PitchBook News - Investors hold out on healthcare IT

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The Daily Pitch: VC

December 14, 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:

Fewer early-stage deals are being inked for healthcare IT startups, and digital health specialists continue to struggle

Private capital fundraising timelines have been slowly increasing since 2019

Our ranking of the most active PE lenders

Today's Top Stories

PE, VC dealmaking lag in healthcare IT

In a market increasingly weary of point solutions, early-stage healthcare IT dealmaking is lagging as investors hold out for companies developing platform solutions. Meanwhile, PE activity ticked up slightly in Q3 but continued on its overall downward trajectory.

Our Emerging Tech Research outlines the PE and VC trends to watch in healthcare IT. The report includes comprehensive market maps and breaks down promising areas including healthcare price transparency and value-based care point-of-care solutions.

read the preview

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Digital health looks for a turnaround

The digital health market continued its challenging year in Q3, generating $800 million in VC funding across 60 deals, according to our Emerging Tech Research on the space.

The sector was a pandemic darling, but shifting conditions have significantly reduced the available funding. Still, our analysts see emerging opportunities in virtual specialty medicine, like gastrointestinal care, and digital drug companion software.

read the preview

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A message from McDermott Will & Emery

Join McDermott and EY during the 2024 J.P. Morgan Healthcare Conference

The McDermott and EY Forum is back in San Francisco during the 2024 J.P. Morgan Healthcare Conference! Come to the Ritz-Carlton on January 9 for a full day of dynamic programming, substantive discussions and invaluable networking opportunities.

Key decision-makers, innovators and investors across the healthcare, life sciences and private equity sectors will share insights into the latest trends and developments, forecasts for hot investment opportunities and predictions for the coming year.

Secure your spot to connect with senior leaders and strategists from PE firms, investment banks, hospitals and health systems, payors and digital health and life sciences companies.

Register today

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Private capital fundraising timelines are getting longer and longer

(Ktsdesign/Getty Images)

Private capital fundraising is taking longer than it has in a decade.

By the end of September, the average period between a private capital fund's open and close reached 15.8 months, the highest that figure has been since 2012, according to our latest Global Private Market Fundraising Report.

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Survey: New year, new VC?

Venture investors are ready for a rebound in 2024. Half of the 72 respondents to our industry survey expect more dealmaking, compared with 24% when we asked in May. But they're not throwing caution to the wind. Respondents continue to rate potential profitability as the most important factor in choosing an investment.

Our recent Emerging Tech Research analyzes investor attitudes on technology and the overall VC market and how those have changed during the year.

On hype: Generative AI still has potential, but crypto is overinvested.

On fund returns: 2024 is now expected to be a strong vintage year.

read it now

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Ranking the most active lenders in PE

Ten lenders took part in at least 20 deals each for US PE-backed companies in the third quarter, with the most active trio notching at least 30 apiece.

Which firms are on the leaderboard? See our interactive Q3 2023 PE Lending League Tables, sponsored by Twin Brook Capital Partners. Sort the data by sector, deal type, geography and more.

see the rankings

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Since yesterday, the PitchBook Platform added:

1

VC valuations

1820

People

614

Companies

16

Funds

See what our data software can do

The Daily Benchmark:
2016 Vintage Global Secondaries Funds

Median IRR

20.14%

Top Quartile IRR

24.78%

0.78x

Median DPI

Select top performers

Timber Bay Fund I

LTO Fund

Industry Ventures Special Opportunities Fund III

*IRR: net of fees

26 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Harvey, an AI-powered legal software provider, is in talks with Kleiner Perkins and Elad Gil to raise between $70 million and $80 million at a $700 million valuation, The Information reported.

Metabolic care startup Twin Health raised a $50 million Series D led by Temasek.

India's Aye Finance raised roughly $37 million in a round led by British International Investment for its digital lending platform.

Seattle-based Zuper, which caters to the field service management market, raised a $32 million Series B led by Fuse.

Paris' Pivot secured €20 million in a Series A from investors including Visionaries Club and Anamcara Capital for its procurement software.

Verve Motion raised a $20 million Series B led by Safar Partners. The Harvard University spinout is developing wearable robotics intended to reduce industrial workplace injuries.

Tel Aviv-based cybersecurity startup Guardz raised an $18 million Series A led by Glilot Capital Partners.

Metafuels, a Zurich-based developer of sustainable aviation fuel, secured $8 million in a seed round led by Energy Impact Partners and Contrarian Ventures.

Sydney's SourseAI raised $3 million in a Series A led by Centerstone Capital for its decision intelligence platform.

PE Deals

Apollo Global Management is considering a bid for UK-based Pension Insurance Corporation that could value the specialist pension insurer at £5 billion (about $6.26 billion), Sky News reported. CVC Capital Partners and the Abu Dhabi Investment Authority are among its current owners.

Clayton, Dubilier & Rice agreed to acquire Ohio-based snack manufacturer Shearer's Foods from the Ontario Teachers' Pension Plan, which will exit the company.

Bain Capital agreed to invest in New York-based 1440 Foods, a portfolio of sports nutrition brands backed by 4x4 Capital and formerly a division of The Bountiful Company.

Exits & IPOs

KKR is in advanced talks to buy Hg-backed Iris Software after pulling ahead of rival bidders, Bloomberg reported. The potential deal is said to value the UK company at around £3 billion.

Fundraising

Houston-based Ara Partners, which invests in industrial decarbonization, closed its third fund on $2.8 billion and raised at least $200 million through LP co-investment vehicles.

Houston-based Covalence Investment Partners is eyeing $750 million for its first oil and gas fund, which has a 15-year term and aims to provide returns through dividends rather than asset sales, The Wall Street Journal reported.

Pictet Alternative Advisors has reached a $320 million final close on its first healthcare-focused PE fund and exceeded its $300 million target.

CICC Capital has launched a new fund targeting investment in both China and Korea, the Korea Economic Daily reported. CICC will manage the fund with Seoul-based CICC Ascent, a joint venture with Korean firm Ascent Equity Partners.

Investors

Australia's largest superannuation fund, AustralianSuper, is growing its private credit exposure and increasing its mandate with Churchill Asset Management from $250 million to $1.5 billion, according to the Australian Financial Review.

Chart of the Day

"There are four central factors influencing the return potential of the carbon utilization space as a whole: carbon capture's proliferation, government funding and regulatory support, challenges faced by its main alternative, and corporate sustainability commitments."

Source: Q4 2023 Emerging Sustainable Investing Opportunities: Carbon Utilization

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PitchBook News - Investors hold out on healthcare IT

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