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The Daily Pitch: VC

January 17, 2023

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

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

Our 2022 Annual European PE Breakdown shows how the industry reacted to a hostile macroeconomic environment.

Our latest analyst note explores the forces shaping sustainable and digital infrastructure investing.

Today's Top Stories

The future of infrastructure investing is sustainable and digital

The prospects of inflation, recession and market turmoil have often sent investors running for the stability of infrastructure funds. But as society evolves, so do the types of infrastructure we must rely on. Private fund investment in sustainable and digital infrastructure has grown rapidly over the last 15 years, and PitchBook analyst Anikka Villegas expects LPs will seek to gain more exposure to these burgeoning areas going forward.

As climate change and energy security challenges loom and the economy camps out in the cloud, our latest analyst note breaks down what you need to know about the forces shaping sustainable and digital infrastructure investing.

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European private equity surprises in a difficult 2022

European private equity dealmaking defied economic headwinds in 2022, with both estimated deal count and deal value increasing.

Our 2022 Annual European PE Breakdown shows how the industry reacted to an increasingly hostile macroeconomic environment, with interest rate hikes being used to combat rising inflation. Key takeaways include:

2022 was a record year for add-on acquisitions as a percentage of total buyouts.

Take-privates tallied their second-best year, with €37.3 billion in value across 31 deals.

Exit value fell to its lowest level in nine years.

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A message from J.P. Morgan

What lies ahead for venture

With expectations for a deteriorating macro environment, venture players will have to balance near-term challenges with longer-term opportunities. While private capital markets have served as a critical source of funding for later-stage private companies given the pause in IPO markets this year, founders should be prepared for a turn in the exit environment. In preparation for a pick-up in exit environment activity, whether it is months or quarters away, there are best practices for private companies to consider.

Drawing on PitchBook data, Ginger Chambless, Head of Research, Commercial Banking, and experts from J.P. Morgan unpack the ways founders and investors can navigate this dynamic VC landscape.

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US loan default rate ends 2022 at 0.72%; downgrades, distressed volume in focus

(ImageFlow/Shutterstock)

There were no defaults among companies in the Morningstar LSTA US Leveraged Loan Index in Q4 2022, and the default rate closed the year at 0.72%—well below the historical average. The default rate is a lagging indicator, though, and is expected to rise.

The volume of loans priced at distressed levels has increased, compounded by a flurry of late-year downgrades. A high percentage of loans needing to be repaid in the near term are from issuers rated B-minus or lower. LCD's quarterly Leveraged Finance Survey of market professionals revealed that the loan default rate is expected to end 2023 between 2% and 2.49%.

Recommended Reads

A look at the results from Tulsa's big bet on remote workers. [Harvard Business Review]

After growth stocks' losses last year, investors are still hesitant to jump back in. [Institutional Investor]

How Activision-Blizzard's attempt to mimic a traditional sports league in the world of esports has stalled out. [Wired]

Since yesterday, the PitchBook Platform added:

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VC valuations

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People

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27

Funds

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Quick Takes

	The Daily Benchmark
	2018 Vintage Global PE Funds with less than $250M
	VC Deals
	Wind turbine maintenance startup Aerones bags $30M
	Logistics startup Locad collects $11M
	Fintech startup Kwara adds $3M to seed round
	Fundraising
	Fractal Growth Partners seeks $250M for fund
	BPC, Mubadala back SV Health fund

The Daily Benchmark

2018 Vintage Global PE Funds with less than $250M

Median IRR

32.00%

Top Quartile IRR

44.75%

1.40x

Median TVPI

Select top performers

SSC Partners I

Level Equity Opportunities Fund 2018

Oaktree Star Investment Fund II

*IRR: net of fees

35 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Wind turbine maintenance startup Aerones bags $30M

Latvia-based Aerones has raised $30 million in a round led by Lightrock and Haniel. The startup offers robot-enabled wind turbine maintenance and inspection services.

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View 1 competitors »

Logistics startup Locad collects $11M

ReefKnot Investments has led an $11 million Series A in Singapore-based Locad. The startup offers a cloud supply chain network for brands to store, pack, ship and track orders for ecommerce and omnichannel retail.

View round

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Fintech startup Kwara adds $3M to seed round

Kwara, a Nairobi-based digital banking platform for credit unions, has added $3 million to its seed round, bringing the total to $7 million. Investors in the round included Globivest and DOB Equity. Alongside the round, Kwara has agreed to buy IRNET, the software subsidiary of the Kenya Union of Savings and Credit Cooperative.

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View similar company »

PitchBook webinar: 2023 European Private Capital Outlook

Join us for a webinar examining developments in the European private capital markets and the outlook for 2023. PitchBook analysts will discuss important deals, exit trends and fundraising activity, along with what could be on the horizon for the landscape in a time of global market uncertainty. Key takeaways include:

The European VC and PE dealmaking landscape in 2022 and beyond.

An update on the exit environment and its impact on PE- and VC-backed companies.

Challenges and opportunities within fundraising for GPs and LPs.

Register now to secure your spot.

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Fundraising

Fractal Growth Partners seeks $250M for fund

Fractal Growth Partners is looking to raise as much as $250 million for its new fund, Bloomberg reported. The firm, founded by former KKR exec Ajay Candade, is targeting Indian startups in areas including SaaS and B2B.

View details

View investment »

BPC, Mubadala back SV Health fund

British Patient Capital and Mubadala Investment Company have made commitments to SV Health Investors' SV Biotech Crossover Opportunities Fund. British Patient Capital is a cornerstone investor, committing $48.6 million. The vehicle will be used to target growth-stage biotech companies with a focus on the UK.

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View 296 investments »

Chart of the Day

"On the whole, multispecialty exit activity has been muted, with sponsors sitting on the sidelines amid an uncertain pricing environment. Optum's acquisition of TPG-backed Kelsey-Seybold Clinic, a Houston-based multispecialty group, for a reported $2 billion is a noteworthy exception."

Source: PitchBook's Q3 2022 Healthcare Services Report

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PitchBook News - The future of infrastructure investing

Older messages

Europe's fintech startups to watch

European VC misses the mark

A fresh look at fund performance

Fintech faces tough choices

When VC goes overboard

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