PitchBook News - VC gloom: Who powered through?

Charting VC's budding acquisitions; fintech's tempo slows; healthcare investors proceed with caution; AI brings agtech innovation
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The Daily Pitch: VC
February 5, 2024
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In today's Daily Pitch, you'll find:
Today's Top Stories  
VC gloom: Who powered through?
The latest PitchBook-NVCA Venture Monitor, sponsored by J.P. Morgan, Dentons and Deloitte, now includes league tables ranking the industry's most active players.

Venture capital had a tough year. Not only was there a $71.6 billion drop in funding for the strategy—more than $88 billion if you exclude OpenAI and Anthropic's behemoth rounds. But the high number of companies still private, and the pullback of many investors, has led to a wide spread between capital needs and available supply.

VC deal count was still higher in Q4 than in any quarter in the pre-2020 days, but bridge rounds have become an artificial signal of strength. Which firms kept investing through 2023's volatility?
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M&A of seed-stage startups outshines mature companies
(Micha Pawlitzki/Getty Images)
2023 was a dismal year for VC-backed M&A, but it wasn't as bad for seed-stage startups.

Founders saw the environment for fundraising becoming more difficult, and secondary share sales at the Series A stage had ceased. Instead, they sprang to sell their young companies early.
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Are semiconductors ripe for PE investment?
(Mara Potter/PitchBook News)
Semiconductors are a core part of modern electronics, yet they retain a reputation for being a highly niche industry.

With the industry predicted to double in size by the end of the decade and surpass the $1 trillion mark, is it time for PE to start investing?
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Fintech's tempo slows after blockbuster growth
After growing at a feverish pace for the past two years, fintech appears to be returning to a sense of normalcy, according to our recent analyst note. Among the takeaways:
  • Fintech companies secured $34.6 billion in VC funding across 2,055 deals in 2023, representing a year-over-year decline of -43.8% and -32.4%, respectively.

  • Valuations mostly declined, with the median of $19.4 million down -13% from 2022's figure.

  • Amid the IPO freeze, $5.9 billion in exit value was generated across 185 exits in 2023, a YoY decline of around -76% and -22%, respectively.
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Healthcare PE investors proceed with caution in 2024
(David Sacks/Getty Images)
Healthcare-focused PE managers were less active in 2023 than years prior, and they're likely to maintain caution in 2024.

From its 2021 peak to the end of 2023, total healthcare-related PE deal value fell 60.4%—reaching its lowest point since 2016, according to our 2023 Annual US PE Breakdown.
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Can AI-powered drones fix the US farming industry?
Despite a slow quarter for agtech deals overall, agribusiness marketplaces, drone specialists and imagery startups performed strongly—especially those focusing on generative AI applications.

It may feel like doom and gloom compared to 2021, but labor shortages, climate change and supply chain disruptions will require economic transformations that agtech specialists are well positioned for, according to our Q4 2023 Agtech Report. From precision farming to optimized crop management, there's much in store for the industry in 2024.
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Since yesterday, the PitchBook Platform added:
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The Daily Benchmark:
2021 Vintage Global Funds-of-Funds
Median IRR
Top Quartile IRR
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Select top performers
Capital Dynamics Transaction Partners 2021
Aberdeen U.S. Private Equity IX
HarbourVest International Private Equity Partners IX
*IRR: net of fees
41 Funds in Benchmark »
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VC Deals  
Digital health and medical device startup Avation Medical has raised a $22 million Series C led by ShangBay Capital and Asahi Kasei.

Denver-based Splash has raised a $14.1 million Series A2 backed by Boston Seed, Velvet Sea Ventures and K5 for its sports strategy games.

Delaware-based Podcastle, which offers an AI platform for podcasting, has raised a $13.5 million Series A led by Mosaic Ventures.

Ireland's CitySwift, which specializes in intelligent transportation data, has raised €7 million led by Gresham House Ventures.

Edrone has secured €4.6 million from investors including Inventures. The Polish company provides customer relationship management and marketing automation systems for ecommerce.

California-based Eggscape Entertainment, a gaming studio that creates mixed-reality applications, has received a $4.25 million seed round led by Transcend Fund.

Harbor, a Dallas-based infant care technology startup, has raised a $3.7 million seed round led by Trust Ventures.

KuCoin Ventures has made a strategic investment in AI blockchain company Ta-da.
PitchBook Emerging Tech Talks webinar: Disruption in CRM
Join Emerging Tech Research analysts Derek Hernandez and James Ulan as they investigate Y Combinator's newest crop of CRM startups and their plans to out-innovate incumbents. Discussions with multiple founders will cover how they're building better products and their experiences in helping companies track customers, provide technical support and more. Key topics include:
  • Where large incumbents are falling short and how startups can break through.

  • What founders are learning about customer needs.

  • How AI is currently changing CRM, and predictions for the future.
Register now to secure your spot.
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PE Deals  
Singapore-based Whites Group has agreed to invest up to $500 million each into two Chinese financial services companies: Nasdaq-listed Fanhua and Puyi.

RA Capital Management is leading a PIPE financing in Nasdaq-listed Tyra Biosciences for gross proceeds of approximately $200 million.

OpenGate Capital has bought arcade game supplier Player One Amusement Group from Cineplex for $155 million.

Barclays is talking to PE firms about taking a majority stake in its UK merchant payments business, Reuters reported.

Blackhawk Network, a portfolio company of Silver Lake and P2 Capital Partners, has acquired digital B2B gift card rewards company Tango Card.
Chart of the Day  
Source: Q4 2023 PitchBook-NVCA Venture Monitor
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