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The Daily Pitch: VC

September 15, 2022

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In today's Daily Pitch, you'll find:

Middle-market dealmaking stayed steady in H1, but fundraising was another story, according to our new US PE Middle Market Report.

Pet ownership in the US has grown dramatically in recent years, and so has PE's footprint in the veterinary industry.

How PE and VC could benefit from Walmart, Amazon and CVS disrupting healthcare services.

Today's Top Stories

Walmart, Amazon, CVS want to disrupt healthcare services. Here's how PE, VC could benefit

(Courtesy of Walmart)

Walmart has a 10-year partnership with UnitedHealth. Amazon plans to acquire One Medical. CVS has a deal to buy Signify Health.

What does the retail wave mean for healthcare? Senior healthcare analyst Rebecca Springer unpacks these outsiders' strategies and what it all means for incumbent PE- and VC-backed companies.

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Dealmaking holds steady, fundraising slows in US PE middle market

PE deal activity in the US middle market totaled $228.2 billion in H1—a sharp drop from 2021's record but on pace for a healthy year nonetheless. Firms have abundant dry powder, and large GPs averse to making massive bets in the current environment have eagerly turned their eyes to smaller investment opportunities.

Yet the middle market's size advantage in the dealmaking space proves a hindrance when it comes to fundraising, according to our Q2 2022 US PE Middle Market Report, sponsored by Antares Capital and Baker Tilly. Among the takeaways:

The crowded fundraising landscape is expected to have its biggest negative effect on the middle market, as LPs pushed near their allocation limits prioritize relationships with larger, more-established fund managers.

Add-on activity accounted for 73% and 62.5% of deal count and value, respectively—both all-time highs.

Deal sizes have trended downward, with middle-market deals over $500 million making up their lowest share of count and value in at least a decade.

Exit activity in Q2 fell for the second consecutive quarter, with the cumulative value of $35.6 billion falling below the average quarterly value for the five years pre-pandemic.

read it now

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A message from the U.S. National Science Foundation

Invention to impact

With phone scams and phishing texts on the rise, Forward Edge-AI is developing artificial intelligence for public safety and national security using machine learning and blockchain technologies.

Forward Edge-AI (NSF-2028451) is one of hundreds of deep tech startups funded annually by the National Science Foundation (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 investing roughly $200 million in startups annually, 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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Got a pet? There's a good chance that private equity backs your vet

(Bachkova Natalia/Shutterstock)

More than 90 million households in the US have at least one pet, nearly all of which will require a trip to the vet at some point. As pet ownership has surged in recent years, so too has the veterinary sector—and private equity's interest in it.

PE deals in the vet industry have totaled over $45 billion since the start of 2017. We spoke to investors about the sector's appeal, as well as its challenges.

Recommended Reads

The world's biggest automakers are betting on a startup taking advantage of the Inflation Reduction Act to recycle old batteries as material for building electric cars. [The Wall Street Journal]

Rather than selling Patagonia or taking it public, the founder has transferred ownership to a specially designed trust and a nonprofit organization. [The New York Times]

The airlines are wondering why passengers aren't stowing their carry-on bags like tacos. [The Wall Street Journal]

Since yesterday, the PitchBook Platform added:

31

VC valuations

1996

People

557

Companies

25

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2016 Vintage Global Debt Funds
	VC Deals
	Acelyrin banks $300M Series C
	Nile emerges from stealth with $125M
	Redesign Health brings in $65M
	Podcasting platform Podimo picks up $58M+
	Cyrebro secures $40M
	Construction tech startup Kojo raises $39M
	Morpheus Space collects $28M
	Nyshex nabs $25M Series B
	Fundraising
	Prime Movers Lab raises $500M
	Two Sigma Ventures brings in $400M

The Daily Benchmark

2016 Vintage Global Debt Funds

Median IRR

10.26%

Top Quartile IRR Hurdle Rate

13.03%

1.25x

Median TVPI

Select top performers

Silver Point Distressed Opportunities Master Fund

Centerbridge Special Credit Partners III- Flex

PAG Enhanced Credit Fund

*IRR: net of fees

60 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Acelyrin banks $300M Series C

Acelyrin has raised $300 million in a round led by Access Biotechnology. Based in Los Angeles, the company is a developer of drug candidates for inflammatory diseases like psoriatic arthritis and axial spondyloarthritis.

View round

View similar company »

Nile emerges from stealth with $125M

Nile has raised $125 million from investors including March Capital, 8VC, JC2 Ventures and Iconiq Capital. The Santa Clara-based company offers enterprise networking tools for continuous monitoring and analytics.

Redesign Health brings in $65M

Redesign Health has raised $65 million Series C led by General Catalyst, with support from CVS Health Ventures and UPMC Enterprises, Fast Company reported. Redesign helps develop and launch technologies for healthcare companies.

View round

View similar company »

Podcasting platform Podimo picks up $58M+

Podimo has raised €58.6 million (about $58.5 million) in a round led by 83North, Highland Europe and Saban Ventures. The Danish startup offers a subscription service for audio entertainment and podcasts.

View round

View 9 competitors »

Cyrebro secures $40M

Cyrebro has closed a $40 million Series C led by Koch Disruptive Technologies. The Israeli startup is the developer of a platform for security operations center infrastructure.

View round

View 110 competitors »

Construction tech startup Kojo raises $39M

Kojo has raised $39 million in Series C funding led by Battery Ventures. Based in the Bay Area, the company is the developer of a materials management platform designed to connect workers, accounting teams, vendors and contractors for construction projects.

View round

View 2 competitors »

Morpheus Space collects $28M

Morpheus Space has raised $28 million in a round led by Alpine Space Ventures. The company develops electric propulsion devices for spacecraft.

View round

View 2 competitors »

Nyshex nabs $25M Series B

Collate Capital has led a $25 million Series B in Nyshex, which provides a digital contracting platform for ocean freight shipping.

View round

View 41 competitors »

Fundraising

Prime Movers Lab raises $500M

Prime Movers Lab has raised $500 million for its debut early growth fund. The firm targets startups developing potential breakthrough technologies in sectors such as energy, transportation and biotech.

View fund

View 48 investments »

Two Sigma Ventures brings in $400M

Two Sigma Ventures has raised a combined $400 million across two vehicles. Its fourth flagship fund will focus on early-stage startups, and its second opportunity fund will back growth-stage companies.

View fund

View 106 investments »

Chart of the Day

Source: PitchBook's H1 2022 Global Real Estate Report

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PitchBook News - VC, PE and a healthcare disruption

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