PitchBook News - First-time VCs face dropout problem

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The Daily Pitch: VC

February 19, 2024

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 analysts find about 37% of first-time VCs might not be able to raise a second fund

We spoke with the founder of Bridge, which connects GPs seeking subscription credit lines with lenders

What were Europe's biggest PE growth fund closes of the past year?

Our Global Fund Performance Report unpacks returns across seven private market strategies

Today's Top Stories

37% of first-time VCs might not be able to raise a second fund

2021 was the heyday for new entrants in venture capital: First-time fundraising reached a peak of $14.7 billion, including to more inexperienced managers without bulletproof track records or networks. Now that LPs have retreated, those same fund managers are in trouble, according to our latest analyst note.

More than 247 first-time managers that closed funds between 2019 to 2021 won't be able to raise a sophomore fund, according to PitchBook estimates. Those particularly at risk of being incapable of raising a second VC fund will likely be managers of funds with less than $10 million in commitments and those in emerging US markets.

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Q&A: How technology can streamline fund financing

Bridge founder Andrew Frazer Smith
(Courtesy of Bridge)

The fund financing market has felt a particular strain on subscription credit lines, a kind of facility secured against LP commitments.

We talked with Andrew Frazer Smith, the UK-based founder of Bridge, a platform to connect GPs to lenders and remove many of the inefficiencies in the market.

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London still the center of European PE growth fundraising

(Alexander Spatari/Getty Images)

London remains the biggest hub for European PE growth fundraising, accounting for five out of the 10 biggest fund closes last year. But European growth funds remain small in size compared to their US cousins.

Take a look at the list of those 10 biggest closes.

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The Daily Benchmark:
2014 Vintage Global VC Funds

Median IRR

17.74%

Top Quartile IRR Hurdle Rate

25.78%

1.18x

Median DPI

Select top performers

Earlybird Digital East Fund I

IQ Capital Fund II

4BIO Ventures I

*IRR: net of fees

61 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Firefly Bio, a biotech startup based in San Francisco, has emerged from stealth with a $94 million Series A co-led by Versant Ventures and MPM BioImpact.

Childcare network startup Upwards, which is based in Los Angeles, has raised a $21 million Series B led by Alpha Edison.

Israeli insect farming startup FreezeM has secured a $14.2 million Series A from investors including the European Innovation Council Fund.

California-based Vatom has raised a $10 million Series B led by GSV AirCO for its customer engagement platform.

Coding permissions startup Permit.io, which is based in New York, has raised an $8 million Series A led by Scale Venture Partners.

Coatue, Gigascale Capital and ReGen Ventures are among participating investors in a $6.2 million seed round for HVAC intelligence software company Arch.

Toronto-based Armilla AI, an AI testing and assurance startup, has received a $4.5 million seed round led by Mistral Venture Partners.

Simplyblock, a German high-performance cloud storage startup, has raised a $2.75 million seed investment led by 42CAP.

UK-based HR tech startup MeVitae has secured €1.7 million in a round led by Apex Black.

PE Deals

Permira is considering a €4 billion sale of private shopping club Best Secret, Private Equity News reported.

Gabon's national oil company is acquiring Assala Energy from The Carlyle Group, preempting its sale to Maurel & Prom.

Avista Capital Partners has acquired dental prosthetics company Terrats Medical from Miura Partners.

Bowmark Capital has invested in SaaS risk management specialist CubeLogic.

SpendLab, an AI-enabled payments auditing company, has received a majority investment from Story Capital.

Chart of the Day

Source: 2023 Annual European PE Breakdown

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PitchBook News - First-time VCs face dropout problem

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