PitchBook News - China's VCs take shelter

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The Daily Pitch: VC

September 18, 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 Greater China Venture Report unpacks the state of VC in the region

VC funding for female founders holds steady

How cultivated protein can drive positive social and environmental impact

777 agrees to add Everton FC to its soccer team portfolio

Today's Top Stories

China's VCs take shelter

Venture investment in China continued to retrench in the first half of 2023 as startups and investors grappled with socioeconomic and geopolitical headwinds, our Greater China Venture Report shows.

The difficult fundraising climate, a decline in exits and dwindling capital availability have caused GPs to slow the pace of capital deployment into the market. In addition, foreign investor participation has continued to drop—partly due to questions on whether the Chinese government will continue to support foreign capital for high-growth sectors.

Our report is available in English, traditional Chinese and simplified Chinese. Takeaways include:

$26.7 billion was invested across 3,072 deals in H1 2023, on track for a 31.4% drop in deal value from 2022.

Just 10% of Chinese VC deals in H1 included an investor based outside the region—the lowest recorded figure.

read the report

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Funding levels remain consistent for female founders

(Julia Midkiff/PitchBook News)

US VC funding for female-founded startups remains at roughly pre-pandemic levels with Q3 drawing to a close soon, according to our US VC female founders dashboard.

Startups with at least one female founder garnered $1.9 billion across 212 deals in August, in line with recent monthly totals. Dealmaking has stayed relatively consistent throughout 2023 and activity in Q3 looks to continue that trend.

In August, startups in the healthcare devices and supplies sector raised the most money among startups with at least one female founder, including a $100 million Series D for medtech developer Beta Bionics.

explore the dashboard

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Cultivated meat as a sustainable investing opportunity

VCs have thrown $4.8 billion at companies in the cultivated protein space over the last decade as investors pay greater heed to the potential financial, environmental and social upsides of meat alternatives. The debut piece in our Emerging Sustainable Investing Opportunities analyst note series dives into how cultivated protein may drive dividends for VCs and their sustainability goals in the future.

As consumer demand grows for sustainable protein that still tastes like hanger steak or Alaskan wild salmon, cultivated meat providers will likely have a competitive advantage over their plant-based meat rivals. Plus, the IP of early cultivated meat technology itself has strong ROI potential.

read it now

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PE piles into battery storage sector

(Yuichiro Chino/Getty Images)

Private equity's investment in battery storage has been increasing in recent years, coinciding with a move to clean energy and increased use of electric vehicles.

Given the intermittent nature of renewable energy sources such as wind and solar, storing the energy produced by these assets is key to preventing fossil fuels from being used to supplement shortages and reducing the cost of vehicle charging.

Recommended Reads

Goldman Sachs is offering rich clients access to a unique investment: the chance to own a piece of a private sports team. [The Wall Street Journal]

Private funds are preparing to spend billions on compliance after the SEC's recent decision. [Financial Times]

From spinout to soonicorn: 19 European companies on the cusp of $1 billion valuations. [Sifted]

Since yesterday, the PitchBook Platform added:

1

VC valuations

78

People

6

Companies

See what our data software can do

The Daily Benchmark:
2016 Vintage North American Secondaries Funds

Median IRR

22.31%

Top Quartile IRR

26.05%

0.79x

Median DPI

Select top performers

Industry Ventures Special Opportunities Fund III

Timber Bay Fund I

Industry Ventures Secondary VIII

*IRR: net of fees

20 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

People

Nicole Musicco, the chief investment officer of Calpers, will step down this month after less than two years in the role. Deputy Chief Investment Officer Dan Bienvenue will serve as interim CIO.

VC Deals

Munich-based defense AI startup Helsing has secured a €209 million Series B led by General Catalyst.

Revel, a Madrid-based provider of car subscription services, has raised €115 million from investors including KKR and Santander.

São Paulo-based motorcycle rental company Mottu has raised a $50 million Series C led by QED Investors and Bicycle Capital.

HyperJar, which offers a money management app, has secured a $24 million Series A led by Susquehanna Private Equity Investments.

Singaporean medtech specialist Awak Technologies has raised more than $20 million in a Series B led by Lion X Ventures and Vickers Venture Partners.

Don't miss our upcoming webinar

Given shaky investor sentiment and prolonged regulatory tightening, many industry players wonder what's ahead for US PE in Q4. While banks have been slow to commit to new loans, syndicated LBOs picked up steam in H1 and are forecast to continue in Q4. PitchBook analysts will revisit forecasts made at the beginning of the year with updates from our 2023 US Private Equity Outlook: H1 Follow-Up. Key topics include:

PE exits remain muted but the bid-ask spread has narrowed, and pressure is building for an M&A recovery.

PE returns have underperformed public market returns year-to-date.

Take-private activity, contingent on debt availability, has seen deal sizes shrink.

Resister now to secure your spot.

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PE Deals

Pollen Street Capital-backed UK insurer Markerstudy has agreed to acquire Ardonagh Group's personal insurance business Atlanta Group with additional backing from Bain Capital. Ardonagh will retain a minority stake in Atlanta Group, which is valued at £1.2 billion.

Toshiba's largest shareholder, Effissimo Capital Management, intends to sell its 9.9% stake in the Japanese conglomerate, Reuters reported. The sale would form a part of Japan Industrial Partners' $14 billion takeover bid for the firm, launched last month.

BlackRock Capital Investment Advisors and PNC Bank have invested $350 million in South Carolina-based Nephron Pharmaceuticals, which develops and produces inhalation solutions.

Quad-C Management has invested in Vortex Companies, a Platform Partners-backed business that provides products and services that assist with rehabilitating failing infrastructure.

Bernhard Capital Partners-backed power plant servicer Allied Power Holdings has acquired Dominion Engineering, which provides equipment, technology and engineering services to the nuclear power industry.

Exit & IPOs

Southern Cross Group has agreed to sell its 100% equity stake in Esmax, a Chilean fuels and lubricant distributor and retailer, to Saudi energy giant Aramco. Southern Cross acquired Esmax from Petrobras for an estimated $490 million in 2016.

EnCap Investments has been seeking a buyer for Portland-based US wind power developer Triple Oak Power, for which a deal could be finalized in October, PE Hub reported. Other backers include Yorktown Partners and Mercuria Energy.

Brookfield Property Partners is in talks with several of its limited partners about the sale of a stake in UK holiday villages operator, Center Parcs, Sky News reported. Several months ago, it was reported that CVC Capital Partners, KSL Capital Partners and GIC were pursuing an LBO of the company.

Investors

The Rockefeller Foundation will invest more than $1 billion over the next five years in the global climate transition through grants, VC investments and more. In 2020, the foundation said it would divest its $5 billion endowment from fossil fuels.

Abu Dhabi-based Chimera Investments is launching Lunate, an alternative investment fund with more than $50 billion in AUM, according to reports.

Chart of the Day

Source: Q2 2023 US PE Middle Market Report

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PitchBook News - China's VCs take shelter

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Healthtech startups strain against funding woes

Examining US investments in China

Foodtech's changing fortunes

Fortune favors the middle market

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