Healthtech startups strain against funding woes

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The Daily Pitch: VC

September 13, 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:

Our Digital Health and Healthcare IT reports cover the healthtech startups that could draw funding in coming quarters

JP Morgan's Melissa Smith on the SVB crisis, venture debt and startup survival

Instacart's IPO price target shows revenue multiples of formerly VC-backed companies have cratered

Warburg Pincus dips into its own capital to strengthen its insurance foothold

Four charts showcase the key trends shaping the UK's VC market

Today's Top Stories

Healthtech startups strain against flagging funding

As the venture capital dollars flowing into digital health have slowed, startups focused on behavioral health (predictably) and general telehealth (not-so-predictably) still attracted nine-figure rounds in Q2.

The capital-raising environment looked a bit rosier for healthcare IT as health systems' finances, and capacity to invest, improved in recent months. In that sector, the Centers for Medicare and Medicaid Services' willingness to reimburse providers for novel methods of care is steering attention from investors.

For insights into the startups that could get funded in coming quarters, check out our latest reports on Healthcare IT—with a crucial update on generative AI, which attracted $250 million in the sector in Q2—and Digital Health—which features the challenges facing digital therapeutics.

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Q&A: JP Morgan's strategy to become the venture bank to beat

JP Morgan's Melissa Smith
(Caroline Suttie/PitchBook News)

A tough environment for startups is prompting investors and lenders alike to offer different advice than founders might be used to hearing.

Such as: Take what capital you can get—in a down round, for example—and live to fight another day.

That's the advice that Melissa Smith, managing director at JP Morgan and co-head of its innovation economy unit, gives to founders now. Smith sat down with PitchBook to discuss the Silicon Valley Bank crisis, venture debt and fears of a startup doomsday.

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A message from G-P

Tips to improve employee retention while staying competitive

While advancements in tech have made it easier than ever to recruit top-tier employees globally, retaining talent is another story. An estimated 61% of employers currently find talent retention to be a top issue,¹ which is why leaders must adopt new strategies and plan talent-first initiatives to secure key team members in this competitive market.

Rather than attempt to shield employees from other opportunities, focus on improving company procedures, culture, and employee career growth.

Read G-P's eBook, Retention Roadmap: Ways to Reduce Talent Turnover in 2023, which provides insight, tools, and strategies to ensure your company is set up for retention success!

1: "2021 Talent Attraction and Retention Survey," WTW, September 16, 2021.

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Instacart's IPO price target delivers startups a dose of reality

(Justin Sullivan/Getty Images)

Instacart's IPO is seen as a bellwether for public investors' demand for startups.

So far, it's telling the entrepreneurial world what was already obvious—that revenue multiples of formerly VC-backed companies have cratered as investors lack faith in their growth.

Instacart is targeting an IPO valuation of up to $9.3 billion on a fully diluted basis, 76% below its last $39 billion private market valuation and a fraction of what it would have received if the company had gone public in 2021.

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Hamilton Lane appoints CEO successors

(Ryan Poole/Getty Images)

Hamilton Lane has appointed two long-time executives to replace its current CEO next year, a product of a calculated succession plan.

The multibillion-dollar private market asset management firm announced yesterday the appointment of Erik Hirsch and Juan Delgado-Moreira as co-chief executive officers, replacing Mario Gianni, who held the position for the past 22 years. The appointment will go into effect Jan. 1, 2024.

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Gloomy skies: UK H1 2023 VC trends in 4 charts

(TomasSereda/Getty Images)

The UK's venture market has been under pressure this year, and dealmaking is unlikely to reach last year's numbers.

Take a look at four charts from our 2023 UK Private Capital Breakdown to see how the country's venture market has progressed so far.

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Warburg Pincus' latest bet on insurance uses its own capital

(PM Images/Getty Images)

Warburg Pincus upped its bet on the insurance industry through a new collaboration with US insurance behemoth Prudential Financial.

Together with a group of investors, the two firms committed $1 billion of initial equity investments to launch a Bermuda-based reinsurer.

