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The Daily Pitch: VC

January 23, 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:

Former pro gamer Moritz Baier-Lentz will be putting his experience to use as Lightspeed's new head of gaming.

Our 2022 Annual US PE Breakdown explains how the industry's activity has slowed and evolved.

Vytautas Plunksnis, head of private equity at Lithuania's INVL, describes investment opportunities in Central and Eastern Europe.

Today's Top Stories

Lightspeed's new head of gaming wants to rethink investments in the vertical

Diablo II
(Courtesy of Blizzard)

Moritz Baier-Lentz is Lightspeed's new head of gaming. The German former pro gamer bankrolled his Stanford business school tuition selling in-game items for Blizzard's "Diablo II" in the early 2000s and started Goldman Sachs' games practice.

So, Baier-Lentz knows gaming—and he thinks VCs need to refocus their priorities when looking at the vertical.

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How US PE adapted to 2022's harsh environment

For all the headwinds that hit the private equity world in 2022, firms still managed to do over $1 trillion in deal value—down 18% from 2021. Early in the year, the record-breaking pace of new deals, exits and fundraising collided with higher interest rates. By mid-year, traditional debt markets closed, and PE firms had to adjust to make deals happen and keep the LBO machine humming.

Our 2022 Annual US PE Breakdown, sponsored by Stout, CBIZ Private Equity Advisory, Golub Capital, and Apex, explains how the industry's activity has slowed and evolved.

The market stayed resilient: That's, in large part, due to availability of debt from private credit funds.

Deals count was stable: The number of deals fell only 5% year-over-year, but deal sizes were smaller, adding up to less value overall.

Exits plummeted: For just the second time in 14 years, exit value failed to keep up with fundraising and new platform investments.

Dry powder found a home: The new year capped the best two-year run for PE take-privates in 15 years.

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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 recent analyst note breaks down what you need to know about the forces shaping sustainable and digital infrastructure investing.

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Q&A: Lithuania's INVL on private equity in Central and Eastern Europe

(Devis M/Shutterstock)

Nearly a year after Russia launched its invasion of Ukraine, all of Central and Eastern Europe has been impacted in one form or another.

Yet even now the region continues to attract capital from investors taking a long-term view on the region's prospects.

We spoke to Vytautas Plunksnis, head of private equity at Lithuania's INVL, about the opportunities he's seeing and what makes the region appealing.

Recommended Reads

The Turing test used to be the gold standard for proving machine intelligence. This generation of bots is racing past it. [The New York Times]

How a missing $4 billion brought down a century-old Brazilian retailer in just a week. [Bloomberg]

Here's why there's no quick fix for the problems of social media. [The Wall Street Journal]

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Quick Takes

	The Daily Benchmark
	2013 Vintage Global Real Assets Funds
	VC Deals
	SetPoint Medical raises $80M
	ADARx lands $46M
	A16z leads $32M round for Plai Labs
	AiOla secures $25M
	Presso scores $8M for dry-cleaning robotics
	Portfolio Companies
	PE-backed Fanatics eyes sports betting deal
	Genesis files for bankruptcy protection
	Investors
	Boeing lands $425M from NASA for greener planes

The Daily Benchmark

2013 Vintage Global Real Assets Funds

Median IRR

5.61%

Top Quartile IRR

11.80%

1.39x

Median TVPI

Select top performers

Rockland Power Partners II

EQT Infrastructure Fund II

Grain Infrastructure Fund II

*IRR: net of fees

36 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

SetPoint Medical raises $80M

SetPoint Medical has secured $80 million in a preferred stock financing co-led by Norwest Venture Partners and Viking Global Investors. The startup specializes in treating chronic autoimmune diseases.

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ADARx lands $46M

ADARx Pharmaceuticals has raised a $46 million Series B1 led by Ascenta Capital. The biotech startup, based in San Diego, is developing RNA-targeting therapeutics for a wide range of diseases.

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A16z leads $32M round for Plai Labs

Gaming startup Plai Labs has raised a $32 million seed round led by Andreessen Horowitz, TechCrunch reported. Plai was started by Chris DeWolfe and Aber Whitcomb, the co-founders of Myspace.

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AiOla secures $25M

AI language recognition startup AiOla has raised $25 million in a round led by New Era Capital Partners. The Israeli company has now raised a total of $33 million.

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Presso scores $8M for dry-cleaning robotics

Presso, which offers robotic dry-cleaning machines, has raised an $8 million seed round from investors including Uncork Capital, 1517 Fund and AME Cloud Ventures, TechCrunch reported.

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Don't miss our upcoming webinar

Join LCD for a webinar exploring the trends that defined the private credit and leveraged loan landscapes in 2022, along with what lies ahead for these spaces. LCD analysts will discuss the growth in the private credit market and the increase in distressed debt last year, along what investor demand for collateralized loan obligations looks like in 2023. Key topics include:

US leveraged loan market trends and analysis, including a look at volume, proceeds, leverage, returns, credit risk and supply vs. demand.

The growth in private credit and direct lending in 2022, compared to the broadly syndicated market along with where opportunities in private credit might lie in 2023.

How distressed debt hit its highest level since the pandemic onset toward the end of 2022, even as leveraged loan defaults remained scarce.

Register now to secure your spot.

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Portfolio Companies

PE-backed Fanatics eyes sports betting deal

Armed with $1.9 billion in capital and $2.5 billion in credit secured in 2022, Fanatics is in talks to acquire app specialist BetParx sportsbook, CNBC reported, as Fanatics considers diving into sports betting. Greenwood Gaming & Entertainment backs BetParx.

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Genesis files for bankruptcy protection

Crypto lender Genesis Global Holdco and two of its subsidiaries have filed for bankruptcy protection in New York. Genesis is owned by Barry Silbert's VC firm Digital Currency Group, which invested $140 million into the startup in November.

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Investors

Boeing lands $425M from NASA for greener planes

NASA has agreed to award Boeing $425 million over seven years to back a project to design and build a single-aisle plane that requires roughly 30% less jet fuel than today's models. Boeing has agreed to spend an additional $725 million on the project.

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Chart of the Day

"The departure of late-stage crossover and nontraditional participants and capital that have supported the outsize fundings of early-stage startups has caused investors at this stage to be more wary of allowing startup valuations to balloon to unsustainable levels. Without sufficient investor willingness and demand to fund these deals at the later stage, the upside potential for early-stage investment could be compromised if startups are forced to raise subsequent rounds at slightly higher or flat valuations."

Source: Q4 2022 PitchBook-NVCA Venture Monitor

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PitchBook News - Lightspeed's game changer

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