PitchBook News - Can VC rebound before a recession?

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The Daily Pitch: VC

September 21, 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:

Recent IPOs have raised the possibility of a softer landing for the VC industry

GPs confront the rising costs of capital call credit lines

VCs explore the deep-sea mining space, even as costs and risks may outweigh the benefits

How is VC investment in crypto exchanges faring one year after FTX's collapse? Not well.

Our France Market Snapshot tells a tale of two markets for PE and VC dealmaking

Today's Top Stories

Volatility continues to cloud the venture market

Inflation rates are stabilizing, and recent IPOs have brought hope that a pickup in the exit market may be around the corner, raising the possibility that the VC industry is headed for a softer landing than pessimists predicted. But that's not to say the skies are clear: Our recession model still pegs the probability of a recession at 73%, and high interest rates still make less-risky alternatives to venture more attractive to asset managers.

With over 30 charts, our VC-focused Q3 2023 Quantitative Perspectives: Turbulence on the Approach peers into the state of the industry and what the future could hold as the IPO window slowly reopens.

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Scraping the seabed for critical minerals

In what may be the new frontier for mining, some $860 million has been invested in deep-sea mineral extraction technology, which has applications that span the electronics, energy, aerospace and construction industries, according to our latest Emerging Space Brief.

But the technology, backed by investors including Allseas Group, Camar and Y Combinator, has high upfront costs and risks significant ecological disruption that divides the emerging market. Seabed mining is likely to prompt a closer eye by environmental regulators as it scales. Before the startups innovating in deep-sea mining can reach commercial viability, lots of water will need to pass under the bridge.

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Resource: Top ESG KPIs organized by industry

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FTX effect: Crypto exchange VC deals on pace for 97% decline

(Drew Sanders/PitchBook News)

The rise of fall of cryptocurrency exchange FTX played out like a rollercoaster ride. Now a year after its collapse, cryptocurrency exchange startups have struggled mightily to climb back to the heights they once reached.

VC investment is on track for a decline of 97% this year relative to 2021, and several have gone out of business or come under regulatory scrutiny. As one investor puts it: "The exchanges are under attack."

Recommended Reads

KKR's approach to the Simon & Schuster deal shows how private equity can do good. [Slate]

One writer argues that Instacart and Klaviyo's IPOs will help the late-stage VC market, but only for some companies. [The Wall Street Journal]

Language was long understood as a human-only affair. New research suggests that isn't so. [The New York Times]

Since yesterday, the PitchBook Platform added:

25

VC valuations

2488

People

584

Companies

22

Funds

See what our data software can do

The Daily Benchmark:
2019 Vintage Global Debt Funds

Median IRR

10.70%

Top Quartile IRR

14.92%

0.34x

Median DPI

Select top performers

Inveready Venture Finance III

Origami Opportunities Fund IV

Chambers Energy Capital IV

*IRR: net of fees

79 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Surgical robotics company CMR Surgical has raised $165 million from investors including Cambridge Innovation Capital, Lightrock and SoftBank's Vision Fund 2.

AI healthcare startup Corti has raised a $60 million Series B led by Prosus Ventures and Atomico.

MotherDuck, the developer of a data analytics platform, has raised a $52.5 million Series B led by Felicis.

Cybersecurity startup Legit Security has raised a $40 million Series B led by CRV.

Vivante Health, a biotech startup specializing in digestive health, has raised a $31 million Series B led by Mercato Partners.

India's Kuku FM, which offers an audio content platform, has secured a $25 million Series C led by Fundamentum Partnership and International Finance Corporation.

Tankfarm, a propane distribution specialist, has secured a $23 million Series B.

Fernride, a Munich-based autonomous trucking company, has raised an additional $19 million for its Series A, bringing the round's total to $50 million. Investors included Deep Tech & Climate Fonds, Bayern Kapital and Munich Re Ventures.

BeDimensional, an Italian producer of graphene and other two-dimensional crystals, has raised €5 million in a round led by Eureka! Venture.

PE Deals

Premier League soccer team Chelsea Football Club has raised about $500 million from Ares Management, the Financial Times reported.

Toshiba has announced that Japan Industrial Partners' $14 billion tender offer to take the Japanese conglomerate private is "forecasted to be successful," according to a report from the buyer.

IK Partners has taken a co-controlling stake in French metrology technology company Metrology & Monitoring Solutions Group.

The Ontario Teachers' Pension Plan has agreed to acquire KKR and other shareholders' stakes in GreenCollar, an Australian environmental markets project developer and investor.

Goldman Sachs is in talks to sell consumer loan company GreenSky to a consortium including Sixth Street, Pacific Investment Management and KKR for around $500 million, according to reports.

Fundraising

Goldman Sachs Asset Management has secured more than $15 billion for its private markets secondaries funds, raising $14.2 billion for its Vintage IX and $1 billion for its Vintage Infrastructure Partners fund.

Blue Sea Capital has closed its third flagship fund on $618 million.

Humble Growth, a consumer-focused growth equity firm, has raised more than $312 million for its debut fund.

Investors

CVC Capital Partners is looking to hold an initial public offering, possibly in Amsterdam, as soon as November, Bloomberg reported.

Corporate M&A

British car retailer Pendragon has rejected a $486 million buyout proposal from PAG International and Hedin Mobility Group, its largest shareholder.

Chart of the Day

"While many postquantum cryptography startups are nascent and dependent on grants for funding, some like ArQit have reached billion-dollar valuations through unconventional routes such as SPAC mergers. The industry's future leaders are expected to emerge from those who have a hand in shaping the standards."

Source: 2023 Emerging Space Brief: Postquantum Computing

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PitchBook News - Can VC rebound before a recession?

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