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The Daily Pitch: VC

February 9, 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 US VC Valuations Report examines how startups made some notable wins in a tough market.

Private debt secondaries are on the rise as investors hunt for liquidity options, but the market remains undercapitalized.

Six VCs share which of Europe's healthtech startups they'll be watching in 2023.

Today's Top Stories

US startup valuations remained high in 2022, but trend isn't a friend

Despite it all—a vulnerable market in flux, an IPO freeze and rising geopolitical tensions—valuations for US-based startups remain strong. Yet it does depend on where you look, and the positive trend may soon change. Records were broken in 2022, both good and otherwise.

Our 2022 Annual US VC Valuations Report, sponsored by Morgan Stanley at Work and Reitler, has all the key figures and charts to make sense of the year. Key takeaways include:

Median seed valuations grew by 16.7% to $10.5 million, the highest annual value ever recorded by PitchBook.

Exits were hit by a freeze in IPOs, driven by unstable market conditions, which leaves a critical off-ramp for startups now closed. Public exit valuations dropped 32%, with median and average valuations falling to their lowest point in five years.

Accordingly, startups in the venture growth stage also suffered a decline in valuations, dropping 17% from last year—though the bottom may not have fallen out yet, as valuations remain high.

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Startup radar: Europe's healthtech companies to watch

(Tetra Images/Getty Images)

Even as investment cools off from its pandemic peak, European healthtech is still attracting significant amounts of venture capital as startups continue to innovate in areas such as AI and decentralized science.

We reached out to six VCs active in European healthtech to find out which companies they think represent the cutting edge of healthcare in 2023.

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A message from McDermott Will & Emery

Network with interested investors during the premier healthcare PE conference

HPE Miami 2023: March 8–9 at the Ritz Carlton, Miami Beach

Join McDermott at HPE Miami, the premier healthcare private equity conference that convenes industry leaders and builds invaluable business connections. McDermott is back on the beach with new programming and enhanced dealmaking opportunities!

New this year for independent healthcare companies: Join McDermott's "Independent Healthcare Company Transactions Forum" on March 8. Gain substantive insights from leading national experts, including investment bankers, advisory firms and healthcare founders, addressing topics such as structuring your transaction, completing a deal in the current market environment, engaging third-party advisors, mitigating risk and other transactional considerations.

On March 9, McDermott will convene for plenary panels and breakout discussions on the beach covering the hottest subsector and industry trends.

Register Today!

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Slump puts startups' fates in hands of all-powerful VC insiders

(Jenna O'Malley/PitchBook News)

About a year into the downturn, the VC-backed universe looks relatively unscathed.

Sure, there were some large-scale layoffs at companies that overstretched during the bull cycle as well as spectacular failures in the highly speculative crypto industry, but judgment day has yet to come for most startups.

But it is still coming, and in many cases, companies' existing investors will play the role of God in deciding their fate. In recent weeks, VCs have been getting louder and more candid about the impending reckoning.

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Private debt secondaries flooding the market overwhelm limited capital

(pogonici/Shutterstock)

Private debt secondaries experienced record transactions in 2022—totaling $17 billion—largely driven by limited partners seeking to rebalance their investments.

But the market remains undercapitalized. Despite heavyweight buyers dedicating capital to private debt secondaries, the market has been pulling out all the stops to absorb big-ticket LP portfolio sales, and it's been difficult to find buyers for some larger GP-led transactions.

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Why PE's take-private joyride is downshifting

(ANGHI/Shutterstock)

Buying a public company on the cheap has been a popular strategy for private equity firms in the past two years.

Buyout firms spent a record $195.1 billion to acquire US public companies in 2022, PitchBook data shows. Several transactions fetched a valuation at or above $10 billion, with the average take-private coming in at $4.15 billion.

However, with favorable market conditions—including an easy fundraising market and the availability of cheap debt—enjoyed by PE funds falling away, dealmakers are souring on large take-privates and favoring smaller transactions instead.

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Recommended Reads

How the Rothschild family will buck a trend among boutique investment banks by delisting Rothschild & Co. [Financial Times]

Is Google's 20-year search dominance about to end because of generative AI? [The Economist]

The expensive fees of multimanager hedge funds don't drive investors away—consistently higher returns are worth the cost. [Reuters]

Since yesterday, the PitchBook Platform added:

5

VC valuations

1966

People

463

Companies

26

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2010 Vintage European PE Funds
	Fundraising
	Seven Seven Six eyes $776M fundraise
	Volition raises $675M Fund V
	Mercato Partners wraps up $400M
	Planet A Ventures scores $172M for debut fund
	Investors
	Bluestone Equity launches with $300M
	Monument to open Amsterdam office
	Corporate M&A
	CVS Health to take Oak Street private for $10.6B

The Daily Benchmark

2010 Vintage European PE Funds

Median IRR

11.15%

Top Quartile IRR

19.00%

1.46x

Median TVPI

Select top performers

UFG Private Equity Fund II

R Capital III

Inflexion 2010 Buyout Fund

*IRR: net of fees

18 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

French space-tech startup Exotrail has raised $58 million in a round led by Bpifrance, Eurazeo and Celad.

