PitchBook News - VC's M&A wave more of a drizzle

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The Daily Pitch: VC

April 20, 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 latest European PE Breakdown shows how the industry responded as macroeconomic conditions finally caught up in Q1.

Investors expected a wave of startup M&A in the first quarter, but the waters are calmer than ever.

As the world's largest gaming market, Asia poses an opportunity for VCs.

Today's Top Stories

VCs expected an M&A wave—deals fell to a decade low instead

(mycteria/Shutterstock)

Startup M&A fell to its lowest level in 10 years during the first quarter as the market digested rising interest rates, geopolitical uncertainty and a renewed focus on profitability by large tech acquirers.

The downtrodden exit environment is a blow to hopes that M&A would tick up as funding slows and the IPO market remains shut. But buyers and sellers are beginning to agree on valuations, a hopeful sign for dealmaking later in the year.

Recommended Reads

Strict enforcement of China's internet rules is likely to stifle the development of generative AI in the country. Will the government give any leeway? [The Economist]

Used routers are coming loaded with corporate secrets from login credentials to user data. [Wired]

As banks cut back on lending, private equity firms are clamoring for bridge loans. [The Wall Street Journal]

Since yesterday, the PitchBook Platform added:

19

VC valuations

2464

People

648

Companies

39

Funds

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The Daily Benchmark:
2016 Vintage Global Secondaries Funds

Median IRR

18.18%

Top Quartile IRR

23.97%

0.71x

Median DPI

Select top performers

Industry Ventures Special Opportunities Fund III

Timber Bay Fund I

Greenspring Secondaries Fund II

*IRR: net of fees

28 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Coro, which offers a cybersecurity platform, has secured $75 million from investors including Energy Impact Partners.

EdgeQ has raised a $75 million Series B to assist in the production of its 5G chips. Backers included the United Arab Emirates' Strategic Development Fund, Yaletown, and ClearSky.

Financial automation startup Clerkie has raised a $33 million Series A led by Left Lane Capital.

3D Glass Solutions, which creates glass-based electronic devices, has secured a $30 million Series C led by Walden Catalyst Ventures and joined by Intel Capital and Lockheed Martin Ventures, among others.

E-magy, a developer of nano-porous silicon for lithium-ion batteries, has raised €20.5 million. Investors included Shift Invest, Rubio and Invest-NL.

Aqua-Spark has led an €11 million Series A for Finland's EniferBio, which makes protein derived from fungi.

Triver, which provides financing to small businesses, has secured £7 million from investors including Axeleo Capital, Motive Partners and Stride, according to reports.

Pivotal, a provider of biodiversity data and analytics, has raised a £4.5 million seed round led by Octopus Ventures.

Don't miss our upcoming webinar

The war in Ukraine, skyrocketing inflation and overall financial market volatility resulted in a rocky year for the European leveraged-finance primary markets in 2022. Loan volume plummeted to a 10-year low, and new high-yield bond issuance registered its lowest annual tally since the global financial crisis of 2007 to 2009.

In our upcoming webinar, LCD analysts will explore what lies ahead for leveraged financing trends in 2023. Key topics include:

What specific refinancing risks loan and bond-funded companies face.

How the cost of capital in the loan, bond and direct lending markets is changing.

How recent market volatility in the banking sector is impacting corporate financing and PE activity.

Register now to secure your spot.

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PE Deals

M42 has purchased Diaverum, a European dialysis clinic chain backed by Bridgepoint Group. Based in Abu Dhabi, M42 is a joint venture by Mubadala and G42 Healthcare that combines their healthcare assets.

Francisco Partners-backed Forcepoint, a cybersecurity company, is considering a sale of its government security unit for an estimated $2 billion, Reuters reported. Forcepoint, previously known as Websense, was acquired by Francisco Partners in 2020 from Raytheon Technologies.

Voting machine company Dominion, a portfolio company of Denver-based PE firm Staple Street, has won $787 million in a defamation settlement with Fox News.

Nordic Capital has acquired German medtech company Corpuls, which provides products such as portable defibrillators for use in emergencies.

Exit & IPOs

Ticket and events platform SeatGeek has confidentially filed for an IPO, The Information reported. In 2022, SeatGeek raised a $238 million Series E led by Accel at a $1.1 billion pre-money valuation.

Allianz is selling its stake in German challenger bank N26, the Financial Times reported. The holding, which is around 5%, will be offered at a valuation of $3 billion, representing a discount of around 68% to N26's $9 billion valuation achieved in 2021.

Lottomatica, an Italian gambling company backed by Apollo Global Management, is planning to take investor orders for an IPO between €600 million and €700 million as soon as later this week, Bloomberg reported.

Fundraising

Germany's Forbion, a venture capital firm specializing in life sciences startups, has closed two funds totaling €1.35 billion, its sixth flagship and an opportunities fund.

Flexstone Partners has raised $790 million for Global Opportunities IV with a plan to make 40 to 50 direct co-investments.

Gilde Healthcare has raised €600 million for its latest venture and growth fund. It will be used to invest up to €60 million in European and North American healthcare, medtech and biotech startups active.

Singapore-based Aquilius Investment Partners has closed its debut fund on more than $400 million. AIP Secondary Fund I will specifically target the Asia-Pacific market.

Investors

UK-listed asset manager Abrdn is looking to sell a package of private equity businesses valued at around £250 million, Reuters reported. Abrdn oversaw more than £12 billion in PE investments at the end of last year.

Chart of the Day

Source: Q1 2023 PitchBook-NVCA Venture Monitor

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PitchBook News - VC's M&A wave more of a drizzle

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