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The Daily Pitch: VC

January 31, 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 Q4 2022 Information Security Report explores how startups in the sector have strained to grow in a dull funding environment.

Two generative AI startups—Character and Anthropic—are seeking huge funding rounds as the frenzy for the novel technology continues.

With its largest-ever number of PE deals, 2022 was a record-breaking year for Spain.

Today's Top Stories

Information security startups adapt to dull VC market

As companies tighten their belts, one category of enterprise software holds steady in their budgets: information security. The vertical is a priority for governments as well; the US passed an act in December requiring that federal agencies prepare for attacks from quantum computers.

Even with this support, growth for information security startups has been limited, and the number of VC deals stayed flat from Q3 to Q4 2022. For now, dealmaking emphasis is on debt financing or take-private deals for proven companies.

PitchBook analysts take a snapshot of Q4 VC activity in the sector in our latest Emerging Tech Research, with an eye ahead to emerging opportunities in AI and machine learning, outsourced threat monitoring services, and quantum computing.

read the preview

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After Microsoft's OpenAI play, a feast at the generative AI buffet

(Richard Baker/Getty Images)

Two generative AI startups—Character and Anthropic—are seeking hundreds of millions of dollars at unicorn valuations as investors scramble to secure stakes in the segment.

The funding frenzy comes as enterprise tech giants take their own bites at the generative AI apple, and encounter legal pitfalls along the way.

Recommended Reads

PE investors are stuck in valuation limbo as the gap widens between the value of their assets on paper and what is really happening in their portfolios. [The Wall Street Journal]

When private equity came for the toddler gyms. [The New York Times]

Tension is growing between universities and spinout founders who believe their academic institutions are taking too much equity. [Financial Times]

Quick Takes

	The Daily Benchmark
	2020 Vintage Global VC Funds
	Portfolio Companies
	Marqeta to buy Power Finance for $223M
	Fidelity cuts Twitter valuation—again
	Grey Rock's Vault plans ethanol carbon capture project
	Exits & IPOs
	UK-listed SPAC eyes Istesso merger
	Fundraising
	Warburg Pincus inches closer to $16B fund target
	Gemspring raises $2.1B for buyout, growth funds
	CPPIB commits $205M to IndoSpace fund
	Theta Capital launches third blockchain VC fund
	Investors
	Brookfield eyes Deutsche's PE secondaries arm
	Corporate M&A
	Renault, Nissan announce changes to partnership

The Daily Benchmark

2020 Vintage Global VC Funds

Median IRR

32.35%

Top Quartile IRR

58.57%

1.33x

Median TVPI

Select top performers

Rockaway Blockchain Fund I

DN Capital—Global Venture Capital V

Acadian Ventures Fund I

*IRR: net of fees

80 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

London's Raylo has raised about $136 million, mainly in debt provided by NatWest and Quilam Capital, TechCrunch reported. The startup leases products like phones and laptops.

Psychiatric drug development specialist Alto Neuroscience has raised $25 million from Alpha Wave Ventures, bringing its Series B total to $60 million. Alto has also secured a credit facility of up to $35 million from K2 HealthVentures.

Math education company Prisms VR has raised a $12.5 million Series A from Andreessen Horowitz.

German biophotonics company Refined Laser Systems has raised about $2.9 million in a round led by High-Tech Gründerfonds and Apex Ventures.

Agrochemical company Redag Crop Protection has raised about $1.6 million from existing investors including Seneca Partners.

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PE Deals

EnCap Investments-backed Double Eagle Energy Holdings IV and Tumbleweed Royalty IV—related upstream oil and gas companies—have received $600 million in equity commitments, building on an existing $1.7 billion from 2022. The companies' minority investors include Magnetar Capital and Apollo Global Management.

IW Capital has invested roughly $1.24 million in UK-based Situ Live. The company's showrooms allow shoppers to try out products from a variety of brands before buying them online.