Data management specialist InfluxData has raised a $51 million Series E led by Princeville Capital and Citi Ventures. The company also secured a $30 million debt facility from Silicon Valley Bank.

Arrcus, which provides network connectivity software, has raised a $50 million Series D led by Prosperity7 Ventures.

Light Field Lab, which makes holographic displays, has secured a $50 million Series B led by Ncsoft, a game developer. Investors including Khosla Ventures, Samsung and Verizon also participated.

Carbonplace, which offers a carbon credit transaction network, has secured a $45 million investment from backers including NatWest, BNP Paribas and UBS.

Lithium-ion battery maker Ionblox has extended its Series B to $32 million. Backers included Temasek, Lilium and Applied Ventures.

Canoe, which helps investors track alternative assets, has raised a $25 million Series B led by F-Prime Capital. Canoe counts Blackstone and The Carlyle Group among both its investors and clients.

India-based Zypp Electric has secured a $25 million investment led by Gogoro, TechCrunch reported. Zypp offers electric vehicles for last-mile delivery.

Evonetix, a DNA synthesis specialist, has secured an additional $24 million for its Series B, bringing the round's total to over $54 million. The investment was led by Foresite Capital.

Medical imaging company Avicenna.ai has raised a Series A from Innovacom and Cemag Invest, bringing the startup's total investment to roughly $10 million.

Speedinvest and Raed Ventures have led a $5 million seed investment for HR tech startup Palm.hr.

Fiberwood, a Finnish maker of sustainable insulation and packaging products, has raised €3 million in a round led by Metsä Spring.

PE Deals

Brookfield Reinsurance has agreed to acquire NYSE-listed Argo Group International Holdings for $1.1 billion in cash. Argo is a US-focused underwriter in the property and casualty insurance markets.

Snow Software's PE owners are considering selling the company for roughly $1 billion, Reuters reported. Snow's backers include Vitruvian Partners, Sumeru Equity Partners and Adams Street Partners.

GreenPoint Partners has acquired a UK car park portfolio for roughly $368 million. New investors Ivanhoé Cambridge and Greater Manchester Pension Fund took part in the deal.

Investindustrial has agreed to buy European custom fluids solutions provider Procon from US-listed Standex International in a deal that values the business at $75 million.

AnaCap-backed French wealth manager Milleis Banque Privée has completed its acquisition of Paris-based private bank Cholet Dupont-Oudart Group.

Blue Wolf Capital Partners has acquired Sterling Site Access Solutions from Oaktree Capital Management, which bought the construction access specialist in 2016.

HC Private Investments-backed Prince Industries has acquired Precision Shapes, a precision machining company serving aerospace and defense customers.

UK snacks brand Burts has been acquired by Europe Snacks, a French snacks company backed by Apax.

Fundraising

Seven Seven Six eyes $776M fundraise

Reddit co-founder Alexis Ohanian's VC firm, Seven Seven Six, is planning to raise two new funds with a total of $776 million, The Information reported.

View details

View 71 investments »

Volition raises $675M Fund V

Volition Capital has closed its fifth flagship fund totaling $675 million. The firm has invested in SaaS, cybersecurity and ecommerce startups including Chewy, JazzHR and Ping Identity.

View fund

View 125 investments »

Mercato Partners wraps up $400M

Mercato Partners has closed Traverse Fund IV on $400 million. The venture growth vehicle will target companies that have been historically underserved by growth capital.

View fund

View 45 investments »

Planet A Ventures scores $172M for debut fund

Berlin-based VC Planet A Ventures has reached a €160 million (around $172 million) close on its debut fund. The vehicle will be used to back early-stage climate-tech startups.

View fund

View 13 investments »

Investors

Bluestone Equity launches with $300M

Newly launched Bluestone Equity Partners has raised $300 million for its first fund, which targets growth-equity investments in global sports, entertainment and media. Founder Bobby Sharma previously held leadership roles at IMG and the National Basketball Association.

View details

View investment »

Monument to open Amsterdam office

Placement agent Monument Group plans to open an office in Amsterdam. The new office, which is expected to aid the firm's European expansion, will work closely with the firm's existing London team.

View details

View 3 investments »

Corporate M&A

CVS Health to take Oak Street private for $10.6B

CVS Health has agreed to acquire Oak Street Health for $39 per share in cash, valuing the company at roughly $10.6 billion. Oak Street is a value-based primary care provider that works with older adults, particularly in underserved communities, through 169 medical centers across 21 states.

View details

View 17 competitors »

Chart of the Day

Source: PitchBook's 2022 Annual European Venture Report

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PitchBook News - VC valuations ebb, flow

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