PitchBook News - Signs of stability for VC valuations

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The Daily Pitch: VC

August 10, 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:

Median US VC valuations ticked up in Q2 across all stages except seed

Leveraged loans continue to rally toward their strongest year since the global financial crisis

Our PE Barometer reaches positive territory for the first time since late 2021

Our updated SoftBank Vision Fund dashboard tracks the firm's latest investments

Supply chain tech is exploring AI for relief from its labor shortage

OMERS Ventures is joining North American peers in withdrawing from Europe's market

Today's Top Stories

VC valuations start to stabilize in Q2

In Q2, US VC valuations were considerably below the peaks of 2021 and early 2022. But there are signs that prices may be stabilizing. The median valuations for all stages, except for seed, registered an uptick from the previous quarter.

Although prices are no longer in a free-fall, the VC valuation glass may still be less than half full amid the near-frozen IPO market, reduced risk appetite from VCs and a continued pullback from nontraditional investors. Other key takeaways from the Q2 2023 US VC Valuations Report, sponsored by Morgan Stanley at Work, include:

Seed-stage deal sizes have started to stagnate, indicating that the capital that VCs are willing to give to the youngest companies may have reached a ceiling.

The median valuation step-ups for early-stage companies have hit a near-decade low, a challenge for seed-stage investors looking for markups.

Insiders have led 9.4% of late-stage rounds year-to-date, the highest proportion in nearly a decade.

Recommended Reads

A survey has found that PE firms aren't yet willing to temper their expectations for 2023 returns. [Institutional Investor]

Startup EverestLabs is using robotic arms and AI to make recycling more efficient. [CNBC]

Iron and rust could be the secret to storing clean power for days. [Forbes]

Since yesterday, the PitchBook Platform added:

10

VC valuations

2086

People

625

Companies

27

Funds

See what our data software can do

The Daily Benchmark:
2015 Vintage US PE Funds

Median IRR

19.15%

Top Quartile IRR

28.04%

1.06x

Median DPI

Select top performers

Gridiron Capital Fund III

Oaktree Power Opportunities Fund IV

New State Capital Partners Fund

*IRR: net of fees

79 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Credgenics, an Indian SaaS-based debt collections platform, has closed a $50 million Series B from investors including Westbridge Capital, Accel and Tanglin Ventures.

Singaporean digital wealth adviser Endowus has raised $35 million from backers including Citi Ventures and MUFG Innovation Partners.

Bactolife, a Copenhagen-based developer of technology to improve gut health, has raised €30 million in a round led by Athos.

Balderton Capital has led a $30 million investment in Berlin-based large language model developer Deepset.ai.

Diality, a medical technology company, has raised $28 million from undisclosed investors.

Kraftblock, a German provider of energy storage systems, has closed a €20 million Series B from investors including Finindus, TechEnergy Ventures and Shell Ventures.

AI-powered security startup Symmetry Systems has raised $17.7 million from investors including ForgePoint Capital, Prefix Capital and W11 Capital Management.

Searact, a German developer of autonomous robotics for warehouses, has raised $5 million in a round led by Point Nine and Air Street Capital.

Home EV charging startup Treehouse has raised $10 million led by Montage Ventures and Trucks Venture Capital.

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In this webinar, PitchBook lead healthcare analyst Rebecca Springer will speak with representatives from Aurora Mental Health & Recovery, Colorado Access, and Owl Health about the transformation of treatment and business models in the behavioral health industry.

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PE Deals

Investors led by Crestline Investors have agreed to sell German renewable energy producer NeXtWind to Sandbrook Capital, the Public Sector Pension Investment Board and the Investment Management Corporation of Ontario. The buyers plan to invest $750 million to acquire and grow NeXtWind.

Novacap has acquired TV advertising specialist Cadent from Lee Equity Partners. The company changed hands for about $600 million, Axios reported.

Kohlberg & Co. has acquired a majority stake in Engage PEO. Existing investor Lightyear Capital will retain a minority stake alongside the HR outsourcing company's management.

Argosy Private Equity has acquired a majority interest in commercial outdoor furniture and traffic safety product manufacturer Barco Products.

Beech Tree Private Equity has invested in CovertSwarm, which employs ethical hackers to test organizations' ability to withstand cyberattacks.

Exit & IPOs

CVC Capital Partners is considering a 2024 IPO for German perfume retailer Douglas, which could be valued at more than €7 billion, Bloomberg reported.

Fundraising

Japan's Longreach Group has launched its fourth flagship fund targeting $800 million, according to reports.

GEF Capital Partners has closed GEF LatAm Climate Solutions Fund III on 1.05 billion Brazilian reais (about $210 million). The fund targets lower-middle-market investments addressing climate change and pollution control.

HealthEdge Investment Partners, which invests in lower-middle-market healthcare companies, has closed its fourth fund on more than $160 million.

South Africa-based Knife Capital has closed its third fund, which will make growth-stage investments, on $50 million, TechCrunch reported.

London's Pretiosum Ventures has held a first close of its $20 million second fund, TechCrunch reported. The vehicle will back infrastructure startups and focus on pre-seed, seed and Series A investments.

Chart of the Day

Source: PitchBook's Q2 2023 Global M&A Report

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