PitchBook News - Medtech startups battle incumbents

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The Daily Pitch: VC

May 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:

Our inaugural report on the medtech industry charts out the opportunities and investment drivers in the sector.

Acquirers want to keep buying yet avoid selling. They've bridged that gap by increasing M&A of founder-owned companies.

For the first time in more than five years, the combined post-money valuations of European unicorns have fallen.

Today's Top Stories

Medtech startups battle strong incumbents

From the Apple Watch to portable dialysis, we're in the golden age of connected medical technology, and investors are paying attention. Our inaugural report on the medtech industry covers five segments, 41 categories, and more than 1,100 companies to chart out the opportunities and investment drivers in the sector.

In Q1 2023, VCs invested $1.8 billion in medtech across 122 deals.

Precision medicine, surgical cardiovascular devices and neurostimulation are key areas of innovation.

50% of Americans are managing a chronic health condition, and patients want more portable, remote and minimally invasive solutions.

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Founder-owned companies fill M&A gap as sellers strike

Corporate acquirers and PE firms drove M&A's ascent over the past two years, yet the exit market is described as stagnant. The grease keeping the wheels turning is founder-owned businesses, according to our latest analyst note.

Acquisitions of these companies, which have never received outside capital, hit 61.5% of M&A deals in Q1, up from a recent low of 53.8% in Q4 2020. Likewise, their share of total deal value increased from 31.3% to 43.5%. As acquirers keep buying but avoid selling, the investable opportunities in nonbacked businesses—around 2.6 million in the US and Europe—are ever more appealing.

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A Message From SS&C Intralinks

Private equity firms adjust their sails entering 2023

Private equity firms are some of the best-positioned investors in a down market, but after more than a year of difficult exit conditions, some are feeling the heat. Capital stockpiles are not replenishing as quickly and investing strategies are being scrutinized closely. Add-on deals, which involve buyouts intended to supplement an existing portfolio company, remain a popular strategy for firms in the current market environment. SS&C Intralinks' Global Private Equity Dealmaking 2023 report takes a deeper look at this and other trends, offering valuable insights into the evolving landscape.

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European unicorn valuations succumb to market pressure

(Roberto Machado Noa/Getty Images)

In Q1, the combined post-money valuations of European unicorns fell for the first time in over five years.

Stagnating unicorn count and slowing deal activity have put pressure on the price tags for companies valued at more than €1 billion, which is likely to persist for the foreseeable future.

Recommended Reads

Which companies and firms have scooped up the most unicorns over the last 25 years? [Visual Capitalist]

The crackdown on risky chemicals that could derail the chip industry. [Financial Times]

Scientists are testing ways to construct buildings on Mars and the moon without hauling materials from Earth. One possible solution: sourcing 3D-printing materials from the planet's surface. [Wired]

Since yesterday, the PitchBook Platform added:

13

VC valuations

2151

People

701

Companies

30

Funds

See what our data software can do

The Daily Benchmark:
2015 Vintage North American Funds-of-Funds

Median IRR

22.45%

Top Quartile IRR

25.88%

0.63x

Median DPI

Select top performers

TrueBridge Direct Fund

TrueBridge-Kauffman Fellows Endowment Fund IV

HarbourVest Partners X-Venture

*IRR: net of fees

48 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Generative AI company Anthropic has raised a $450 million Series C led by Spark Capital with participation from investors including Alphabet, Salesforce Ventures and Sound Ventures.

ReNAgade Therapeutics has secured a $300 million Series A led by MPM BioImpact and F2 Ventures for its RNA medicines.

London-based Builder.ai, which offers an AI-powered platform for creating software, has raised $250 million in a round led by Qatar Investment Authority.

France's Tissium, a developer of products for tissue reconstruction, has raised a €50 million Series D from investors including Cathay Capital and Sofinnova Partners.

Enterprise payments provider Episode Six has raised a $48 million Series C led by Avenir.

Datasembly has raised a $16 million Series B led by Noro-Moseley Partners for its B2B data analytics platform.

Telehealth startup Lifeforce has received a $12 million Series A co-led by M13 and Peterson Ventures.

Paris-based cyber risk management specialist CyberVadis has raised a €7 million Series A led by Zobito.

Twirl, a data infrastructure company based in Stockholm, has secured a $2.5 million pre-seed investment led by Creandum.

PE Deals

Genstar-backed European financial services provider Apex Group has completed its acquisition of the data and analytics division of asset management service provider MJ Hudson.

Baird Capital has invested in payments and currency exchange platform Freemarket via its Global Private Equity Fund.

Sandbridge Capital has led an investment in REM Beauty, a consumer brand founded by Ariana Grande, which the pop singer bought back from creditors of Forma Brands for $15 million in February. Investors including Strand Equity also participated.

Cube Infrastructure Managers and Equitix Investment Management have acquired Northern Ireland-based integrated waste management company RiverRidge.

Portfolio Companies

Blackstone-backed Lumina CloudInfra plans to build out a network of data centers in India before the end of the decade that could require up to $3.9 billion, with Microsoft and Amazon in talks as customers, Reuters reported.

JP Morgan Chase has purchased more than $20 million in carbon removal services from VC-backed direct air capture company Climeworks.

Daylight, a digital banking platform for the LGBTQ+ community, is shutting down. Launched in 2020, the startup has raised capital from investors including Kapor Capital and Citi Ventures.

Fundraising

GTCR has closed its 14th fund on $11.5 billion. The buyout firm invests in healthcare, tech, media, financial services and other industries.

Fintech-focused firm QED Investors has raised $650 million for an early-stage fund and $275 million for a growth-stage fund.

VC firm Anthemis is looking to raise $200 million for its third fund, according to an SEC filing.

Moonfire Ventures has closed a $115 million fund targeting early-stage startups.

Investors

The Alaska Permanent Fund has dropped its target private equity allocation from 19% to 15% for fiscal year 2025, The Wall Street Journal reported.

Chart of the Day

Source: The Transient Era of Billion-Dollar Funds

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PitchBook News - Medtech startups battle incumbents

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