PitchBook News - The end of a mega-funds era

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The Daily Pitch: VC

April 7, 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:

After two standout years for VC mega-funds, signals point to an end for the boom.

In Europe, VC dealmaking involving companies with at least one female founder rebounded in March, ensuring a strong finish to the quarter.

Our Global Real Estate Report provides clarity and insights on the opaque investing strategy.

Today's Top Stories

The mega-funds boom of 2022 finished with a fizzle

Thirty-five venture funds raised $1 billion or more in 2022—more than three times as many as any year prior to 2021. Andreessen Horowitz alone closed four mega-funds in 2022.

But the breakout years for mega-funds aren't likely to last. Our latest analyst note tracks 60 funds in 2021 and 2022 totaling over $147 billion, driven by VC exit activity topping over $1 trillion in the same time span. LPs were paying venture more attention and, in turn, fund managers were rushing to return to market at record speed. But as one-year performance fell and exits turned stale in mid-2022, the mega-funds boom came to an end.

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Public real estate's woes start to hit private investors

Private real estate investors have a lot less capital to work with today. Real estate funds raised just over $128 billion in 2022, the lowest figure since 2013, and did so through the fewest vehicles since 2009. Dry powder is down, too, having fallen 13% year-over-year.

That's despite the private real estate world's dogged outperformance of publicly traded REITs, whose assets are more vulnerable to fluctuations in value. Some observers have questioned how long private real estate can soar above the rest.

Our Global Real Estate Report provides clarity on the opaque investing strategy, with details on fundraising and challenges in various sub-strategies.

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Global airlines crave green fuel. Few are willing to bet on it.

(Drew Sanders/PitchBook News)

A consortium of 300 airlines—responsible for more than 80% of all air passengers—has committed to reaching net-zero by 2050. Their strategy relies heavily on an industry-wide transition to sustainable aviation fuels.

But where the rubber meets the tarmac, the checks that airlines are writing for green fuel technology are nowhere near matching the daunting scale of the task ahead.

Recommended Reads

Stocks haven't looked this unattractive since 2007. [The Wall Street Journal]

With Russian natural gas out of the picture, Norway is stepping up to the plate. [The New York Times]

Cameras can help cities identify dangerous drivers, but officials can't always do much with that information. Now, some are considering speed-limiting tech. [Bloomberg]

Since yesterday, the PitchBook Platform added:

5

VC valuations

525

People

141

Companies

8

Funds

See what our data software can do

The Daily Benchmark:
2014 Vintage European Real Estate Funds

Median IRR

8.2%

Top Quartile IRR

11.68%

1.48x

Median TVPI

Select top performers

Activum SG Real Estate Fund III

NREP Nordic Strategies Fund I

MARK European Retail Partners II

*IRR: net of fees

18 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Full-stack observability specialist Honeycomb has raised a $50 million Series D led by Headline and joined by Insight Partners and Scale Venture Partners, among others.

Malaysian fintech startup Soft Space has secured $31.5 million in a round led by Southern Capital Group.

Spring Free EV, an electric vehicle-focused fintech company, has raised $31 million in debt and equity. The Series A equity investment was led by Spring Lane Capital.

Social Future, the creator of metaverse app MAY, or Meet Another You, has raised $6 million.

Rodeo, which offers a finance platform for gig economy workers, has raised a $5 million seed investment led by LocalGlobe.

Carbonwave, which upcycles seaweed bloom into biomaterials, has raised a $5 million Series A led by Mirova.

Biotech startup CND Life Sciences has secured $4.5 million, bringing its total seed funding to $12.5 million. Investors including Top Corner Capital participated in the round.

Third Summit, the parent of content creation platform Alteon.io, has raised $4.5 million in a seed round led by Florida Innovation Capital.

Native AI, the developer of a market intelligence platform, has raised $3.5 million in seed funding co-led by Jumpstart Ventures and Ivy Ventures.

Recruitment software startup Engin has secured $2.5 million in a seed round led by Gotham Green Partners.

PE Deals

KKR is closing in on a deal to buy a large stake in London-headquartered communications company FGS Global, the Financial Times reported. The deal would value the company at $1.4 billion, according to the report.

Hunter Point has taken a passive minority stake in UK middle-market PE firm Inflexion. Founded in 1999, Inflexion has returned £5.3 billion to investors with a 39% IRR to date.

Accession Capital has acquired a 25% stake in Exact Systems, a testing, inspection and certification company based in Poland.

Brand investor Piper has reinvested £8 million in Monica Vinader about a month after exiting its stake in the London-based jewelry company. Bridgepoint bought a majority stake in the business March 10.

Fintech company Arcesium has acquired Aquata, an investment management-oriented data platform. Arcesium was founded in 2015 as a joint venture of DE Shaw Group and Blackstone Alternative Asset Management, with later backing from JP Morgan.

Mill Point Capital has acquired Florida-based horticulture-tray manufacturer Nursery Supplies from Lincolnshire Management, which first acquired the company alongside other investors in 2005.

Exit & IPOs

PIF-backed Savvy Games has agreed to buy mobile game developer Scopely for $4.9 billion. The company is currently backed by investors including Battery Ventures, the Canada Pension Plan Investment Board and Highland Capital Partners.

Fundraising

Canaan has raised $650 million for its eighth flagship fund to invest in early-stage healthcare and technology companies. The firm also raised $200 million to reinvest in its existing portfolio companies.

Coller Capital is looking to raise 1.5 billion yuan (about $218 million) for its first Chinese-currency secondaries fund. Coller, which has offices in Beijing and Hong Kong, will use the fund to provide liquidity to the private capital markets in China.

Africa-focused VC firm Equator has held a $40 million first close for its debut fund. The vehicle will target seed and Series A investments in sectors including energy, agriculture and mobility.

Chart of the Day

"Nordic exits were much more resilient than exits elsewhere in Europe: Exit value decreased 45.1% for Europe in 2022, marking the worst performance in nine years. In comparison, the Nordics fared much better and recorded their second-best year on record, totaling €57.7 billion in exits."

Source: PitchBook's 2023 Nordic Private Capital Breakdown

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PitchBook News - The end of a mega-funds era

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