PitchBook News - What LPs look for in a VC fund

CVCs crowd out VCs in gen AI deals; a private market waiting game; Q&A: 'Another epic year' for secondaries
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The Daily Pitch: VC
February 6, 2024
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Today's Top Stories  
What LPs look for in a VC fund
VC fundraising has become a brutal slog. Indeed, LPs' bar for backing a venture vehicle has risen significantly. Allocators are prioritizing funds whose predecessors converted returns into cash, remained disciplined during the 2021 market frenzy, and had a thoughtful strategy around fund size increases.

Emerging managers with unique networks and relevant industry experience can stand out from the pack. Our latest analyst note outlines expectations for smaller fund sizes, fewer new products and a shakeout of mediocre managers who struggle to adapt.
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Corporate influence over generative AI deals irks some VCs
(AerialPerspective Images/Getty Images)
Corporate investors are pouring huge sums into generative AI startups, rankling traditional VCs who are getting squeezed out of deals as they contend with soaring valuations and onerous deal terms.

CVCs were tied to 80% of VC deal value flowing into generative AI companies last year, PitchBook data shows. Some investors are wary that their influence will hinder startups in the long run.
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Private markets lag historical returns. Is a catch-up in store?
The first half of 2023 was a challenging period for private market strategies. PE, VC and private debt lagged their historical returns, and only real assets outperformed its 10-year average. In fact, PE returned only 6.6% for the year through June, a massive dip from its average return of 16.4% over the last decade.

But the surge in public market returns is a sign of optimism for PE and VC. Our Q2 2023 Global Fund Performance Report, with preliminary Q3 data, shows that private market strategies are hinting at signs of life. Last year was a surprisingly good year in the public markets, a trend that may spur private fund write-ups in Q4 2023.

Only time will tell.
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Q&A: Expect 'another epic year' for secondaries
Amyn Hassanally, Pantheon's global head of PE secondaries
(Courtesy of Pantheon)
Although exit conditions are predicted to improve this year, few expect to see a major ramp up of M&A and IPOs. That's good news for secondaries.

We spoke to Amyn Hassanally, global head of PE secondaries at investment manager Pantheon, who told us he expects it to be "another epic year" for secondaries activity and that greater secondaries fund specialization is in the cards.
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LP interest in energy transition reflected in $10B Brookfield fund
(Buena Vista Images/Getty Images)
Brookfield Asset Management has raised $10 billion in the first close of its second fund dedicated to the global energy transition, signaling continued investor interest in clean energy, sustainability and a net-zero economy.

The fund's predecessor closed on $15 billion with contributions from LPs like the New Jersey Division of Investment, the New York State Common Retirement Fund and the Ontario Teachers' Pension Plan.
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VC Deals  
Houston-based Procyrion, which makes medical devices for cardiac care, has raised a $57.7 million Series E led by Fannin Partners.

ProducePay, an agtech startup based in Los Angeles, has received a $38 million Series D led by Syngenta Group Ventures.

Lithuanian cryptocurrency payments startup Oobit has raised a $25 million Series A led by 468 Capital, Tether and CMCC Global.

StatusPro, a VR entertainment company based in California, has secured a $20 million Series A led by GV.

Jua has raised a $16 million seed round co-led by 468 Capital and the Green Generation Fund, TechCrunch reported. The Swiss AI startup creates models for weather prediction.

Chicago-based insurtech company Kin has secured a $15 million investment led by Activate Capital.

Paris-based Naboo has raised €7.5 million from investors including ISAI, Kima Ventures and CapHorn Invest for its corporate off-site booking platform.

Oslo-based industrial automation specialist OTee has received €1.25 million in a round led by RunwayFBU and Superangel.
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PE Deals  
Thoma Bravo has agreed to take Nasdaq-listed event management software company Everbridge private in a roughly $1.5 billion all-cash transaction.

Investcorp's Strategic Capital Group made a growth investment in Banner Ridge Partners.

MRH Trowe, a German insurance broker backed by AnaCap, acquired four commercial brokers: Bavaria, Vertoura Versicherungsmakler, Frank Rauch & Kollegen Finanz-und Versicherungsmakler, and Asspert Versicherungsmakler.

A consortium of PE firms led by Bain Capital is buying Australian wine producer Accolade Wines from The Carlyle Group.
Exits & IPOs  
HIG Capital is exploring a sale of Usalco, which provides water-treatment chemicals, that could fetch as much as $2 billion, Bloomberg reported.

EQT is reviving plans for an IPO of dermatology company Galderma, the Financial Times reported.
Carnelian Energy Capital has closed its fifth namesake fund on $975 million.
Chart of the Day  
Source: 2023 Annual Global M&A Report
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