PitchBook News - Sequoia cuts short global strategy

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The Daily Pitch: VC

June 7, 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 for PE—the bread and butter of the big public alternative asset managers—has taken a back seat to other strategies.

Silicon Valley stalwart Sequoia has decided to separate from its China and India units.

The impact investing ecosystem has ballooned in recent years. We've compiled a list of the five largest US PE impact funds operating in 2023.

Today's Top Stories

Sequoia's three-way split brings abrupt end to global strategy

Neil Shen, founding and managing partner of Sequoia China
(Peter Parks/Getty Images)

After years of weighing the pros and cons of running a global business, Silicon Valley stalwart Sequoia has decided to separate from its China and India units.

While the firm told its LPs that the move is a result of the difficulties associated with running an increasingly complex business, the decision comes amid growing geopolitical tensions between US and China that have battered some young tech companies and their investors.

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PE isn't driving the growth for public alts managers

The big six public alternative asset managers reached $3 trillion in collective AUM in Q1, but that growth came mainly from strategies other than private equity.

PE—the bread and butter of these alts managers—has taken a back seat to private credit. The firms' fundraising for core PE during the quarter fell by over 40% year-over-year, but strength in credit fundraising trimmed that to a 28% decline.

Another big growth area: funds that raised what some GPs call "perpetual capital," which grew more than 20% over the past year to reach $1 trillion.

Our Q1 2023 US Public PE and GP Deal Roundup pulls together data on trend-setting firms like Blackstone, KKR and Apollo Global Management to analyze the strategies and forces driving their growth.

read the report

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A message from RBC Capital Markets

Innovation and growth: key ingredients to healthcare M&A

Despite a subdued start to 2023, M&A volumes in the US healthcare sector are beginning to stabilize. Compressed valuations, heightened boardroom CEO confidence across various sub-sectors, and the need to accelerate top-line growth and scale are all indicative of an upcoming wave of deal activity. What's next for healthcare? Listen to Strategic Alternatives, the RBC M&A podcast.

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European IPO backlog expected to drive strong rebound

(Serdar Tibet/Shutterstock)

VC investors expect a slew of high-quality offerings when the IPO window opens back up in Europe.

Just nine VC-backed companies went public in Europe in Q1, according to PitchBook data. But speakers at the SuperVenture conference in Berlin said a significant backlog of listings could hit the market in a rush when conditions improve. When that rebound might begin remains unknown.

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Fundraising challenges squeeze European emerging managers

(Mihai Simonia/Shutterstock)

European VCs have warned that emerging managers that are too small to attract institutional investors will continue to have a tough time fundraising this year.

At the SuperVenture conference, industry participants said that in a slowing VC market, differentiation could become an important component of attracting commitments.

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A look at the 5 biggest US PE impact funds

(Ivan Roth/Shutterstock)

The impact investing market reached over $1 trillion in AUM at the end of 2021, a response to LP demand for quantifiable social and environmental outcomes from their investments.

This massive ecosystem has a number of private equity managers to credit for its expansion. We compiled a list of the five largest US PE impact funds operating in 2023.

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Recommended Reads

Is Google a bad neighbor? A fight over water use at a huge data center is exposing deeper issues in an Oregon town. [Fortune]

Do you really need prestigious business school credentials to work in private equity? [The Wall Street Journal]

A look at the US' largest semiconductor companies, ranked by size. [Visual Capitalist]

Since yesterday, the PitchBook Platform added:

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The Daily Benchmark:
2013 Vintage North American Real Estate Funds

Median IRR

12.01%

Top Quartile IRR

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KTR Industrial Fund III

Cabot Industrial Value Fund IV

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VC Deals

Indian analytics and AI solutions company Course5 Intelligence has raised $53 million in a round led by Nuvama.

Curri, a last-mile logistics platform for construction, has raised a $42 million Series B round led by Bessemer Venture Partners.

Medtech device company Candesant Biomedical has raised a $35 million Series B led by KCK MedTech.

Plant-based foodtech MyForest Foods has raised a $15 million Series A-2 round, led by its parent company, Ecovative Design.

Life5, a life insurance startup previously known as Getlife, has raised a $10.7 million Series A, TechCrunch reported.

French cybersecurity startup Escape has raised €3.6 million in a round led by Iris.

Paris-based cybersecurity company Elba has raised €2.5 million in a seed round led by XAnge.

Norwegian drone logistics company Aviant has raised €1 million in a round led by Innovation Norway.

Spanish AI data management and security company MLCode has received pre-seed funding in a round led by Bullnet Capital.

PE Deals

CVC Capital Partners is preparing to join the bidding for UK holiday resort company Center Parcs, which is said to be worth around £4 billion, Sky News reported.

Equistone-backed Sihl Group has acquired industrial 3D printing company Trichord through its subsidiary Perigon.

Fundraising

B Capital Group is in talks to raise $500 million for its third Ascent Fund, which will target early-stage startups, Bloomberg reported.

Nexa Equity has raised roughly $330 million for Nexa Equity Fund I and several deal-specific co-investment vehicles. The lower-middle-market software and fintech PE investor raised more than $180 million for the inaugural fund.

Chart of the Day

"By geography, there is an overrepresentation of European funds in the PRI (Principles for Responsible Investment) signatory universe. ... The magnitude of the difference is considerable, highlighting the outsized role Europe plays in the development of ESG-related trends, standards, and best practices."

Source: Are "ESG Investors" Underperforming?

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PitchBook News - Sequoia cuts short global strategy

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