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The Daily Pitch: VC

September 11, 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:

The path forward for unicorns in a sluggish IPO landscape

How VCs are laying the tracks for self-driving freight trains

The dealmaking environment extends its investor-friendly streak

Today's Top Stories

Gauging the outlook for VC-backed IPOs

Dramatically higher interest rates and lower tech stock valuations have led to the most sluggish IPO environment in more than a decade. But Instacart and Klaviyo's recent IPO filings could end the drought.

Our latest analyst note lays out the potential next steps for unicorns. About 220 VC-backed companies should have listed since early 2022, and these businesses will likely rush to file their IPOs when the market improves. This will depend on Wall Street's reception of Instacart and Klaviyo. We also examine the balance between innovation, growth and profitability that many IPO hopefuls need to strike.

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A VC-backed freight train without a conductor

Startups are exploring the possibility of autonomous freight trains for the US rail network, according to our latest Emerging Tech Research.

Rail accounts for just 2% of transportation emissions, and it's nearly four times more energy-efficient to move cargo by train than by truck. Innovations in battery-electric rail cars, including by a cohort of former SpaceX engineers, and remote operation are laying the groundwork for the future of freight travel.

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A message from Ontra

Experts discuss AI for private equity

Private equity is heavily focused on AI lately—and with good reason. AI has the potential to transform workflows associated with fundraising, portfolio investment, and fund operations.

However, the industry's interest is tempered by fear of the unknown. What are the limitations? What are the risks?

Ontra's Chief Product Officer Nat Kunes dove into these questions and others with the help of Dr. Megan Ma, Assistant Director of the Stanford Program in Law, Science, and Technology and the Stanford Center for Legal Informatics (CodeX).

Watch their conversation in Ontra's on-demand webinar, "The Promise, Pitfalls, and Practical Application of AI in Private Markets."

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Startup supplies run low

(Drew Sanders/PitchBook News)

The VC market has continued its rapid march into investor-friendly territory in Q3, our VC Dealmaking Indicator shows. The biggest shift in recent months has been a declining capital supply, which has left cash-hungry startups with fewer options for new investment. All signals indicate the later stage is more investor-friendly than at any other point since 2010.

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For public and private alternative asset managers, GP stakes are back

The firms that manage money in the alternative assets industry saw strong growth in Q2 2023, but it wasn't driven by fundraising, capital deployment or fund performance.

Stakes in GPs changed hands at a brisk pace in Q2. Nearly half of them were controlling stakes, and the other half represented minority stakes acquired by dedicated GP stakes funds.

PitchBook's Q2 2023 US Public PE and GP Deal Roundup pulls together insights on the seven largest US-listed alternative asset managers as well as stakes taken in privately owned managers.

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Recommended Reads

Tennis, anyone? A former star applies lessons from the sport to private equity. [Institutional Investor]

The instant oral history of "Trench Foot Burning Man": Tech pros tell their personal survival stories from this year's mud-stuck desert bacchanal. [The Information]

US retail workers are quitting, facing low pay, crime and long hours. [Bloomberg]

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VC Deals

Brine, a Bengaluru-based decentralized finance startup, has raised $16.5 million in a round led by Pantera Capital.
Fintech startup Tradeteq has raised a $12.5 million Series A led MS&AD Ventures.
Inari, an insurtech startup, has raised a $5.2 million seed round led by Caixa Capital Risc.
Roseman Labs, a Dutch developer of secure computation software, has raised a €4 million seed round from Matterwave Ventures, Spacewalk VC and NP-Hard Ventures.

PE Deals

Warburg Pincus and Prudential Financial have launched life and annuity reinsurance company Prismic Life Reinsurance, based in Bermuda. Warburg, Prudential and other investors committed $1 billion in equity to Prismic.

Ares Management has led a $550 million growth equity round for global cruise line Virgin Voyages, with additional participation from Bain Capital and Virgin Group.

Biobest, a Belgian provider of crop protection products majority owned by Floridienne, has raised about €400 million from Tikehau Capital, M&G Investments and others. The funds will be used to acquire Brazilian agtech company Biotrop, which Biobest agreed to buy from GIC and Aqua Capital for €532 million.

Transition Equity Partners and others have invested $189 million in Trinity Gas Storage, a natural gas storage facility under construction in Texas. Other investors included Pan Capital Management, Abrdn, SailingStone Capital Partners and Rice Investment Group.

Legacy Food Group, backed by Quad-C Management, has acquired four distribution companies: Keck's Food Service, M&V Provisions Co., Thomsen Foodservice and Legacy Foodservice Alliance.

Bocap has backed Younite-AI, a developer of AI and extended reality software. The investment came via Bocap SME Achievers Fund III.

Exit & IPOs

TPG has agreed to sell its majority stake in Hollywood talent agency Creative Artists Agency to French billionaire Francois Pinault's holding company Artémis. Financial details were not disclosed, but Bloomberg previously reported a valuation of around $7 billion.

Vista Equity Partners and Clearlake Capital have been considering selling EagleView Technologies in a deal that could value the aerial imagery provider at around $2 billion, Reuters reported.

Quantum Energy Partners-backed 547 Energy has sold solar, wind and battery storage developer ConnectGen to Spanish energy company Repsol for $768 million.

Fundraising

Cerea Partners, a food and beverage-focused investor based in Paris, has closed Cerea Mezzanine IV on €300 million. The fund is 50% larger than its predecessor.

MUFG Innovation Partners, the VC arm of Japan's Mitsubishi UFJ Financial Group, has launched a 20 billion yen (around $136 million) fund that will target overseas startups that focus on AI, Nikkei reported.

Investors

Werfen, a Spanish medical diagnostics company, has launched its own VC arm, We Venture Capital, which will focus on investing in diagnostics startups, as well as digital solutions and biotechnology in the diagnostics space.

Chart of the Day

Source: PitchBook's Q2 2023 US VC Valuations Report

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