PitchBook News - Unicorns close out a forlorn Q1

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The Daily Pitch: VC

April 10, 2023

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Unicorn creation closes out a meager Q1

Only 18 unicorns were minted in Q1 2023 at a combined valuation of $27.1 billion, according to our unicorn tracker. This is the lowest quarterly new unicorn count since 2017.

Startups in North America made up the largest share of unicorns for the quarter. Africa got its fifth unicorn as Scroll, a Seychelles-based blockchain company, eclipsed the $1 billion valuation mark in March.

Notable deals included machine learning model developer Adept's $350 million Series B, reportedly at a more than $1 billion valuation, and fertility services provider Kindbody's $100 million round at a $1.8 billion valuation.

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Chinese VC looks to regain its shine after difficult 2022

Venture capital activity in Greater China—defined as mainland China, Hong Kong, Macao and Taiwan—fell sharply last year as investors grappled with disruptive lockdowns and economic headwinds at home and abroad.

But a revamped IPO system and lifting of pandemic restrictions should improve prospects for startups and their investors. Our H2 2022 Greater China Venture Report, available in English, traditional Chinese and simplified Chinese, unpacks the state of VC in the region. Highlights include:

VC deal value fell to the lowest level since 2017 as mega-rounds became increasingly rare.

Fundraising fell by about half year-over-year, to $44.5 billion, which will drag on future investment in the region.

Exit activity benefited from a new, streamlined IPO system in China that supported a rebound in public listings during the second half of 2022.

read the report

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The 20 most active LPs in direct PE investments

(MEzairi/Shutterstock)

Institutional investors have been ramping up their exposure to direct PE deals in recent years, as the strategy allows limited partners to take a direct stake in assets and bypass hefty fees charged by private equity funds.

The institutional investors that completed the most of these deals last year are sovereign wealth fund managers and pension plans based in the Middle East, Europe and Asia. Singapore's wealth fund GIC and the French state bank Bpifrance were the most active of the lot in 2022.

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GPs tap co-investments as debt capital dries up and fundraising lags

(Gajus/Shutterstock)

Fundraising for PE-led co-investments, which allow LPs to invest alongside a fund manager, has soared over the last decade as managers turn to these transactions to expand their access to capital and LPs are attracted by low- and no-fee structures.

Co-investments not only allow GPs to fill the equity gap in buyout deals when cheap debt financing is harder to come by but also give them more time to raise their next fund. Dealmakers anticipate this strategy will continue to gain momentum as fundraising remains challenging.

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Since yesterday, the PitchBook Platform added:

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'Big oil' bankrolls more climate VC deals, a dilemma for founders

(Joe Portlock - Formula 1/Getty Images)

More than one-fifth of all VC dollars that flowed into climate-tech startups in 2022 was in deals with participation from "big oil": $6.79 billion out of a total $36.47 billion invested, PitchBook data shows.

But taking money from fossil fuel companies is a conundrum for many founders. "As a founder your best bet would be to take their money if you need it, but keep them at arm's length," said Wes Selke, a partner at Better Ventures.

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VC dealmaking in climate tech slows dramatically

(Mny-Jhee/Shutterstock)

VC dollars into climate tech slowed to its lowest pace in nearly three years in Q1, in a worrying sign for the industry.

Through the end of 2022, funding for green ventures had stayed resilient. But the startup market downturn may be finally catching up to them.

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Hot software take-privates are low on leverage

(Matej Kastelic/Shutterstock)

Specialist SaaS investors and generalist GPs alike have recently announced big take-private deals in the software industry.

One easy trick to pulling off an LBO agreement during a crisis of confidence in the banking system? Use less debt and pony up more equity.

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Why Europe struggles to scale its deep-tech startups

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Europe has a reputation for deep-tech innovation but has historically struggled to scale startups in the sector.

While governments have sought to boost investment in deep-tech startups, the region still suffers from a dearth of late-stage investment needed to create the next generation of European unicorns in the sector.

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