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The Daily Pitch: VC

October 19, 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 European Venture Report breaks down the trends shaping the continent's VC dealmaking, fundraising and more

2023's total VC exit value is on track to notch the second-worst year in a decade

What's the status of cloud gaming in light of Microsoft's Activision Blizzard deal close?

Our Q3 2023 US PE Breakdown examines effects of the exit doldrums, plus fundraising and deal trends

VC deals involving UK university spinouts have dried up—politicians hope to help

Today's Top Stories

Europe's VC market sees uptick in deal value

VC deal value in Europe has grown for the third consecutive quarter, but 2023's total is likely to fall far short of recent years.

Our Q3 2023 European Venture Report shows that startups have raised €43.6 billion in the first nine months of the year—nearly 50% lower than in the same period in 2022. While the drop is significant, this year's total deal value is on track to reach pre-2021 levels, signaling that Europe's VC market has still experienced long-term structural growth.

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Recent IPOs won't pull 2023 out of VC exit value trough

(Tyler Sayre/Getty Images)

Thanks to Klaviyo and Instacart's high-profile IPOs, Q3 had the strongest VC exit value since Q4 2021. But those public debuts have not made a major difference to VC' big problem: a lack of cash returns. Despite realizing $35.8 billion in liquidity during this most recent quarter, 2023 is on track to be the second-worst year in a decade for exits.

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A message from Rho

How this trailblazer saves $100K a year switching spend management to Rho

Dr. Squatch's record-setting growth—a standout in the hypercompetitive CPG space—forced its already lean finance team to reevaluate its previous patchwork spend management system that made expense tracking and transaction coding difficult to scale.

Their secret to continued success: centralized financial operations. Bring all spend management into the Rho platform, synced directly to NetSuite, automating expense management and reconciliation while unlocking better capital efficiency as the company looks to grow sustainably.

"Rho's platform and unique credit underwriting model have transformed our finance operations … it's about doing more with less. With Rho, each of our finance team members can achieve the output of 10."—Dr. Squatch

Learn how Rho boosts operational efficiency 10x while driving cost savings.

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Analyzing the ups and downs of cloud gaming

When the UK's Competition and Markets Authority halted Microsoft's buyout of Activision Blizzard in April, the agency cited concerns for a monopoly in the still nascent cloud gaming ecosystem. With the deal now closed, our latest analyst note provides an analysis of the strengths, weaknesses, opportunities and threats within the sector.

VC investment has only gone up, with most investors betting on infrastructure to enable new ways to play video games. In the age of streaming, will cloud gaming catch on by leveraging this infrastructure, or will it wither amid consumer apathy?

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On PE's capital highway, slower traffic and far fewer exits

In a reversal from Q2, exits—the most important link in the private equity value chain—were weaker in Q3 than almost any quarter since the global financial crisis. More than anything, tight monetary conditions are to blame. Our Q3 2023 US PE Breakdown, sponsored by Stout and Barings, explains who's still buying and selling and what could pull the industry out of its exit doldrums. 

As fund managers weigh exit options, new off-ramps are likely to emerge in the form of secondaries and continuation funds.

Fundraising has fared better than expected, with new PE commitments tracking down 12% from record-breaking 2022.

Growth deals could outnumber LBOs this year for the first time, while corporate carveouts shine for their superior bankability.

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Can UK parties give a boost to university spinout companies?

(joe daniel price/Getty Images)

The UK's Labour party has announced several new policies to increase the number of university spinouts as VC funding dries up. The Conservative government is also looking at the problem.

Despite housing over 1,700 spinouts, only 84 VC deals involving these companies have closed this year in the UK.

Recommended Reads

The rise—and fall—of healthtech startup Babylon. [Sifted]

Brazil is embracing the migrant crisis that everyone else wants to avoid. [Bloomberg]

Does private equity need a new talent strategy? [Harvard Business Review]

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VC Deals

San Francisco-based geospatial analytics startup Hayden AI raised a $53 million Series B led by Drawdown Fund.

HqO raised a $50 million Series D led by Koch Real Estate Investments for its real estate platform.

Paris' Hivebrite secured a $37 million Series B led by Quadrille Capital for its community management platform.

Darwinium raised an $18 million Series A led by US Venture Partners. The cybersecurity and fraud prevention startup is based in San Francisco.

Luzia raised €9.5 million from investors including Khosla Ventures, Abstract Ventures and FJ Labs. The Madrid-based company offers an AI assistant.

Barcelona's Flanks, which automates wealth management services, secured an $8 million Series A led by Earlybird Venture Capital.

Stockholm-based climate fintech startup Cloover secured a €7 million pre-seed investment led by 9900 Capital.

Gero, a Palo Alto-based biotech startup, raised a $6 million Series A extension led by Melnichek Investments.

Apartool, which offers a temporary accommodation platform for corporate travel, raised a €5.5 Series A led by Roch Ventures and Barlon Capital.

PE Deals

Australia's Mirvac Group, alongside Pacific Equity Partners and Tasman Capital Partners, will purchase land lease operator Serenitas from GIC as a joint venture for about $642 million, Reuters reported.

London-listed Kin & Carta agreed to a take-private by a company formed by Apax Partners for roughly $247 million.

L Catterton-backed fitness company Hydrow is in talks to buy Cityrow, a rowing machine competitor, Bloomberg reported.

Vendor management specialist Gatekeeper received a strategic growth investment from Vista Equity Partners.

CVC Capital Partners is considering a bid to acquire Nexi, a European payments services provider.

Portfolio Companies

Fintech company Plaid has hired its first chief financial officer, former Expedia executive Eric Hart.

Exit & IPOs

Cinven plans to put luxury shoe brand Kurt Geiger up for sale for an expected $400 million, Sky News reported.

CVC Capital Partners is planning an Amsterdam IPO as soon as next week, the Financial Times reported.

Fundraising

Gridiron Capital raised $2.1 billion for its fifth flagship buyout fund, The Wall Street Journal reported.

Longpoint, a Boston-based real estate firm, closed its third fund on $940 million.

Pfingsten, a Chicago-based PE firm focused on the lower middle market, raised $435 million for its sixth fund.

Hamilton Lane closed two small-business credit funds, one focused on New York and one on the wider US, on $290 million total.

Utah-based seed-stage investor RevRoad Capital closed on $61 million for its first fund.

Chart of the Day

Source: Q3 2023 PitchBook-NVCA Venture Monitor

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PitchBook News - Cloud gaming's moment under microscope

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