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The Daily Pitch: VC

April 17, 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:

The VC dealmaking decline is leveling off from 2022, a sign that the market could soon regain its footing.

Generative AI startups had a stellar first quarter, and now Amazon has entered the field with its Bedrock tools.

Our 2023 Sustainable Investment Survey is taking the pulse of private market participants on impact strategies and/or ESG risk factors. Take the survey here.

Today's Top Stories

PitchBook Benchmarks for PE, VC and more

In the opaque world of private capital, finding a clear view of fund performance has never been easy—and macro headwinds have reinforced the need for transparency. That's where PitchBook Benchmarks come in, offering a window on the latest data for closed-end fund returns across strategies and vintage years.

The new edition is now available, updated through Q3 2022 with preliminary data for Q4. It features downloadable XLS tables, data visualizations, and PDFs that reveal the numbers by strategy and geography.

see the data

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VC trends in 5 charts: Dealmaking decline levels off

(r.classen/Shutterstock)

Later-stage companies had a rough run in Q1 with VC capital in short supply. The sluggish exit market continues to tie up LP capital, and investors remain wary in an unforgiving tech market.

But it's not all doom and gloom: The dealmaking decline is leveling off from 2022, and seed valuations are ticking up. Five charts reveal what you need to know about the market right now.

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A message from Deloitte

10 finance and operational considerations for early-stage PE managers

New and early-stage private equity funds and firms often underestimate the time and effort required to initiate the finance and operations (F&O) processes of their new business and therefore may be less familiar with these areas. Underinvestment in these critical functions can create significant risk to the success of the firm.

Deloitte has assembled a list of 10 finance and operations considerations that early-stage private equity firm leaders should consider at the beginning of their journeys. These F&O leading practices are by no means an all-inclusive road map or checklist of everything firms would need to consider—but are a great place to start.

Check out Deloitte's Ten considerations for early-stage private equity managers for more.

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Generative AI startups jockey for VC dollars

(gabriel12/Shutterstock)

Amazon is rolling out generative AI tools across its cloud business and has tapped two leading startups to provide the foundational models. It's yet more evidence of tech giants handpicking fledgling companies and giving them launchpads for future growth.

Investors have taken note and are betting on winners in a crowd that's quickly filling up. More than $12 billion worth of VC deals were completed or announced in Q1, according to PitchBook data.

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Alibaba's split maps out a new model for tech success in China

China's internet sector is looking to rebuild after a yearslong crackdown has shaken VC investor confidence.

The breakup of Alibaba into six units could pioneer a success roadmap and test the nation's recently revamped IPO system. Meanwhile, the Chinese government has been feeling increased pressure to boost a pandemic-battered economy, which should lead to softened policies.

Our latest analyst note explores how the restructuring of giants like Alibaba and JD.com could impact the region's VC market.

read it now

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Africa's VC market braces for tougher times

Iyinoluwa Aboyeji, founding partner of Nigerian VC firm Future Africa
(Tasos Katopodis/Getty Images)

Despite defying the global venture downturn last year, the African VC market is expected to become more challenging this year as deal flow slows.

Layoffs, valuation cuts and fewer rounds are on the horizon, but some investors say that Africa's value-oriented market could be better positioned than most to ride out a global slowdown.

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JP Morgan wins $50B in deposits and chance to woo ex-SVB clients

JP Morgan CEO Jamie Dimon (Drew Angerer/Getty Images)

Deposits at JP Morgan swelled by $50 billion following the banking crisis in March. Now, the challenge will be to keep those customers.

The collapse of Silicon Valley Bank has presented the banking giant with an opportunity to capitalize on the turmoil by winning over the VC firms and startups that SVB served. JP Morgan has sought inroads in the tech IPO market, beefing up its ranks with SVB's own leaders to better serve founders and investors earlier in the company lifecycle.

"As you would expect, we saw significant new account-opening activity and meaningful deposit and money market fund inflows," said Jeremy Barnum, CFO of JP Morgan, at the start of its Friday earnings call.

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Surveying sustainable investing practices

We're conducting our 2023 Sustainable Investment Survey to measure how investors and other private market participants are thinking about impact strategies and/or ESG risk factors. Please share your firm's approach to sustainable investing and what drives it.

