PitchBook News - Biotech, AI stand out in emerging tech

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The Daily Pitch: VC

November 27, 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:

The latest Emerging Tech Indicator points out how top VCs are favoring biotech and AI

Private credit is in the limelight—and some allocators are watching with caution

Our newest Country Snapshot unpacks trends in the UK's public and private markets

VC market map for the vast electric vehicle segment shows where capital is flowing

Today's Top Stories

Top VCs stand behind biotech, AI while slowing investment overall

PitchBook's Emerging Tech Indicator, which shares quarterly insights on investment activity from a subset of the world's most successful VC firms, has found that biotechnology followed by AI and machine learning is top of mind for investors, dominating deal activity despite an overall decline across ETI deals in Q3. The report digs into the types of technologies and startups that top investors backed.

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How long can the 'golden age' of private credit last?

(Peter Dazeley/Getty Images)

Private credit is enjoying the limelight this year as the $1.75 trillion market benefits from the rapid expansion of interest rates and a retreat in bank lending.

But now, some investors are worried that the conditions benefiting the asset class won't last forever. The generous yields that private credit lenders currently extract on deals may come to an end should competition increase and the Federal Reserve reverse course on interest rate hikes, some said. Others are concerned about whether their private credit portfolios are positioned to weather a real economic downturn.

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Markets resilient despite the challenging UK economy

Our Q3 2023 UK Market Snapshot is the latest in a quarterly series detailing economic trends in European public and private markets.

The Bank of England's interest rate hike looks to have tamed inflation in Q3, sparking hopes of a recovery despite zero GDP growth. PE dealmaking improved on the previous quarter with exit activity following suit, if skewed by Arm's IPO in September. VC dealmaking showed the clearest signs of recovery, although VC fundraising is lagging significantly behind total commitments secured in 2022.

Read more on crucial statistics for market participants, from corporate and sovereign bond yields to the top investors in private markets.

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Private equity stuck in a holding pattern

Sizzling economic growth and consumer spending have combined with cooler inflation to fuel a resilient US economy. But the higher-for-longer timeline for interest rates, and a disconnect on valuations between buyers and sellers, has created a more lukewarm environment for private equity, according to our Quantitative Perspectives report.

While PE firms dealt with those issues, another threat emerged to the industry's growth: higher yields on Treasury notes. Long-term bonds could present competition for PE as institutional investors allocate capital to less risky asset classes.

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VC Deals

VC-backed Japanese battery maker AESC Group is looking to raise around $1.5 billion for its Series C at a $10 billion valuation, Bloomberg reported.

Floy, a Munich-based provider of AI-driven software to support radiologists, has closed a €5.4 million seed round led by HV Capital.

EMotorad, an Indian maker of e-bikes, has raised a $20 million Series B led by Panthera Growth Partners.

Aptus.AI, an Italian provider of AI technology designed to create machine-readable versions of legal documents, has raised €3 million in a round led by P101.

CatX, a US-based digital marketplace for insurance risk, has secured $2.7 million from investors including HackLegacy.

Mettle, a London-based mental fitness app for men, has raised £2.5 million from investors including Elbow Beach Capital.

PE Deals

Blackstone and Carlyle Group-backed Italian insurance company Prima Assicurazioni is looking for a new minority investor in a deal that would value the company at €1 billion, Reuters reported.

Exits & IPOs

Carlyle Group has agreed to acquire a majority stake in German software vendor GBTEC Software from Main Capital Partners.

Fundraising

South Korea’s Ministry of Health and Welfare is allocating 261.6 billion won (around $200.2 million) to Yuanta Investment and Premier Partners over the next four years to boost private investment in the biopharma sector.

Netherlands-based NP-Hard Ventures has closed its debut fund on €12 million to back early-stage software startups in Europe and the US.

Paris-based Saviu Ventures has held a €12 million first close for its second fund. The vehicle will target seed to Series A investments in African startups.

Chart of the Day

"Down rounds increased, but could the level be plateauing? ... On a quarterly basis, the proportion of down rounds in Q3 stayed broadly flat versus Q2, at 22.7%. This is the highest it has been since 2020, but the levelling off could be a sign that we are past the peak proportion."

Source: Q3 2023 European VC Valuations Report

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PitchBook News - Biotech, AI stand out in emerging tech

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