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The Daily Pitch: VC

October 30, 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:

Distressed debt GPs foresee more troubled companies, a boost for fund returns in 2024

Analysts find generative AI may be able to recharge the information security sector

In ranking the 10 largest enterprise software PE deals, take-privates lead the pack

We asked four VCs which immigrant-founded startups are the ones to watch

Today's Top Stories

Can generative AI give information security a jump-start?

VC funding for the information security sector remains flat, with $2.3 billion invested across 135 deals in Q3, according to our latest Emerging Tech Research.

Generative AI may be able to charge up the stagnant space. Tech leaders, while excited about the AI boom, are also concerned about security and compliance risks associated with large language models—leading to a crop of startups adapting and offering new tools.

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Nvidia bets on next-generation chip manufacturing in its VC spending spree

(Justin Sullivan/Getty Images)

NVentures, Nvidia's corporate venture arm, has teamed up with prominent climate investor Capricorn to lead a $99 million Series C for a startup that uses 3D printing to replicate metal parts without the high carbon footprint typical in manufacturing.

The investment in Seurat Technologies is the latest in a string of startup bets by Nvidia. Emboldened by the explosion of interest in chips for AI technology and riding high on blockbuster earnings, the semiconductor giant has been on the hunt for venture deals, especially in verticals with potential future applications for the semiconductor industry.

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Get SVB's latest insights on private equity trends

Find out what SVB's proprietary survey and fund data reveal about how PE/VC firms are navigating headwinds.

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Distressed debt investors prepare for 2024 opportunities

(Blackstation/Getty Images)

The performance of distressed debt funds slipped in recent years due to a lack of investment opportunities. However, some fund managers expect a booming supply of distressed assets in 2024 as more corporate debts mature.

Higher interest rates and tight credit conditions will hinder borrowers' ability to service debt and impede their refinancing efforts, further aggravating worries about the accumulation of risky corporate debt coming due for repayment.

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Startup Radar: VCs on immigrant-founded startups you need to know

(Tang Ming Tung/Getty Images)

Immigrant entrepreneurs are responsible for over half of US unicorns. What's more, nearly two-thirds of US billion-dollar startups were founded or co-founded by immigrants or their children, according to research by the National Foundation for American Policy.

We asked four VCs which startups founded by immigrants are the ones to watch.

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Take-privates dominate top PE-backed enterprise software deals

(Andriy Onufriyenko/Getty Images)

Massive take-privates have been propping up private equity activity in enterprise software.

While global PE deal value in the business-centered software arena is down from its 2022 peak of $138.8 billion, investors are remaining active with $58.3 billion in total value in 2023, spearheaded largely by a number of large-scale take-privates.

We've compiled a list of the 10 largest PE deals in software enterprise in 2023, with take-privates holding the top spots.

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Antitrust enforcement comes for the little guys

Newly proposed antitrust rules in the US could bring scrutiny to smaller M&A—not just big-time, industry-shifting deals. The changes would lower market concentration thresholds for monopoly scrutiny and broaden the definition of competitive harm, shifting the status quo for strategic buyers and PE alike.

Our recent analyst note explores whether changes to antitrust policy and enforcement could affect the M&A market: More deals could get blocked, but concessions to regulators could also amp up corporate divestitures.

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Recommended Reads

How a lawsuit against a small VC firm is provoking outrage, new DEI strategies—and renewed commitment. [Institutional Investor]

In Yellowstone National Park's Old Faithful, researchers discovered an extraordinary diversity of microbial life. [The New York Times]

Electric vehicle deals and funds have helped boost Detroit's venture ecosystem. [The Wall Street Journal]

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The Daily Benchmark:
2015 Vintage Global Debt Funds

Median IRR

8.20%

Top Quartile IRR

10.67%

0.89x

Median DPI

Select top performers

AAVIN Mezzanine Fund

ICG Europe Fund VI

TA Subordinated Debt Fund IV

*IRR: net of fees

75 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Eavor, a Calgary-based geothermal energy startup, raised C$182 million (about $133 million) led by OMV.

Abridge raised $30 million led by Spark Capital for its clinical-documentation generative AI technology.

Seattle-based solar sales startup Omnidian raised $25 million with participation from Activate Capital, Wind Ventures and HSBC Asset Management and others.

UK-based embedded finance platform Railsr has raised $24 million from investors including D Squared Capital and Moneta Venture Capital, Sky News reported.

Inlyte Energy, a grid battery startup, has raised an $8 million seed round led by At One Ventures.

Memox, a Zurich-based provider of meeting and conference rooms, has closed a €2.8 million Series A led by Swiss Prime Site and Fortyone.

London-based travel ecommerce specialist InterLnkd has secured €1.1 million in a round led by Vanneck.

PE Deals

Ares Management is leading a preferred equity investment in Consolidated Precision Products, a US-based aerospace parts manufacturer owned by Warburg Pincus, Bloomberg reported.

Nexus Capital Management has purchased California-based male grooming products company Dollar Shave Club from Unilever.

Apollo Global Management-backed HarbourView Equity Partners bought the rights to Fleetwood Mac star Christine McVie's music catalog.

Sheridan Capital Partners launched an Atlanta-based physician practice manager, Ascend Plastic Surgery Partners, which has five plastic surgery practices and two medspas in the US.

Software-focused PE firm Performant Capital acquired Los Angeles-based SquadUP, a white-label event management, ticketing and audience engagement business.

South Korea's Pine Tree Investment has completed its acquisition of Diageo's whisky subsidiary Windsor Global.

Portfolio Companies

VC-backed Spanish supply chain finance company Twinco Capital secured a €50 million debt facility from BBVA Spark.

Exit & IPOs

Silver Lake and Thoma Bravo-backed SolarWinds is considering a sale, Bloomberg reported. The Austin-based software company went public on the NYSE in 2018.

Logistics company Flexport is considering buying Convoy's trucking technology after the startup ceased operations this month, The Wall Street Journal reported.

Fundraising

Korea Investment & Securities committed $300 million to funds managed by The Carlyle Group, The Korea Economic Daily reported.

Investors

HIG Capital filed a lawsuit against Audax Group accusing the rival PE firm of "brazen, massive, systemic fraud" in connection with Audax's $915 million sale of a majority stake in Mobileum to HIG in 2022, Bloomberg reported. Audax said it plans to counter-sue, according to the report.

Chart of the Day

Source: H1 2023 Greater China Venture Report

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PitchBook News - Can AI jump-start information security?

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