The Riverside Company has acquired UK-based EnAppSys, a data and analytics provider for the European energy market.

Thompson Street Capital Partners-backed PestCo Holdings has acquired the assets of Romney Pest Control, which operates in Texas, and Phenom Pest Protection, which provides services in Maryland.

Cadman Capital Group has purchased a stake in Netherlands-based Urchinomics, which is involved with kelp restoration in parts of Japan.

Slate Hill Partners, which is backed by a single-family office, has purchased a minority stake in registered investment adviser XO Wealth Management. This is Slate Hill's first of several planned investments in Texan financial services firms.

Portfolio Companies

Marqeta to buy Power Finance for $223M

Marqeta has agreed to acquire VC-backed Power Finance for $223 million in cash, TechCrunch reported. If an undisclosed milestone is met within the next year, Marqeta will pay an additional $52 million to the fintech infrastructure startup.

View details

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Fidelity cuts Twitter valuation—again

Fidelity marked down the carrying price of its Twitter stock by 9.58% between the end of November and the end of December, Axios reported. This means Fidelity has decreased the value of its Twitter shares by more than 60% since Elon Musk acquired the company in late October.

View details

View 15 competitors »

Grey Rock's Vault plans ethanol carbon capture project

Vault 44.01, a carbon capture specialist backed by Grey Rock Investment Partners, has formed a joint venture with Cardinal Ethanol called One Carbon Partnership. The JV plans to build and operate a carbon capture project at Cardinal's ethanol production plant in Indiana.

View details

View similar company »

Exits & IPOs

UK-listed SPAC eyes Istesso merger

Hambro Perks Acquisition, the first SPAC to list in London since the UK introduced new rules on blank-check companies, is in talks to merge with Istesso, a developer of drugs for treating chronic diseases, Sky News reported. Istesso is backed by VC firm IP Group.

View details

View 1 investments »

Fundraising

Warburg Pincus inches closer to $16B fund target

Warburg Pincus has raised $15.36 billion for its new flagship fund, Global Growth 14, approaching the firm's target of $16 billion. The vehicle is the firm's largest to date, Reuters reported, surpassing Warburg Pincus Private Equity X, which closed in 2007 on $15.1 billion.

View fund

View 1,402 investments »

Gemspring raises $2.1B for buyout, growth funds

Middle market-focused Gemspring Capital Management has held the final close of Gemspring Capital Fund III, which targets buyout investments, on $1.7 billion. In 2022, the firm also raised $400 million for Gemspring Growth Solutions Fund I, its first non-control fund.

View fund

View 51 investments »

CPPIB commits $205M to IndoSpace fund

The Canada Pension Plan Investment Board has committed $205 million to IndoSpace Logistics Parks IV, a fund managed by Indian real estate investor IndoSpace.

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View 1 investments »

Theta Capital launches third blockchain VC fund

Amsterdam-based Theta Capital Management has launched its third Theta Blockchain Ventures fund. The vehicle will target core blockchain infrastructure at the earliest stages.

View details

View 3 investments »

Investors

Brookfield eyes Deutsche's PE secondaries arm

Brookfield Asset Management has been in late-stage discussions to acquire Deutsche Bank's DWS Group, its nascent private equity secondary investing arm, Bloomberg reported. A deal could be announced in early February.

View details

View 97 investments »

Corporate M&A

Renault, Nissan announce changes to partnership

Renault has agreed to place a 28.4% stake in Nissan Motor, more than half of its overall holdings in the Japanese carmaker, into a French trust for potential sale. The divestment is just one part of an overhaul of the companies' long-standing partnership.

View details

View 14 competitors »

Chart of the Day

Source: PitchBook's Q3 2022 Global Real Assets Report

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Two generative AI startups dull funding environment huge funding rounds The Daily Pitch

PitchBook News - Information security feels the strain

Key phrases

Older messages

Ranking VC's most active players

Portfolio balancing act

VC's massive imbalance

When dry powder stays dry

M&A marches on

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