PitchBook News - A chance of sun in Europe's 2023

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The Daily Pitch: VC

December 21, 2022

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

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

PitchBook analysts share their predictions for European PE and VC in 2023.

Out latest Quantitative Perspectives report highlights how the uncertainties and trends of PE in 2022 might impact next year.

Chart of the day: PE-led take-private deal activity, from our US PE Middle Market Report.

Today's Top Stories

Optimism for European private capital despite a challenging year ahead

European private capital faced a myriad of challenges in 2022, with a mix of economic factors impacting the market coupled with a European war—yet analysts are optimistic about certain areas for next year.

Our 2023 European Private Capital Outlook examines how a harsher economic environment can aid parts of the market, while remaining a detriment to others. For instance, listed companies become cheaper acquisition targets as their valuations drop, but interest rate hikes make financing leveraged PE deals more expensive.

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Clean energy VC investment shines in a storm

The energy crisis that followed Russia's invasion of Ukraine has accelerated demand for alternative energy sources, especially low-carbon ones that can be produced domestically at lower cost than imported fuels.

Meanwhile, growing investment in clean energy supply chains and hefty government spending measures provide a foundation for future growth.

It all adds up to a fertile environment for startups in the space, as PitchBook senior analyst John MacDonagh lays out in our recently launched Emerging Tech Research coverage of clean energy.

VC activity has been remarkably resilient, with $11 billion raised across 401 deals in the segment. That's on pace to match the record set in 2021.

Intermittent renewable energy, especially solar, has outperformed relative to last year. So have clean fuels, led by low-carbon hydrogen.

The Inflation Reduction Act, signed into law by President Biden in August, gives significant support to clean energy production. Its effects are already being felt.

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General Atlantic's $3.5B haul caps another strong year for climate funds

(Fly_and_Dive/Shutterstock)

General Atlantic's $3.5 billion debut climate-focused fund shows that the sector is still a priority with LPs.

Private equity and venture capital firms are responding to scientists' dire warnings about the future of the planet by raising vehicles aimed at funding companies that reduce carbon emissions and provide clean technology. TPG, Fifth Wall and Union Square Ventures are among the other private investors to close climate-oriented funds this year.

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European VC-backed IPOs falter

(Immersion Imagery/Shutterstock)

VC-backed IPO activity in Europe has significantly declined since last year's record high.

One deterrent for new listings has been the performance of those that went public in the last few years; the majority that have floated since 2021 are now trading below their listing price.

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Looking ahead at PE landscape with quantitative data from 2022

(Kwangmoozaa/Shutterstock)

This year has been a mixed bag for the US private equity market. And as the new year dawns, challenges lie ahead, including the prospect of higher interest rates, tightening financial conditions and further economic slowdown—or even recession.

PitchBook's latest Quantitative Perspectives report highlights how these uncertainties might impact the PE landscape next year. We've identified and explored four key takeaways from the report.

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Nuclear fusion need not apply: Planet-saving tech is ready to scale

(Joey Schaffer/PitchBook News)

Earlier this month, scientists shot a cluster of lasers at hydrogen isotopes and—for the briefest of moments—got an inkling of what it would be like to control a star.

The experiment at the Lawrence Livermore National Laboratory in California marked the first time that a fusion reaction spun off more energy than was used to create it. It's an important milestone, but commercial fusion is likely still decades off, even if things go well. But the climate is not waiting, and dozens of other clean energy technologies are ready for prime time.

Venture investors say the primary challenge for climate-tech startups is no longer tech breakthroughs. It's time to scale. But how do they do it? New business models, big-name partnerships and gigatons of software.

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Recommended Reads

One block in Baltimore is illustrative of how big US banks are falling short of their promises to create more Black homeowners. [Bloomberg]

Research shows that many large corporate spinoffs don't create much value. Here's what the top performers are doing right. [Harvard Business Review]

One writer's thoughts on why the due diligence process needs an overhaul. [Institutional Investor]

Since yesterday, the PitchBook Platform added:

8

VC valuations

1894

People

585

Companies

41

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2018 Vintage Global Debt Funds
	VC Deals
	Toss gets $7B valuation
	Divergent grabs $100M
	Xscape Photonics gets $10M
	Parallel Bio rakes in $4.3M
	Lorient, Martis back Rise Health with growth equity
	Fundraising
	10D closes $245M across two funds
	The 81 Collection wraps up $41M

The Daily Benchmark

2018 Vintage Global Debt Funds

Median IRR

10.73%

Top Quartile IRR

14.97%

1.17x

Median TVPI

Select top performers

Raith Real Estate Fund II

PAG Enhanced Credit Fund II

HCAP Partners IV

*IRR: net of fees

79 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Toss gets $7B valuation

Toss, a South Korean fintech app, has closed a $405 million Series G, bringing its total valuation to $7 billion. Tonic Private Equity led the round, joined by previous investors Altos Ventures, Goodwater Capital and Greyhound Capital.

View round

View 62 competitors »

Divergent grabs $100M

Vehicle manufacturing startup Divergent has received a $100 million investment from Hexagon, a Swedish software developer for industrial applications. The company focuses on environmentally sustainable manufacturing.

View round

View 1 competitors »

Xscape Photonics gets $10M

Xscape Photonics, a startup that specializes in using lasers and mirrors to transmit data inside a computer, has raised $10 million from Altair, a software provider for AI, cloud and data centers.

View details

View similar company »

Parallel Bio rakes in $4.3M

Parallel Bio has closed a $4.3 million seed round led by Refactor Capital. Jeff Dean, senior vice president of Google's AI program, also invested in the startup, along with Y Combinator.

View round

View similar company »

Lorient, Martis back Rise Health with growth equity

Lorient Capital Management and Martis Capital have invested growth equity in Rise Health, a primary care-oriented business planning to grow in the US Southwest. Venture studio Despierta was an early investor in Rise Health.

View round

View similar company »

Fundraising

10D closes $245M across two funds

Israel-based venture capital firm 10D has closed two new funds. The firm's $185 million Fund II will target seed and Series A startups, while its $60 million opportunity fund will be used for continued investments in its portfolio.

View fund

View 13 investments »

The 81 Collection wraps up $41M

Chicago-based The 81 Collection has closed its inaugural vehicle on $41 million. The fund will be used to invest in early-stage startups in sectors including manufacturing, construction and forestry.

View fund

View 2 investments »

Chart of the Day

Source: PitchBook's Q3 2022 US PE Middle Market Report

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latest Quantitative Perspectives report PEled takeprivate deal activity European VCbacked IPOs The Daily Pitch

PitchBook News - A chance of sun in Europe's 2023

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Analysts predict tough 2023 for PE

Forecasting a cloudy 2023 for VC

Fusion fantasy, solar substance

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