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The Daily Pitch: VC

September 28, 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:

Can LPs predict fund managers' cash flow timing to help allocation planning?

Our analysts find real estate fundraising is headed for a second straight year of declines

In the hole left by SVB's collapse, venture debt lender WTI is targeting a $600 million fund

Could mezzanine debt dethrone direct lending fundraising?

Ranking the 10 most active lenders in middle-market PE deals

Today's Top Stories

Predicting fund managers' cash flow timing to help allocation planning

LPs face a lot of uncertainty when it comes to the timing and size of the capital calls they'll need to fund and the distributions they'll receive, which is a major hurdle for allocation planning. But is there a pattern to each fund manager's cash flow?

Using PitchBook's new Cash Flow Timing Scores, our latest Allocator Solutions report tests whether historical cash flow data can be used to predict the timing of an individual GP's capital calls and distributions. The report also breaks down which asset classes show the strongest persistence to help LPs pursue a more informed portfolio management strategy.

read it now

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Cracks in real estate fundraising expand

Real estate fundraising is on track for a second straight year of declines. The nearly $67 billion in capital committed in the first half of 2023 lags last year's pace, according to our latest Global Real Estate Report, sponsored by Baker Tilly.

Meanwhile, a rebound in performance for publicly traded REITs has left some categories of private, closed-end real estate funds trailing behind. Our report covers the best- and worst-performing strategies and spotlights REIT M&A with an eye on take-privates.

read the report

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A message from Ontra

How private equity firms are using AI to compete

Private equity firms are always on the lookout for new ways to build a competitive advantage. The latest possibility is integrating AI tools into their fundraising, deal sourcing, and fund operations workflows.

Ontra's GM of Contract Automation, Frank Giovinazzo, sat down with Andrew Prodromos, Deputy GC and CCO at Insight Partners, and Christopher Stanton, Associate Professor of Entrepreneurial Management at Harvard Business School, to discuss how firms are capitalizing on AI while mitigating risk.

Ontra's on-demand webinar, "How Private Equity Is Gaining a Competitive Edge With Artificial Intelligence," covers:

Ways to achieve more with a lean team
Identifying processes ripe for automation
Assessing the impact of AI on an organization
Anticipating how AI will change legal work

Watch now

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Venture debt lender WTI targets $600M fund

(RyanJLane/Getty Images)

One of the longest-standing providers of venture debt to startups, Western Technology Investment is targeting $600 million for its latest fund, according to a regulatory filing.

Silicon Valley Bank's collapse in March rocked the venture debt market, and in the months since, banks and nonbank lenders have been jostling to fill the gap left behind. The market is still finding its footing as loan volumes fall.

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4 charts: Mezzanine debt surges and other global private debt trends

(Dougal Waters/Getty Images)

The terms private debt and direct lending are often used interchangeably, but the strategy is far broader. While direct lending continues to account for the biggest share of private debt fundraising, other fund types such as mezzanine and special situations are increasing their share of the market.

We put together four charts from our H1 2023 Global Private Debt Report to highlight how private debt continues to attract significant investor interest across multiple fund types.

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Singapore beats larger markets for VC funding per capita

Singapore (Buena Vista Images/Getty Images)

By a significant margin, Southeast Asian city-state Singapore has attracted the most venture funding per capita so far in 2023, among countries with more than $500 million in capital raised. The world’s largest VC ecosystem, the US, took second place, while six of the top 10 are European countries.

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Meet the top 10 lenders in middle-market PE

(Chiara Salvadori/Getty Images)

Who are the most active lenders to PE-backed companies in the middle market? To answer that question, we ranked lenders by the total number of loans they've issued to PE-owned companies so far this year.

The list reveals that private investment firms—including Audax Group and Ares Management—are the most engaged credit providers in this market.

