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The Daily Pitch: VC

August 25, 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:

We used our GP scoring data to weigh in on fund family performance persistence

Generative AI can be used to create new drug compounds—and investors are taking note

BlackRock's head of private debt for EMEA on why allocations will keep rolling in to the asset class

Today's Top Stories

Fact or fiction: Does fund family performance persist?

LPs have a long-held, but controversial, expectation that a fund's performance is likely to be similar to its predecessor fund's performance. This has been backed by some academic studies, but more recent research on fund vintages newer than 2000 has shown that the correlation for so-called performance persistence is even less reliable now.

In our latest Allocator Solutions report, PitchBook analysts test if our new Manager Scoring methodology can settle the debate. If it can, would the data on predecessor funds be available early enough for LPs to make their bets?

read the report

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Investors bet on generative AI to revolutionize drug discovery

(metamorworks/Getty Images)

While the use of generative AI to discover medicines is still not widely discussed, some early adopters of large language and diffusion models have succeeded in raising substantive funding in recent months.

"We are in [the] very early days of how generative AI is going to be applied in life sciences, but I think the applications in drug discovery are potentially profound," said Greg Yap, a partner at Menlo Ventures.

Recommended Reads

Peter Thiel launched the Stanford Review newspaper 36 years ago. It has quietly become one of the surest paths to success in Silicon Valley. [Fortune]

Are hedge fund pioneers facing the end of a golden era? [Financial Times]

Eight startups challenging Nvidia in the world of AI chips. [The Information]

Since yesterday, the PitchBook Platform added:

19

VC valuations

3023

People

702

Companies

22

Funds

See what our data software can do

The Daily Benchmark:
2017 Vintage Global Funds-of-Funds

Median IRR

23.28%

Top Quartile IRR

29.35%

0.26x

Median DPI

Select top performers

Top Tier Venture Capital VIII

Raspberry Street Fund II

TrueBridge Capital Partners Fund V

*IRR: net of fees

42 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Sparc Group, the operator of clothing retailer Forever 21, has agreed to take a minority stake in Chinese ecommerce giant Shein, which is backed by Sequoia, General Atlantic, Mubadala and others. In turn, Shein has agreed to acquire around one-third of Sparc.

Poolside AI, which is developing an AI tool capable of writing software code, has raised a $100 million extension led by billionaire Xavier Niel and Felicis, bringing the seed round's total to $126 million, Sifted reported.

Modular, which offers an AI developer platform, has raised $100 million in a round led by General Catalyst.

Schüttflix, which operates a marketplace for construction supplies, has raised €45 million from investors including FJ Labs and DEVK Insurance.

FranklinWH Energy Storage, a home energy management provider, has raised a $25 million Series B led by Particle Future.

Berlin-based soft drink brand Holy has secured a €10.5 million Series A led by Left Lane Capital.

Jungle Ventures and Peak XV have led a $2.1 million seed round for Neurowyzr, a Singaporean startup focused on brain health.

Swedish heat pump startup Drem has secured €2 million from Peak.

PE Deals

PAG is nearing an agreement to acquire Australian Venue, which operates pubs, bars and event spaces in the country, from KKR for about A$1.4 billion (about $906 million), Bloomberg reported.

Ivest Consumer Partners has acquired CloudCo Entertainment, the parent company of the Care Bears franchise, from the Weiss family for $100 million.

Morgan Stanley Investment Management's infrastructure strategy has taken a majority stake in a new joint venture with Crowley called Crowley Wind Services Holdings, which will operate and lease US port facilities to offshore wind developers.

PE firm Japan Industrial Partners has formed a joint venture, BostonGene Japan, with BostonGene, which offers molecular profiles for precise cancer treatment, and NEC Corp., an IT and network technology provider.

Phoenix Equity Partners has invested in Dublin-based managed IT services provider Nostra Technologies.

Exit & IPOs

French utility Engie has agreed to acquire Houston-based Broad Reach Power, a utility-scale battery storage developer started by EnCap Investments in 2019. Apollo Global Management, Yorktown Partners and Mercuria Energy will also exit through the $1-billion-plus transaction.

BPEA EQT has sold its remaining stake in Indian digital IT solutions and consulting services provider Coforge through a $924 million block trade.

US-based Synopsys has agreed to acquire German software provider PikeTec from ECM Equity Capital Management. The deal values PikeTec at more than $200 million, Bloomberg reported.

Fundraising

Blackstone has revived plans to launch a buyout vehicle, Blackstone Private Equity Strategies Fund, aimed at high-net-worth clients, the Financial Times reported.

Questa Capital has raised a $397 million growth-stage venture fund targeting connected medical device companies and value-based care, The Wall Street Journal reported.

Investors

European Investment Fund has signed an agreement with Lithuanian nonbank lender SME Finance to provide guarantees that will enable €40 million in new financing for small businesses in the Baltics, Finland and the Netherlands.

Chart of the Day

Source: PitchBook's 2023 Sustainable Investment Survey

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PitchBook News - Is fund family performance hereditary?

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