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The Daily Pitch: VC

February 29, 2024

Presented by Morgan Stanley at Work

In today's Daily Pitch, you'll find:

Our new quantitative analysis: VC Emerging Opportunities

Public PE firms reap bigger returns from their private credit portfolios than PE

A look at the Netherlands' venture market across dealmaking, fundraising and exits

New treatments for migraines and depression could give medtech a boost

Today's Top Stories

Charting the next hot thing in VC

AI might be the hot-button topic of today, but what about in a year from now? Our latest quantitative report debuts a new series: VC Emerging Opportunities.

Our analysis covers everything from SaaS to gaming to climate tech—and includes our proprietary predictions on future returns on investment. Using PitchBook's VC Exit Predictor, our quantitative team charts the course of the next generation of startups and calculates payout expectations for early investors.

read the report

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Brain therapy devices could boost medtech

Medtech VC funding slowed in Q4—reaching $2.6 billion, down from $3 billion in the previous quarter. PE dealmaking in the sector was more resilient, with total deal count hitting 105 in 2023, up from 99 the year before.

Brain therapy devices could be an opportunity for investors, according to our recent Emerging Tech Research. New treatments for neurological conditions like depression and migraines are gaining traction and may propel medtech innovation forward.

read the preview

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A message from Morgan Stanley at Work

Unlocking the value of equity and liquidity in today's market

Today, private companies must navigate complex headwinds as they plan for a liquidity event or potential option repricing. They may be looking for strategies to help educate employees, realize the full potential of equity or take their plans global.

Watch as Morgan Stanley at Work explores topics impacting private companies today, from understanding valuation practices to demystifying tender offers and improving participant experience.

Morgan Stanley at Work and Shareworks services are provided by Morgan Stanley Smith Barney LLC, member SIPC and its affiliates, all wholly owned subsidiaries of Morgan Stanley.

Morgan Stanley Smith Barney LLC ("Morgan Stanley") and its Financial Advisors and Private Wealth Advisors do not provide any tax/legal advice. Consult your own tax/legal advisor before making any tax or legal-related investment decisions.

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Public PE firms ride rising tide of private credit

(Peathegee Inc/Getty Images)

The largest public PE firms are taking advantage of private credit's good fortune. Private credit portfolios held by KKR, Blackstone, Apollo Global Management, Ares Management, The Carlyle Group, Blue Owl and TPG posted a collective median gross return of 16.4% in 2023, significantly higher than the 9.8% gain achieved by their PE strategies.

"Institutional investor focus has pivoted to asset classes that offer current income, inflation protection and access to areas of secular growth—namely credit, infrastructure and sustainability," said Apollo co-president Scott Kleinman during the firm's Q4 earnings call.

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Since yesterday, the PitchBook Platform added:

16

VC valuations

2503

People

674

Companies

31

Funds

See what our data software can do

The Daily Benchmark:
2015 Vintage Global PE Funds between $250M-$500M

Median IRR

14.93%

Top Quartile IRR

22.33%

1.03x

Median DPI

Select top performers

Sunstone Partners I

Lead Edge Capital III

Tritium I

*IRR: net of fees

23 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Canada's Ideogram, the developer of an AI text-to-image generator, raised an $80 million Series A led by Andreessen Horowitz.

Paris-based Photoroom, which offers photo-editing tools, closed a $43 million Series B led by Balderton Capital and Aglaé Ventures.

New York's Matter Neuroscience a neurological treatments specialist, raised $26 million across two rounds led by Polaris Partners, Arch Venture Partners and Exor Ventures.

Ether.fi, an ethereum staking startup based in the Cayman Islands, raised $27 million split between a $23 million Series A led by Bullish Capital and CoinFund and a previously unannounced round.

Range secured a $23.5 million investment led by Trousdale Ventures. The company is developing powered trailers intended to help decarbonize the commercial transportation industry.

Backpack, a crypto exchange startup based in Dubai, raised a $17 million Series A led by Placeholder VC.

Ohio's Redi Health raised a $14 million Series B led by Blue Heron Capital for its digital healthcare platform.

UK-based cybersecurity startup Sitehop raised £5 million in a round led by Amadeus Capital Partners and Manta Ray Ventures.

PE Deals

Chinese alternative investment firm CDH Investments is in talks to purchase a minority stake of up to $1.7 billion in Vietnamese grocery chain Bach Hoa Xanh from Mobile World, Reuters reported.

CVC Asia Pacific has upped its buyout bid of APM Human Services International to $1.2 billion, Reuters reported.

Peterson Partners-backed accounting software provider Black Mountain Software has acquired Cascade Software Systems.

Astara Capital Partners has invested in Ally Building Solutions, which provides interior finishes for residential construction.

Nordic Capital has acquired a majority stake in ActiveViam, an analytics provider for financial institutions.

Exits & IPOs

EQT Private Capital Asia (formerly BPEA EQT) has exited its remaining 26.7% stake in Indian cash management company CMS. The investment was previously made via BPEA Private Equity Fund VI.

Fundraising

Indian PE firm Kedaara Capital is set to raise $1.7 billion for its fourth fund, Reuters reported.

Tikehau Capital and UOB-Kay Hian are contributing $50 million each to launch a private credit strategy for the Asia-Pacific market.

Houston-based Fathom Fund has raised $100 million for its inaugural fund, which focuses on deep-tech startups, according to reports.

Black Tech Nation, a VC firm based in Pittsburgh, has raised $50 million for its inaugural fund. It will target startups with founders from diverse backgrounds for seed and pre-seed investments.

Chart of the Day

"Though valuations of deals with nontraditional investors have declined significantly across stages, they continue to price well higher than deals without nontraditional involvement."

Source: 2023 Annual US VC Valuations Report

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