PitchBook News - A surge in small funds ebbs

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The Daily Pitch: VC

April 24, 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:

Fundraising is increasingly difficult, and it's particularly challenging for micro-funds.

Our latest US PE Breakdown offers insight into what went right for private equity in Q1 while much of the financial system floundered.

More capital has been leaving Europe's VC funds than entering them, and a dry powder shortage may loom.

Today's Top Stories

Micro-fund managers feel deflated as LPs cool on VC

(Jenna O'Malley/PitchBook News)

The number of micro-funds—VC vehicles under $50 million—exploded during the last couple years of the boom cycle.

But now, raising capital has become so hard that managers may need to meet upward of 100 potential LPs to raise a significant amount of money for their next fund. Venture capital industry participants expect a chunk of those micro-funds never to raise a subsequent vehicle.

The widespread decline in exits means emerging managers haven't had a chance to prove themselves, and they may find the battle to raise funds isn't worth the fight.

Recommended Reads

Why Silicon Valley's favorite slogan has lost all meaning. [The Atlantic]

What do Apple's forays into financial services mean for the future of Wall Street? [Financial Times]

A spirited roundup of seven nuclear fusion startups making clean-energy history. [Bloomberg]

Since yesterday, the PitchBook Platform added:

1

VC valuations

115

People

19

Companies

3

Funds

See what our data software can do

The Daily Benchmark:
2018 Vintage Global Real Estate Funds

Median IRR

13.34%

Top Quartile IRR

20.05%

0.35x

Median DPI

Select top performers

Penzance DC Real Estate Fund

Exeter Europe Value Ventures III

Invesco Strategic Opportunities III

*IRR: net of fees

85 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Weaviate, an Amsterdam-based data storage startup, has raised a $50 million Series B led by Index Ventures.

Paris-based Mooncard, a corporate expense-management specialist, has raised a €37 million Series C from investors including Orange Ventures, Portage and Partech.

Sero, a UK-based clean-energy startup, has secured £6 million from Hodge and Legal & General Capital.

London-based Evermile, which offers a local delivery platform for small businesses, has raised $6 million in a round led by 10D.

Bixby, which provides private credit information on loan issuers, has raised a $5.5 million Series A led by Fitch Ventures.

Earlybird has led a €3.2 million seed investment in Nosh.bio, a maker of plant-based food proteins.

Shield, a Los Angeles-based cybersecurity startup, has raised $2.1 million in pre-seed funding from investors including Kraken Ventures, Eterna Capital and Moonpay.

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.

Share:

PE Deals

The Carlyle Group is looking to add new backers to its stake in McDonald's China business at a valuation of up to $10 billion, Bloomberg reported. Carlyle and Trustar Capital control the operation.

Entertainment company Hasbro is in talks to sell the studio assets of Entertainment One, Bloomberg reported. The studio's founder, Darren Throop, who is backed by CVC Capital Partners, is one of the leading bidders.

Blue Sage Capital and Four Point Capital Advisors have made investments in NexGen Financial, a company that offers financing to debt-settlement companies.

Sureserve has agreed to a takeover offer from Cap10 Partners that would value the energy services specialist at £214.1 million.

Anne Mahlum, the founder of fitness studio operator Solidcore, has sold her shares in the company to Kohlberg & Co.

Exit & IPOs

I Squared Capital has agreed to acquire environmental services specialist Enva from Exponent. Enva, which offers waste management services in the UK and Ireland, was created in 2017 when Exponent bought the environmental division of DCC.

Fundraising

JP Morgan Growth Equity Partners has raised over $1 billion for its debut growth equity fund. The vehicle will target Series B to pre-IPO investments in sectors including software, fintech, real estate and consumer tech.

Hitachi Ventures, the corporate venture arm of Japan's Hitachi, has launched its third fund with $300 million to target Web3, cloud computing and generative AI investments.

Chart of the Day

Source: PitchBook's 2022 Annual US PE Middle Market Report

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PitchBook News - A surge in small funds ebbs

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