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The Daily Pitch: VC

February 22, 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:

Despite the downturn, carbon tech startups secured nearly as much funding in 2022 as they did the year prior.

Six charts tell the story of cooling European VC valuations in 2022.

Our analysts map the road ahead for the US private markets—and explore the potential for a recession.

Today's Top Stories

Carbon and emissions tech defies downturn

After the record amounts of capital deployed in 2021, it seemed that there was nowhere to go but down, but a handful of sectors belied the trend, among them carbon and emissions tech.

Due to the Inflation Reduction Act and other government programs aimed at advancing private investment in the sector, as well as the war in Ukraine and companies' pledges to reduce emissions, carbon and emissions tech startups raised $13.8 billion in 2022—an only 2% decrease from the previous year's $14.1 billion.

Our recent Emerging Tech Research explores recent VC trends in carbon and emission tech, spotlights key players in the space and highlights emerging opportunities in ocean carbon capture and biopolymers.

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Do all roads lead to a recession?

While public market struggles carried the headlines last year, market pricing told a different story.

PitchBook analysts believe rising discount rates, rather than lower growth expectations or higher risk premiums, were responsible for most of the public market's woes in 2022. But what do these mixed messages mean for the likelihood of a recession?

Our analyst note breaks down recent economic and public market developments that have shaped the outlook for the US private markets, examines the key risks and opportunities investors are facing and lays out the potential roads forward—many of which would lead to a recession.

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A message from AIC

Building competition

Private equity's buy-and-build model has become a popular tool over the past decade. Today, add-ons account for almost 80% of all buyouts in the US—a big increase in a short amount of time. But a closer look at the data shows that the majority of add-ons are happening in only a handful of fragmented, highly competitive industries, like insurance, outpatient clinics, and landscaping, among others.

In partnership with PitchBook, AIC has released Building Competition: How buy-and-build helps the American economy. The buy-and-build model helps those sectors become more competitive, provide better goods and services to their customers, and generate higher returns for long-term investors like public pension plans.

To download the report, click here

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Cooling trend: 2022 European VC valuations in 6 charts

(Yuichiro Chino/Getty Images)

European VC valuations for early-stage companies cooled off toward the end of 2022, while late-stage valuations experienced a sharper fall.

Other trends highlighted in our 2022 Annual European VC Valuations report include a decline in down rounds, an increase in nontraditional investor participation and a market fall in unicorn valuations amid a tighter exit environment.

Recommended Reads

Why big layoff announcements don't always mean big workforce cuts. [The Wall Street Journal]

In courting impact investors, entrepreneurs find that successful funding appeals are tailored to the audience. [Financial Times]

The recent announcement that a fossil discovery in India was just residue from a bee's nest is a reminder of the importance of science correcting itself. [The New York Times]

Since yesterday, the PitchBook Platform added:

22

VC valuations

2282

People

593

Companies

22

Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2013 Vintage Global Debt Funds
	Fundraising
	Warburg Pincus targets $437M
	United amasses $100M for sustainable flight
	Sasol launches VC arm
	Investors
	China launches PE real estate investment program

The Daily Benchmark

2013 Vintage Global Debt Funds

Median IRR

7.90%

Top Quartile IRR

9.26%

1.25x

Median TVPI

Select top performers

York Special Opportunities Fund II

Davidson Kempner Long-Term Distressed Opportunities Fund II

Oaktree Real Estate Debt Fund

*IRR: net of fees

61 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Biotech company Hemab Therapeutics has raised a $135 million Series B led by Access Biotechnology.

FreshToHome has raised a $104 million Series D led by Amazon, TechCrunch reported. The India-based startup delivers fish and meat to customers.

London-based quantum computing startup Quantum Motion has raised over £42 million in a round led by Bosch Ventures.

Xeltis, a medtech specialist developing cardiovascular devices, has raised €32 million in a Series D2 from investors including Grand Pharma, DaVita Venture Group and EQT Life Sciences.

Stage 2 Capital has led a $12.6 million Series A for UK-based AeroCloud. The startup offers an airport management platform.

Web3 chat company Sending Labs has secured $12.5 million in seed funding led by Insignia Venture Partners, MindWorks Capital and Signum Capital.

Paleo, a Belgian developer of proteins for meat substitutes, has secured €12 million. The round was led by DSM Venturing and Planet A Ventures.

Chronicle, a developer of interactive presentation software, has raised a $7.5 million seed round from investors including Accel and Square Peg.

Robotic mower company Swap Robotics has secured $7 million in a seed round led by Solv Energy, TechCrunch reported.

Talent assessment provider Plum has raised $6 million in a round led by Pearson Ventures.

Romania-based Veridion has raised $6 million in a round led by Launchub Ventures, OTB Ventures and Underline Ventures. The startup's tools index and contextualize business information.

Kaito, a crypto search engine, has secured $5.3 million in a seed round led by Dragonfly Capital, TechCrunch reported.

PE Deals

Providence Equity has offered to buy UK-listed events manager Hyve Group in a deal that would reportedly value the business at £306 million.

T. Rowe Price has agreed to purchase a $150 million stake in NYSE-listed Mirion Technologies, a provider of radiation detection equipment, for $8.75 per share.

ICV Partners has acquired two South Asian food brands—Desi Natural and Noga—from AUA Private Equity Partners-backed Raymundos Food Group. ICV has merged the brands to form a new company, dubbed Desi Fresh Foods.

Providence Equity has invested in Accelerate Learning, which provides K-12 STEM curricula.

RLH Equity Partners has made a growth-equity investment in consulting firm Connors Group.

Z Capital Group-backed CTM Group has acquired ScooterBug Best Lockers, which provides mobility and locker services at high-traffic destinations like theme parks.

Apax Partners has acquired a majority stake in France's Porsolt, a global contract research organization.

Fundraising

Warburg Pincus targets $437M

Warburg Pincus is raising its first yuan-denominated fund to target opportunities in China, Reuters reported. The new vehicle, which will make investments in the healthcare and technology sectors, is looking to raise 3 billion yuan (around $437 million).

View details

View 1,410 investments »

United amasses $100M for sustainable flight

United Airlines has raised $100 million for a fund that will invest in sustainable aviation startups.

View fund

View 20 investments »

Sasol launches VC arm

South African chemicals and energy company Sasol has launched Sasol Ventures with a €50 million fund (about $53 million) to invest in startups advancing decarbonization technology.

View fund

View investment »

Investors

China launches PE real estate investment program

China is launching a pilot program to increase private investment in real estate that is looking to raise a minimum of 30 million yuan (around $4.4 million) for its first round, Reuters reported. Institutional investors will be expected to contribute a minimum of 10 million yuan each to participate.

View details

View 9 investments »

Chart of the Day

"Real estate's rolling one-year horizon IRR was the highest of any private market strategy in Q2 2022 at 24.2%, down marginally from its Q1 2022 all-time high of 27.3%."

Source: PitchBook's 2022 Global Fund Performance Report

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