PitchBook News - Seeking supply chain stability

Indoor farming struggles to stay afloat; VCs discuss women's health startups to watch; investors pan for retail fintech gold
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The Daily Pitch: VC
May 19, 2023
The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data
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Today's Top Stories  
VC investors make careful supply chain tech bets in downturn
VC investment in the supply chain tech sector continued to drop in Q1. The latter half of the quarter reflected more of the slowdown, possibly in response to the crisis surrounding Silicon Valley Bank. In our latest Emerging Tech Research, the freight tech and inventory tracking industries get the spotlight, along with three companies: Verity, Plus One Robotics and Outrider.
  • The total value of deals for supply chain tech companies fell 45.3% from Q4 2022, while the number of deals was down 19.4%.

  • Enterprise supply chain management was the industry most able to hold fast.
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VC investment in indoor farms plummets 91% in 1 year
(Courtesy of Infarm)
Venture dollars for indoor farms are in a free fall as investors cool on startups whose costs have risen sharply alongside energy prices and interest rates.

Indoor farms raised $75.8 million in VC funding across 14 deals globally, down 91% year-over-year in terms of deal value. Five indoor farms went bankrupt or ceased operations in Q1, and several more have announced major layoffs in recent quarters.

Those that have stayed afloat are surviving by "stretching out their cash," says Mark Lynch, of Oghma Partners.
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A message from Juniper Square  
Don't let uncertainty undermine your success
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This is also a time to learn best practices from your peers. On May 25th, Juniper Square is hosting a live discussion with Wells Fargo, Kirkland & Ellis, and Barings on the state of private equity. The panel will discuss:
  • The availability of debt financing for buyout deals;
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  • How the power balance between LPs and GPs is shifting;
  • Which types of funds might struggle the most in the second half of 2023
Register now and tune in live
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Startup radar: VCs on femtech startups to watch
(Elena Nechaeva/Getty Images)
Global venture investment in femtech has grown in recent years as women's healthcare has garnered more attention.

We spoke to four VCs active in femtech to get their takes on the most promising women's health startups.
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B2B startups steal retail fintech's thunder
Challenges for consumer-facing fintech startups have driven investors toward B2B investment opportunities. And while PitchBook analysts expect VC investment in fintech to continue to fall, a less crowded B2C market does have its upsides.

Our recent Emerging Tech Research on the space explores VC trends in the retail fintech vertical and long-term opportunities like digital financial passports and open-loop P2P payments. It also includes company highlights on Portabl and Ping.
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Ranks of US leveraged loan 'Weakest Links' grow as credit conditions tighten
(pogonici/Shutterstock)
Market watchers wary of clouds on the financial horizon will want to note PitchBook LCD's most recent "Weakest Links" analysis, which tracks how much of the $1.4 trillion US leveraged loan asset class is especially low-rated, and perhaps facing downgrade.

With rising rates increasing debt issuers' borrowing costs and continued recession talk tamping down growth, Weakest Link activity has grown for two quarters and now totals 148 companies—up from 96 at this point last year. That's the highest reading since 2020.

Weakest Links have proved to be an indicator of potential default activity. This analysis also includes downgrades/upgrades ratios, default rates and more.
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Recommended Reads
A punk-rock soccer team in Germany is pushing back against the lure of PE investment. [Bloomberg]

Health concerns keep shrinking the roster of approved artificial dyes, but Americans still can't seem to go cold turkey on ultra-colorful foods. [The Atlantic]

The wind-turbine industry should be booming. Why isn't it? [The Economist]
 
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A Message From Orrick  

VC-backed life sciences companies experience a slow start to 2023

VC deal activity for life sciences companies hit a five-year quarterly low in Q1 2023, signaling an end to the surge of funding that started with the pandemic in 2020 and began to slow due to macroeconomic challenges in 2022. Earlier-stage deals took up a greater share of deal activity at the start of the year as later-stage companies contended with narrower exit opportunities and declining check sizes. Orrick's Life Sciences Snapshot provides further analysis of the US market, as well as a roundtable discussion of the trending supplements market.