All who complete the 10-minute survey will have the opportunity to enter a prize drawing, and for each completion, PitchBook will make a donation to World Central Kitchen.

take the survey

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Recommended Reads

Even with a $700 million valuation, canned water company Liquid Death may need a lot of luck to become liquid gold. [Forbes]

Private credit and venture capital are all the rage among family offices. [Institutional Investor]

For hopeful VCs trying to raise their first funds, the slow market has made the job harder than ever. [Sifted]

Since yesterday, the PitchBook Platform added:

177

People

55

Companies

4

Funds

See what our data software can do

The Daily Benchmark:
2009 Vintage North American PE Funds

Median IRR

14.85%

Top Quartile IRR

22.97%

1.88x

Median TVPI

Select top performers

CIVC Partners Fund IV

Clayton Dubilier & Rice Fund VIII

MSouth Equity Partners

*IRR: net of fees

38 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Internet satellite startup Astranis has raised $200 million in debt and equity led by Andreessen Horowitz, Bloomberg reported.

Kepler Communications, a Toronto-based satellite telecommunications provider, has raised a $92 million Series C led by IA Ventures.

Distyl AI, a startup that helps integrate generative AI into enterprise-scale companies, has raised $7 million in seed funding led by Coatue and Dell Technologies Capital.

Mobile gaming startup Grand-Attic has raised $5.3 million in a round led by Makers Fund.

Tvarit, which enables waste-free, sustainable manufacturing, has secured €5 million in a round led by Momenta and Futury Capital.

Web3 payments platform Helio has raised a $3.3 million seed investment led by Peak and Faction VC.

Don't miss our upcoming webinar

Amid green shoots of optimism, stubborn economic uncertainty continues to hinder risk markets, leaving issuers, leveraged loan investors and direct lenders scrambling for deals—especially in the M&A landscape. This webinar examines trends defining the leveraged loan, private credit, high-yield bond and CLO ecosystems. Key topics include:

While refinancings have emerged in the US leveraged loan segment, higher-reward LBO and M&A deals remain scarce.

With an overall constraint on issuance, the burgeoning private credit segment is having to become more creative to land deals.

After a grim 2022, the high-yield bond market took flight—but an unsettled inflationary environment could be cause for concern.

Register now to secure your spot.

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PE Deals

EQT has made an offer to take over UK-listed veterinary pharmaceutical company Dechra Pharmaceuticals. The company confirmed the offer, which values it at around £4.6 billion.

Manna Capital Partners and MetalX, an Indiana-based metals recycler, have agreed to invest $200 million to build an aluminum slab rolling facility in the Midwest.

WHP Global and Express have agreed to acquire Bonobos from Walmart for $75 million. Created by Oaktree Capital Management in 2019, WHP also has backing from Ares Private Equity Group.

CVC Capital Partners and Francisco Partners have put in a takeover bid for Dubai-based payment processing firm Network International.

Olympus Partners has agreed to acquire a majority stake in International Wire Group from Atlas Holdings. The copper and copper-alloy wire manufacturer has operations in the US and Europe.

Portfolio Companies

Elon Musk plans to launch a generative AI startup that will compete with ChatGPT creator OpenAI, the Financial Times reported. The company, which has incorporated in Nevada with the name X.AI, is recruiting engineers and lining up investors.

Exit & IPOs

Bridgepoint is planning to sell its stake in French insurance broker Kereis, Reuters reported. The deal could value the company at approximately €2 billion.

Parler, a social media platform, has been acquired by Starboard for an undisclosed amount.

Fundraising

JLC Infrastructure, a firm co-founded by basketball star Earvin "Magic" Johnson, is raising its second fund with a target of $750 million, The Wall Street Journal reported.

Healthcare buyout firm BPOC has closed a $425 million continuation fund designed to maintain holdings in five healthcare services companies.

UK banking group Lloyds has appointed Schroders Capital to manage its £250 million private impact fund. The vehicle will invest globally across private equity, infrastructure and real estate.

Paris-based Blisce has closed its second fund on $250 million. The VC firm splits its investments between Europe and the US, with a focus on early-stage companies.

Chart of the Day

"China's increasing tensions with the US, along with its zero-COVID policy, have negatively impacted foreign investor sentiment. 2022 saw just $22 billion of VC exit activity with participation from investors outside of China, a severe decline from the $164.7 billion seen the year prior and the lowest this figure has been since 2016."

Source: PitchBook's H2 2022 Greater China Venture Report

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