a few large deals, VC funding for mobility tech bounced back significantly in Q3, according to our latest Emerging Tech Research. Some $9.8 billion was generated across 215 deals, with the 20 largest accounting for 80% of quarterly deal value.
The report covers these mega-deals, along with key startups and trends in the mobility tech sector. It looks into the future of microcars and the role drones play in defense and warfare. | | | | | | | | | Smaller GPs offer co-investments to build trust with LPs | |  | Butterfly Equity bought an ownership stake in the Qdoba
restaurant chain in 2022 using a co-investment strategy.
(Nicolaus Czarnecki/Getty Images) | | | PE fund managers, particularly those in the lower middle market, use co-investments as a way to establish and solidify relationships with limited partners—an otherwise challenging feat given the lethargic fundraising environment.
For the LP, these arrangements can offer lower fees, increased control of the target company and a way to manage risk.
"[LPs] can adjust their risk-return appetite, like a choose-your-own-adventure," said Butterfly Equity co-founder and co-CEO Adam Waglay. | | | | | | | | | Retail fintech VC investment shows uptick in deal value | | | VC deal value for the retail fintech sector rose 53.2% in Q3 compared to Q2, with companies bringing in $2.4 billion across 149 deals, according to PitchBook's recent Emerging Tech Research. While that total is down 53.5% from Q3 2022, the sector is still holding its own. We've laid out the key trends, deals and emerging opportunities for investors to keep their eyes on. | | | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 566 Deals | 2053 People | 555 Companies | 37 Funds | | | | | | |
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The Daily Benchmark:
2014 Vintage Global Funds-of-Funds | | | | | | |
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Indian B2B ecommerce startup Udaan raised a $340 million Series E led by M&G.
Glean AI, an enterprise AI startup, is in talks with Kleiner Perkins and others to raise at least $200 million at a $2 billion pre-money valuation, The Information reported.
Urban Sports Club, a Berlin-based sports and wellness platform, has raised €95 million in a growth equity round led by Verdane.
London's Qogita secured an €80 million Series B led by Dawn Capital for its wholesale procurement platform.
Ecoworks, a Berlin-based provider of climate-neutral housing renovation solutions, raised €40 million in a round led by World Fund.
Kapital raised a $40 million Series B led by Tribe Capital. The Mexico City-based company offers a banking platform for small and medium-sized businesses.
Swiss biopharmaceutical startup Vandria secured a $20.6 million Series A led by ND Capital.
Meniga, a London-based provider of digital banking tools, secured a €15 million Series D from investors including Groupe BPCE and Crédito Agrícola.
Distributional, an AI testing and evaluation startup, raised an $11 million seed round led by Andreessen Horowitz.
London-based AI marketing startup Arcane raised a $5 million seed round led by Accel.
Hypergene, a Swedish SaaS company specialized in business analysis and budget planning, has secured a growth investment from Thoma Bravo. | | | | | |
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Apollo Global Management is among several firms that could provide as much as $500 million in emergency financing to UK-based luxury fashion retailer FarFetch, which is listed on the NYSE, Sky News reported.
CVC Capital Partners has agreed to pay around €200 million for a significant minority stake in TOPdesk, a Netherlands-based service management software provider.
Line Next has received a $140 million investment from Crescendo Equity Partners. Line Next is a South Korean unit of Japan's Line Corporation focused on Web3 business strategy and planning.
Thoma Bravo agreed to make a growth investment in North Carolina-based BlueMatrix, which offers an investment-research publishing platform.
Argosy Private Equity acquired a controlling interest in Salt Lake City-based Wize Solutions, a full-service racking, automation, dock and door installer.
TowerBrook Capital Partners acquired a majority of Demakes Enterprises, a fourth-generation family business based in Massachusetts that manufactures value-added protein products. | | | | | |
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Oaktree Capital has held a $3 billion close on its third special-situations fund targeting midmarket companies, exceeding its $2.5 billion target, the Wall Street Journal reported.
Connecticut-based Sandbrook Capital closed its first climate infrastructure fund on $1.5 billion and raised at least $600 million more for co-investment vehicles, The Wall Street Journal reported.
Paris-based VC Singular has raised €400 million for its second fund.
BoxGroup has raised $212.5 million for its sixth pre-seed and seed-stage fund and another $212.5 million for BoxGroup Picks, its third opportunity fund.
Deeptech VC Playground Global has raised $410 million for its third flagship fund, which will predominantly invest in seed and Series A companies.
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"Three pieces of criticism revolve around CVC investment activities in Japan. First, despite CVCs actively making investments, corporations are not doing enough acquisitions. Minority investments are likely insufficient for corporations to take full advantage of innovative technology or ideas outside of the organization. Corporations write small checks into startups for a multitude of purposes. While some could be evaluating an eventual acquisition upon making an initial minority investment, others may be incentivized to participate in a round to observe and learn of the type of innovation happening on the ground."
Source: 2023 Japan Private Capital Breakdown | | | | | |
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