PitchBook News - A new year for allocators

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The Daily Pitch: VC

December 18, 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 2024 Allocator Outlook maps the potential routes forward for LPs

Analysts dive deep on PE funding for software and the wider tech sector

Accel has wrapped up its 16th flagship fund on the backs of its exits from Klaviyo and Pismo

Amazon's Prime Day and inflation cut into bottom lines across the ecommerce space

Our list of the most active investors in VC-backed supply chain tech deals

Today's Top Stories

A look ahead at the LP playbook

Portfolio construction adjustments are in store for allocators next year. In 2023, LPs found themselves in uncharted waters, with a frosty dealmaking environment and crippled exits suffocating distributions. As we move into 2024, these jilted fiduciaries are reevaluating the newfound risks and opportunities for their portfolios.

Our 2024 Allocator Outlook explores these recent developments and potential paths forward for LPs and their private market allocations. We focus on three factors that impact return expectations across asset classes: valuations, relative attractiveness to public markets and the supply of available capital.

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PE holds fast on software industry

We're far from the heydays of the pandemic lockdown-induced software boom, but conditions are ripe for another strong run by PE-backed software companies.

Software providers' margins are up, tech deal counts are better than pre-pandemic levels and SaaS business models remain compelling. As firms like Thoma Bravo and Vista Equity Partners bring in revenues rivaling top software corporations, our analysts dive deep on PE funding for the tech sector.

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A message from West Monroe

2024 outlook: The future of the private equity industry

In a year of halted exits, the industry's turn towards sustainable growth anticipates rich dividends in 2024, underscored by a deepened focus on data and AI, paving the way for expanded opportunities. West Monroe's 2024 Private Equity Outlook delves into this paradigm shift, spotlighting pivotal trends transforming the landscape.

Key insights:

The industry's shift toward sustainable growth promises returns in the upcoming year
The strategic emphasis on data and AI unlocks vast potential for innovation and growth
Urgent cybersecurity priorities emerge due to struggles in implementing and monitoring crucial cyber controls resulting in substantial gaps across private equity portfolios

Explore the challenges, trends, and actions that will define the year in private equity. Download West Monroe's 2024 Outlook.

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Accel raises $650M on the back of Klaviyo, Pismo exits

(PM Images/Getty Images)

Accel has closed its 16th flagship fund on $650 million. The early-stage fund, which raised the equivalent amount of capital as Fund XV in 2021, is one of the largest US venture funds to close in Q4 2023, in what remained the toughest fundraising year in recent memory for the asset class.

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AI agents poised to disrupt SaaS

Despite the VC downturn, generative AI remained strong in Q3, according to our recent Emerging Tech Research. While much of the excitement was fueled by Big Tech giants pouring billions into generative AI startups, PitchBook tracked 1,650 VC deals worth $21.1 billion in AI and machine learning in Q3.

And there are still untapped opportunities within the vertical, including coding automation and AI hardware.

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Since yesterday, the PitchBook Platform added:

4

VC valuations

87

People

55

Companies

See what our data software can do

The Daily Benchmark:
2015 Vintage Global Real Estate Funds

Median IRR

11.86%

Top Quartile IRR

15.47%

1.01x

Median DPI

Select top performers

GreenOak Asia II

Blue Owl Capital Real Estate Capital Fund III

Broccolini No. 3

*IRR: net of fees

83 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Seattle-based life sciences company Parse Biosciences has raised $50 million in Series C equity and debt. The former was led by Soleus Capital.

Biopharmaceutical startup Amide Technologies, a spinout from MIT, has announced $16.5 million in total raised across seed funding, a Series A and, most recently, a $7.5 million Series A extension led by The Engine.

Homebuying platform Prevu has raised a $6 million Series A with participating investors Citi, RiverPark Ventures and Metropolis Ventures.

Arbonics, an Estonian forest carbon removal specialist, has raised a €5.5 million seed investment from NordicNinja, Plural and Tilia Impact Ventures.

German scrap metal trading company Metycle has secured $5 million from investors including Project A and Partech.

PE Deals

A group that includes Insight Partners and Clearlake Capital Group is considering taking private California-based data analytics software provider Alteryx for about $5 billion, including debt, Reuters reported.

Hg invested in Spectrum Equity-backed Cinc Systems. The Georgia-based company offers software for community association management.

Heartwood Partners made a majority investment in Bush Brothers Provision Co., a Florida-based business that supplies meat to high-end restaurants, yachts and private chefs.

TruArc Partners invested in St. Louis-based Watchtower Security, which provides video surveillance and asset protection to multifamily housing owners.

Exits & IPOs

Polaris Private Equity agreed to sell its stake in Japanese pharmacy operator Sogo Medical Group to CVC Capital Partners, which is making its investment via its fifth Asia fund.

Fundraising

Toronto-based PE firm TorQuest Partners has reached $2.1 billion final close on its sixth namesake fund, which will target middle-market investments.

France's Partech has launched a €360 million venture fund to invest in up to 24 Series A or Series B European companies.

Chicago-based Motivate has announced its $81 million Fund II, which is focused on sectors including AI, manufacturing and supply chain, SaaS, B2B marketplaces, and insurance.

Chart of the Day

"Real assets fundraising activity was highly anomalous in the first three quarters of 2023. With just $24.4 billion in commitments split among the 34 vehicles that closed through September, the year could be the slowest the asset class has seen in at least a decade from a fundraising perspective."

Source: Q3 2023 Global Real Assets Report

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