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PitchBook News - A16z embraces funds-of-funds

Plus: Gaming sector can't beat slowdown, AI's healthcare takeover, France's private markets start 2023 strong & more
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The Weekend Pitch
June 4, 2023
Presented by Masterworks
(Mara Potter/PitchBook News)
The late-stage venture market is a perilous place to be at the moment, particularly for those itching to offload assets in the public markets.

For that reason, many VCs dedicated to backing the most mature of startups are glancing behind them to see what the earlier stages have to offer. The advantages of this strategy seem obvious—today's early-stage companies could mature in a more forgiving exit environment—particularly for those worried about late-stage valuation trends.

Most investors who focus on more mature companies have simply begun making direct investments in younger companies. But there's another way.

Andreessen Horowitz is preparing to launch a fund-of-funds, Business Insider reported. While the details of its plans—such as size and whether it will be raising external capital—are unknown, the vehicle reportedly has the express purpose of giving the firm a stronger foothold in the early-stage market.

This is the Weekend Pitch, and I'm Leah Hodgson. You can reach me at leah.hodgson@pitchbook.com or on Twitter @LeahFHodgson.
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Trivia
Gaming startups saw deal value rise in Q1 of 2023, even though activity remained lower than historical levels. How much capital did gaming startups raise in Q1?

A.) $4.5 billion
B.) $3.1 billion
C.) $1.1 billion
D.) $5.9 billion

Find the answer at the bottom of The Weekend Pitch!
 

For gaming sector, no beating the overall slowdown

(Anton27/Shutterstock)
One of the newest areas of coverage by PitchBook analysts, gaming has captivated tech and pop culture to become the most valuable entertainment medium in the world. In Q1 of this year, gaming startups saw deal value tick up slightly, but the broad market slowdown has hit the vertical even as new tech brings new challenges.

You can read up on the latest developments in the Q1 2023 Gaming Report.
 

AI healthcare takeover is coming, though it may be gradual

VC dealmaking in healthcare IT has started to recover from a slow period at the end of last year, and the longer term outlook is bullish. The enormous promises of generative AI in healthcare will attract private investors for at least the next decade. Our Q1 2023 Healthcare IT Report recaps key Q1 deals and charts a path forward for the vertical.
 

France's private markets enjoy
bon la vie (the good life)

(Luciano Mortula - LGM/Shutterstock)
Many parts of Europe haven't had the most auspicious starts to 2023, but the year is off to a promising start for French private markets. Private equity deal value has increased substantially compared to the end of 2022, and Paris is holding onto its coveted second position among Europe's top VC hubs. Other regions of the country have moved into the top 15 for the first time.

Learn more in our Q1 2023 France Private Market Capital Breakdown.
 

Quote/Unquote
(Courtesy of Armentum Partners)
"Startups still want venture debt. They just do not feel comfortable taking it from a bank. They're going to [non-bank lenders] instead."

—John Markell, managing partner at Armentum Partners, who spoke to PitchBook about the current state of venture lending.
 

Recommended Reads
Why an octopus-like creature has come to symbolize the state of AI. [The New York Times]

The explosive legacy of the pandemic hand sanitizer boom. [Wired]

Assault allegations plague a $1.4 billion home eldercare startup. [Bloomberg Businessweek]
 

Stay tuned
Keep an eye out for these fresh insights and research reports coming out this week.
  • Q1 2023 US Public PE & GP Deal Roundup
  • Analyst Note: How ESG Commitments Affect Private Fund Performance
  • Q1 2023 Clean Energy Tech Report
  • Q1 2023 ETI Report
 

Trivia
Answer: C)

Gaming startups raised $1.1 billion in Q1 across 140 deals. You can read more about those deals and the vertical in the Q1 2023 Gaming Report.

This edition of The Weekend Pitch was written by Leah Hodgson, David Stevenson, Jacob Robbins and Emily Burleson. It was edited by James Thorne, Ron Prichard and Laural Hobbes.

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