The transaction will enable Warburg Pincus to strengthen its foothold in the insurance industry and grow AUM. It will also allow Prudential to release capital and focus more on its investment management business.

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The Growth and Evolution of Private Markets—Research Report

The finance industry is undergoing a significant transformation. Several major trends are reshaping the space and opening new possibilities for investors and companies.

Get ahead of the trends with Apex's latest insights report, supported by PitchBook data. Apex experts explore how these new dynamics will impact investors and the market, giving you the facts, and insights, you need to navigate challenges and opportunities for your firm.

What insights can you expect from the report?

Exploring fundraising challenges
Ways to unlock opportunities
Trends in changing investor bases
ESG, fintech and new asset classes
Practical takeaways for fund management
Data insights from the numbers

To find out more, download the Apex Research report on the Apex Group website here.

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VC Deals

Lithium battery maker Lyten has raised a $200 million Series B led by Prime Movers Lab.

Enfabrica, a startup developing networking chips for AI workloads, has raised a $125 million Series B led by Atreides Management.

Construction-tech startup Mighty Buildings has raised $52 million in a round led by Wa'ed Ventures and Bold Capital Partners.

Conversational AI company Druid has raised a $30 million Series B led by TQ Ventures.

CertifID, a company that works on wire fraud protection, has raised a $20 million Series B led by Arthur Ventures.

Estonia's Binalyze, which offers a digital forensics and incident response platform, has secured a $19 million Series A led by Molten Ventures.

Bold, a virtual exercise company, has raised a $17 million Series A led by Rethink Impact.

Milan-based fraud prevention specialist Cleafy has raised €10 million in a round led by United Ventures.

Zurich-based Ascento has secured $4.3 million in a round led by Wingman Ventures and Playfair Capital. The startup provides robotic guards and AI software to patrol outdoor spaces.

Astrape Networks, a Dutch startup using photonics to build faster optical networks, has raised €1.6 million in pre-seed funding from investors including PhotonDelta and Brabant Startup Fonds.

PE Deals

Pension fund AustralianSuper has agreed to acquire a minority stake in Vantage Data Centers' Europe, Middle East and Africa business for €1.5 billion.

Genstar Capital-backed Cetera Financial Group has agreed to acquire Nasdaq-listed Avantax, which offers tax-focused financial planning solutions, for $26 per share in cash, valuing the company at roughly $1.2 billion.

HIG Europe has made a £293 million bid for UK-listed delivery company DX Group that the company has recommended to its shareholders.

Thoma Bravo-backed data analytics company JD Power has agreed to acquire Autovista Group, a European and Australian automotive data provider, from Hayfin Capital Management.

Bregal Sagemount has made a growth equity investment in Bradford Airport Logistics.

FPE Capital-backed UK software company NoBlue2 has acquired sector peer BrightBridge Solutions.

Tikehau Capital has invested in sustainability and solutions company Anthesis along with The Carlyle Group.

Ambienta-backed Italian trust software provider Namirial has agreed to acquire financial services digital solutions company Unimatica from RGI, an insurance software specialist.

Portfolio Companies

Direct air carbon capture company CarbonCapture has received an equity investment from Amazon's Climate Pledge Fund.

Fundraising

HIG Capital has closed HIG Middle Market LBO Fund IV on $5.5 billion. The fund targets control investments in complex situations in the US middle market.

PE firm BV Investment Partners has raised $1.75 billion for its 11th fund, which tends to invest in tech companies alongside founders, management and families.

Sierra Ventures has raised $265 million for its Fund XIII, focusing on early-stage B2B companies.

NordicNinja, a Helsinki-based early-stage VC firm, has announced a €200 million fund to back climate-tech and deep-tech startups.

9900 Capital has raised a $100 million fund targeting seed to Series B investments in US and European startups.

Investors

London-based Arjun Infrastructure Partners has been considering selling a portion or a majority stake in the firm, Bloomberg reported. The middle-market PE firm has more than €5.5 billion in AUM.

Chart of the Day

Source: Generative AI in E-Commerce

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Healthtech startups strain against funding woes

The Growth and Evolution of Private Markets—Research Report

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