PitchBook News - Sequoia fumbles under pressure

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The Weekend Pitch

February 25, 2024

Presented by Stout

Michael Moritz
(Michael Kovac/Getty Images)

Swedish fintech company Klarna has had a week that sounds more like an episode of "Succession" than reality.

First, Sequoia partner Matt Miller, with the backing of his firm, asked Klarna shareholders to oust Sequoia ex-chair Michael Moritz from the board, The Information first reported.

It was an astonishingly bold move. Moritz was credited with much of Sequoia's success during his 38-year tenure at the firm, having led its investments into Google, PayPal and Stripe. He's also a close ally of Klarna CEO Sebastian Siemiatkowski and wrote the firm's first check to Klarna back in 2010.

Moritz left Sequoia in July to focus on his wealth management firm, Sequoia Heritage. He handed over his board seat at Sequoia to Miller but had remained on as an independent adviser.

Infighting at the name-brand firm immediately reverberated across the VC world—not only for the "palace intrigue," as one investor put it, but also because tensions like Klarna's are painfully relatable these days. The IPO window is still mostly shut, interest rates are high, and investors are facing pressure from their LPs to get liquidity out. Something's got to give.

This is the Weekend Pitch, and I'm Rosie Bradbury. You can reach me at rosie.bradbury@pitchbook.com or @_RosieBradbury on X.

Trivia

(Jiojio/Getty Images)

Less than a year after raising its blockbuster $29 billion flagship fund, CVC Capital Partners has closed its sixth Asia-focused fund. The new vehicle is 50% larger than its predecessor, which was raised in 2020. How much did CVC raise for its new fund?

A) $4.5 billion
B) $11.3 billion
C) $5.7 billion
D) $6.8 billion

Find your answer at the bottom of The Weekend Pitch!

VCs' disappearing act

As LPs grow increasingly cautious, many of the fund managers who raised their first vehicles in 2021 without long track records or deep networks are in trouble.

More than 247 first-time managers who closed funds between 2019 to 2021 are likely to fade into VC obscurity and never raise a sophomore fund, according to PitchBook estimates.

Investors think about brain therapy

((ktsimage/Getty Images)

Investment in medtech has stalled, with VC funding in Q4 down to $2.6 billion compared to Q3's $3 billion. But can brain therapy devices jump-start the vertical?

Less invasive than devices like Neuralink's, these products seek to treat neurological conditions like depression and migraines, tapping into a largely underserved market. Our Q4 2023 Medtech Report details the startups behind these devices and other trends to watch.

Sun shines on European VC valuations

European VC valuations fared better than expected last year with almost every stage recording an increase in the median pre-money price tag. Investors' flight to quality is a likely driver behind the growth, which also contributed to higher median deal sizes for all but the venture-growth stage.

Exit valuations were a different story. The median figure for both acquisitions and public listings fell by double digits.

Quote/Unquote

(Westend61/Getty Images)

"It's not like people can't succeed. It's just that it's very difficult because everything needs to line up."

—Max Gazor, general partner at CRV, talking about the pitfalls of VCs investing in hardware, though some are betting generative AI will change the playing field.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

2023 VC Emerging Opportunities
Q4 2023 Clean Energy Report
Q4 2023 Artificial Intelligence & Machine Learning Report
Q4 2023 US Public PE and GP Deal Roundup
Analyst Note: The State of Embedded Insurance

Trivia

Answer: D)

CVC Capital Partners raised $6.8 billion for its sixth Asia-focused fund, up from the $4.5 billion vehicle raised in 2020. Read more about CVC's raise, how it stacks up to other funds, and the state of Asia-focused fundraising.

This edition of The Weekend Pitch was written by Rosie Bradbury, Leah Hodgson and Jacob Robbins. It was edited by James Thorne and Samantha Steele.

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PitchBook News - Sequoia fumbles under pressure

Trivia

VCs' disappearing act

Investors think about brain therapy

Sun shines on European VC valuations

Quote/Unquote

Stay tuned

Trivia

Older messages

Rates, recovery, rationalization

How brain devices could boost medtech

AI jump-start for hardware?

European VC valuations unbowed

Hydrogen fuel heats up

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