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Recommended Reads

Target and Costco are having wildly different experiences with America's $41 billion shoplifting problem. [Business Insider]

FTX investors are back in the spotlight—as victims. [The Information]

The FTC's Lina Khan vs. Jeff Bezos: This is Big Tech's real cage match. [The New York Times]

Since yesterday, the PitchBook Platform added:

16

VC valuations

2823

People

582

Companies

11

Funds

See what our data software can do

The Daily Benchmark:
2012 Vintage Global PE Funds between $500M-$1B

Median IRR

12.54%

Top Quartile IRR

26.80%

1.09x

Median DPI

Select top performers

Clearlake Capital Partners III

Parthenon Investors IV

Genstar Capital Partners VI

*IRR: net of fees

25 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Slope, the developer of a B2B payments platform, has secured a $30 million investment led by Union Square Ventures.

Cybersecurity startup Lumu has raised a $30 million Series B round led by Forgepoint Capital.

Neara, the developer of an infrastructure modeling platform, has raised an additional $10 million for its Series B, bringing the round's total to $24 million. Prosus Ventures, Skip Capital and Square Peg Capital participated.

Power grid modernization startup Infravision has raised a $23 million Series A led by Energy Impact Partners.

Gem Security, a cloud cybersecurity startup, has raised a $23 million Series A led by GGV Capital.

Germany's Resourcify, which offers a waste management and recycling platform, has secured a €14 million Series A led by Vorwerk Ventures.

Vega, the provider of a wealth management platform, has raised $8.3 million from investors including Motive Partners, Picus Capital and Citi Ventures.

Rayon, a Paris-based developer of collaborative architectural design tools, has secured a €4 million seed investment led by Northzone Ventures and Foundamental.

Tune Insight, whose software enables secure collaboration on sensitive data, has raised $3.4 million in a round led by 14Peaks Capital.

What to expect at SXSW Pitch 2024

Venture capital may be in the midst of a tepid market, but the nine categories featured in SXSW Pitch 2024 show a lot of promise, according to our analysts.

Download our new report to discover what kinds of companies may join the ranks of Pitch alumni such as Siri, Tango, and Klout and to find out why the competition's fast-growing spaces hold so much potential.

Download now

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PE Deals

New Mountain Capital-backed HealthComp and Marlin Equity Partners-backed Virgin Pulse have agreed to merge. The deal for the combined health-plan administrator and digital wellness company is worth about $3 billion, The Wall Street Journal reported.

Football Australia may sell the rights to its men's and women's national soccer teams and its top division, the A-Leagues, to private equity for a period of 99 years, The Guardian reported.

Gryphon Investors plans to buy AirX Climate Solutions, which provides specialty HVAC systems, from L Catterton.

BV Investment Partners will acquire Half Helix and Tomorrow and merge the two Shopify platform service partners into one company.

The Brydon Group has acquired Focus Learning, which provides workforce training to the US commercial nuclear industry.

Pros is seeking a take-private deal amid profitability issues. The revenue-management software company, with a market value of around $1.7 billion, has rejected bids from several PE firms, Reuters reported.

Exit & IPOs

L Catterton-backed German footwear maker Birkenstock is preparing a roadshow next week for its US IPO, for which it seeks a valuation of $10 billion, Bloomberg reported.

CVC Capital Partners-backed DKV Mobility, a German payments company for fleet managers, is considering a Frankfurt IPO in early October with a valuation of more than €4 billion, Reuters reported.

Wind Point Partners has been seeking a buyer—potentially another PE firm—for Gehl Foods, a cheese sauce manufacturer, in a deal that could value the company around $600 million, Reuters reported.

Fundraising

BXVentures announced that it's launching a global climate-tech venture studio fund with a target of between $200 million and $250 million.

Investors

Consumer-focused VC firm Tiantu Capital is looking to raise up to HK$1.9 billion (around $240 million) in its upcoming Hong Kong IPO, according to reports.

Chart of the Day

"As consumer preferences have shifted toward single-occupancy vehicles in many metropolitan areas—particularly in the US—public transit agencies and operators have sought to improve ridership through new technologies. Since 2013, 61 VC-backed companies have entered the transit tech space, with $5.3 billion in investment."

Source: Emerging Sustainable Investing Opportunities: Transit Tech

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PitchBook News - Is GP cash flow timing predictable?

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