Read it now
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People  
Equity Group Investments founder and chair Sam Zell has died due to complications from illness. Zell, a prolific real estate and corporate investor, was widely known for building residential and commercial real estate investment trusts in the 1990s.
 
VC Deals  
Goodwater Capital has led a $50 million Series C for Hallow, the developer of a prayer and meditation app.

PartsTech, a B2B marketplace for auto parts, has raised a $35 million Series C led by OpenView.

Energy management specialist Peak Power has secured a $35 million investment led by Greenbacker Capital Management.

Barcelona-based climate-tech startup Mitiga Solutions has raised a €13.25 million Series A led by Kibo Ventures.

Faks has raised €5 million from Connect Ventures, Cocoa Ventures and Seedcamp. The French startup's app connects pharmacies and suppliers.

Belgium's VoxelSensors, a developer of 3D perception tech, has secured a €5 million seed investment led by Capricorn Partners and Qbic.

Praetura Ventures has led a $5 million Series A for UK-based adtech company Covatic.

Amini, a Kenyan environmental data aggregation and analytics platform, has raised $2 million in a round led by Pale Blue Dot.
 
PE Deals  
Francisco Partners and TPG have been working together on a bid north of $5 billion for software company New Relic, The Wall Street Journal reported. The publicly traded company provides observability software to application and website owners.

Ambienta has acquired Spaggiari Parma, an Italian company that provides software for schools. The firm completed the deal through its Ambienta Fund III.
 
Exit & IPOs  
Ardian-backed French software company Planisware is considering an IPO, Reuters reported.
 
Fundraising  
Insight Partners has closed its Continuation Fund II on about $1.3 billion committed by LPs including HarbourVest Partners and Lexington Partners.

RMBV, a firm led by former executives of scandal-hit Abraaj, is looking to raise up to $400 million for its North Africa-focused fund, Private Equity International reported. The firm is said to be eyeing a first close by the end of the year.

Morgan Stanley Investment Management has held a $500 million first close on its private equity climate fund.

Michigan-based Plymouth Growth has closed its fifth fund on roughly $125 million. The fund, Plymouth Growth V, focuses on B2B software and tech-enabled services companies in the mid-continent region of North America.
 
Investors  
Pension plan Calpers has an "appetite" to further increase its allocation to private equity, the Financial Times reported. The LP's target allocation for PE was raised from 8% to 13% in late 2022.
 
Corporate M&A  
Shopping center owner, operator and developer Regency Centers has agreed to acquire another real estate investment trust, Urstadt Biddle Properties, in an all-stock deal that values the latter around $1.4 billion.

Chinese manufacturer Geely has invested £234 million in Aston Martin, doubling the company's stake in the British carmaker and making Geely the third-largest shareholder.
 
Chart of the Day  
"Different types of nontraditional investors will be experiencing different challenges in the current climate. For example, a VC arm of an IT company conducting layoffs and focusing on capital efficiency may struggle to justify a hefty capital outlay on a new business. Whereas, a sovereign wealth fund benefitting from recent spikes in oil prices may have revived appetite to deploy cash and diversify into sectors such as IT amid lower valuations."

Source: PitchBook's Q1 2023 European Venture Report
 
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Ranking Q1's most active investors

Thursday, May 18, 2023

Startups welcome sovereign wealth funds; food delivery providers stand out after IPO; Q&A: HSBC builds a tech practice Read online | Don't want to receive these emails? Manage your subscription

The banks scooping up ex-SVB talent

Wednesday, May 17, 2023

Public lenders jump on venture debt; takeaways from Fintech Nexus USA; Twitter makes first Musk-era acquisition; OpenAI CEO testifies on AI Read online | Don't want to receive these emails? Manage

Europe's rise and fall in VC valuations

Tuesday, May 16, 2023

Falling prices bolster M&A; Illumen bags $168M for impact investing; Q&A: How infrastructure defies inflation Read online | Don't want to receive these emails? Manage your subscription. Log

Will VCs leave behind women's health?

Monday, May 15, 2023

Carbon tech pulls ahead; how generative AI will shape our tech; acquirers aren't scared by antitrust; Twitter names new CEO Read online | Don't want to receive these emails? Manage your

Window shopping for startups

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