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The Daily Pitch: VC

November 15, 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:

Analysts find VCs are laser-focused on gaming content startups

Specialist VC Transcend earmarks $60 million as the video game industry matures

It was a long road to liquidation for Apollo's SPAC, and the firm is not alone

Mostly US-based investors have chosen to own more than one European football team. Why?

VC dealmaking in Germany reversed course in Q3 after two quarters of recovery

Today's Top Stories

Content still king for gaming startups

Gaming is battling stiff headwinds. Startups raised $857 million across 113 deals in Q3—a quarter-over-quarter decline of more than 35% and over 10%, respectively, according to our latest Emerging Tech Research.

VCs are still backing game studio startups, hoping to find the next blockbuster. Investors are betting on gaming analytics specialists, which collect player information to help create more engaging experiences. The report also covers the nascent Web3 gaming space.

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Transcend closes $60M fund as VCs jostle for gaming deals

(Flavia Morlachetti/Getty Images)

Gaming-focused VC firm Transcend has raised nearly $60 million for its second fund, which will target early-stage development studio deals.

Shanti Bergel, Transcend's managing director, points to standout acquisitions and huge rounds for video games startups as signs that the industry has evolved from a niche to mainstream investment segment.

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A message from Ontra

Survey shows private equity firms at risk of falling behind digital shift

A new report reveals the key obstacles hindering digital transformation at private equity firms—and how leaders can push ahead.

Ontra and Private Equity Wire surveyed PE firms across North America and Europe on their adoption of new technologies for growth, and the associated benefits and challenges.

Key findings:

98% of firms are undergoing digital shifts
Yet many lag in adopting AI, ML, and legal process automation
PE firms need more leaders who champion digital transformation

For more insights, download the full report: Transformation Track: Private Equity's Journey to a Tech-Powered Future.

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Apollo SPAC liquidates in continued exit freeze

(Maciejwiner/Getty Images)

Apollo Global Management's decision to liquidate and dissolve Apollo Strategic Growth Capital II, a SPAC intended to invest in growth-oriented, pre-IPO companies, is the latest byproduct of a frozen exit environment and declining valuations.

The long road to liquidation began when the blank-check company went public in February 2021, fueled by high private company valuations, a frenzied deal market and a proliferation of SPAC vehicles.

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Reversing course: German Q3 VC trends in 6 charts

(Peter Zelei Images/Getty Images)

After signs of recovery earlier in the year, venture dealmaking in Germany fell once again in Q3.

Take a look at six charts from our Q3 2023 Germany Market Snapshot to see how the country's venture capital market has fared this year.

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PE finds the more the merrier in European football

Private capital investment has become a mainstay of European football. And the use of a multi-club ownership model, where a sponsor owns more than one club, has more than quadrupled in the last decade. Within the top five major leagues in Europe, MCO ownership has gone from nearly 37% of the clubs last season to nearly 42%.

Following up on our previous European football note, our analysts examine why mostly US-based investors have chosen to own more than one team. We also detail the major investors in the MCO space, from PE funds to CVCs and hedge funds.

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3 theories for Sequoia's gravity-defying fund marks

(Julia Midkiff/PitchBook News)

Talk to any valuation professional, and one of the first things they'll tell you is that pricing companies is both an art and a science. Despite financial theory and general guidelines, figuring out how much a privately held business is worth involves a degree of subjectivity.

But Sequoia bucked VC trends, marking up 15 of the 19 funds with vintage years 2018 and later by 9.2% on average over the 12 months ended June 20, according to a UC Regents investments report. LPs, VCs, valuation consultants and other experts offered a few theories that could explain the firm's success.

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A message from Moss Adams

Insights for technology industry market and transaction trends

After high performance in dealmaking in 2021 and 2022, detailed analysis in macro dealmaking shows that the technology sector may be seeing some cooling in private equity, venture capital, M&A, and other market trends.

While high interest rates are affecting deals and the debt versus equity involved with them, the economy has been more buoyant than expected, and growth deals have been surging. M&A activity has slowed, but strong cash reserves and balance sheets indicate promise for the foreseeable future.

Explore recent dealmaking data and current trends in this industry report.

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VC Deals

San Diego-based biotech startup Mbrace Therapeutics raised an $85 million Series B led by TPG.

Fnality International, a company developing a blockchain-based payment system, raised £77.7 million in a round led by Goldman Sachs and BNP Paribas.

Nouscom, a Swiss biotech company developing cancer vaccines, raised a €67.5 million Series C from a syndicate of healthcare investors.

Radiant Security, a cybersecurity startup based in San Francisco, secured a $15 million Series A led by Next47.

BlastPoint, a consumer analytics startup based in Pittsburgh, raised more than $8 million in seed funding from investors including Curql.

Levenue, the operator of a revenue-based financing marketplace, secured €8 million in a Series A led by Truffle Capital and joined by Freshmen Fund.

Cybersecurity startup Zip Security, which is based in New York, secured a $7.7 million investment co-led by General Catalyst and Human Capital.

Pantheon Vision raised $2.5 million in seed funding from KeraLink International to develop corneal blindness treatments.

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PE Deals

Partners Group agreed to acquire Switzerland-based Rosen, which provides inspection services for pipelines and other energy infrastructure, from its founder. The firm plans to finance the deal with a $1.2 billion bank loan, Bloomberg reported.

Aurelius has acquired UK-headquartered The Body Shop from Natura in a deal that values the company at £207 million.

F9 Investments bid $3 per share in cash for LL Flooring, a Virginia-based hardwood flooring retailer. The deal would value LL Flooring at just over $90 million.

Exits & IPOs

Antin Infrastructure Partners is considering selling portfolio company Idex Groupe, a French energy producer and district heating operator, for more than €3 billion, Bloomberg reported.

Fundraising

Investcorp is looking to raise 2 billion to 4 billion Chinese yuan (around $275 million to $550 million) for its first yuan-denominated fund targeting buyouts, Reuters reported.

Barings is hoping to raise A$1.4 billion (about $909 million) for a new Australian private credit fund, Bloomberg reported.

Monta Vista Capital launched its third fund, a $48 million seed fund that will invest in B2B startups.

Investors

Former KKR managing director Tim Short and former AMP Capital principal Michael Hamilton have launched New York-based Acadia Infrastructure Capital, which will target middle-market investments that accelerate the US transition to clean energy.

Chart of the Day

Source: PitchBook's Q3 2023 Gaming Report

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PitchBook News - VC eyes gaming data as vertical dips

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