Eyes on pharma services at healthcare PE event

2024 kicks off with GP leverage over founders; ranking mid-market's prolific GPs; PIF, a16z discuss $40B AI VC fund
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The Daily Pitch: VC
March 20, 2024
Presented by SRS Acquiom
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In today's Daily Pitch, you'll find:
 
Today's Top Stories  
Slow exits, pharma opportunities at healthcare PE conference
Banker pipelines and federal regulators' antitrust push were the talk of the town at the McDermott Will & Emery's 2024 Healthcare Private Equity conference in Miami's South Beach neighborhood The cross-agency federal probe, as well as investment opportunities in pharma services and the slowdown in PE dealmaking, stood out in panels and sidebar conversations, according to our latest analyst note.

On the fundraising side, allocators spoke optimistically about healthcare's reputation as a reliable investment during periods of turbulence, but they predicted PE capital formation won't fully recover until 2025.
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Calpers chases low cost, high returns with new PE targets
(Max Whittaker/Getty Images)
The nation's largest public pension fund is extending its foothold in the private markets and continuing its push into low-cost investments with higher returns.

Yesterday, the investment committee of the California Public Employees' Retirement System voted to increase its PE and private debt allocations. The new plan increased Calpers' PE allocation target to 17%, up four percentage points.
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A message from SRS Acquiom  
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SRS Acquiom M&A Working Capital Purchase Price Adjustment Study reveals that M&A professionals increasingly use customized PPA provisions tailored to deal specifics and the target's financial statements.

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Investors continue to gain an edge on founders in Q1
The VC landscape grew even more investor-friendly in the first two months of the year, PitchBook's VC Dealmaking Indicator shows.

At every stage of company development, deal dynamics have worsened for founders raising capital. Startups are demanding more capital than investors are willing to supply, due in part to diminishing runway.

One positive sign for startups that can secure funding: Valuation step-ups have stabilized or increased in recent quarters.
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Lockheed Martin's pension plan wants 'smaller, newer' managers
(Barry Winiker/Getty Images)
Lockheed Martin plans to reevaluate manager relationships, it revealed at the Greenwich Economic Forum in Miami, where allocators discussed strategic and portfolio maintenance plans for the year ahead.
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PE dealmaking in middle market bounces back
The 2023 Annual US PE Middle Market Report, sponsored by Stax, now includes league tables ranking the industry's most active players.

PE middle-market deal volume rebounded in Q4 2023 after a muted Q3, which brought some optimism about an acceleration in PE dealmaking. However, the seemingly solid turnaround may be misleading, as too many deals involved rescue capital or reflected distressed valuations.

Exit activity also rebounded amid a flurry of continuation fund transactions in the middle-market space. It's a trend that's likely to continue given strong fundraising by secondary buyers.
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Generational transfer in family offices to spark VC windfall
(Jenna O'Malley/PitchBook News)
The family office landscape is undergoing a profound transformation fueled by the imminent transfer of generational wealth. Over the next 25 years, an estimated $100 trillion will be handed down, with much of that capital flowing through family offices. As the torch passes, it is not only the heirs that are poised to see an influx of capital.

Family offices have historically accounted for a small share of overall VC commitments. However, their participation in the asset class has grown significantly over the past decade as they sought more portfolio diversification. VCs, meanwhile, have been keen to tap new sources of capital amid a competitive fundraising environment.
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Since yesterday, the PitchBook Platform added:
15
VC valuations
2089
People
690
Companies
33
Funds
See what our data software can do
 
The Daily Benchmark: 2021 Vintage Global Secondaries Funds
Median IRR
29.83%
Top Quartile IRR Hurdle Rate
35.10%
0.08x
Median DPI
Select top performers
Capital Dynamics Global Secondaries VI
Sturbridge Diversified Private Equity III
Banner Ridge Secondary Fund IV
*IRR: net of fees
29 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
VC Deals  
Food delivery startup Wonder, which is based in New York and operates several cloud kitchens on the East Coast, raised $700 million from NEA, GV, Accel and others.

Biotech startup Engrail Therapeutics, which is based in San Diego, raised a $157 million Series B led by F-Prime Capital, Forbion and Norwest Ventures Partners.

Amsterdam's Moove, a provider of revenue-based vehicle financing, closed a $100 million Series B backed by investors including Uber and Mubadala.

German fintech startup Solaris secured €96 million in a Series F led by SBI Group.

Palo Alto-based healthcare-focused generative AI startup Hippocratic AI completed a $53 million Series A led by Premji Invest and General Catalyst.

Candela raised €25 million from investors including Groupe Beneteau. The Stockholm-based company makes electric ferries.

Ingrid, the Swedish operator of a delivery platform, secured €21 million in a round led by Verdane.

NeuReality, a data center and computing startup, raised $20 million from the European Innovation Council Fund, Varana Capital, Cleveland Avenue and others.

London's Anima, which offers a healthcare management platform, secured $12 million in a Series A led by Molten Ventures.
 
Don't miss today's webinar
Women in VC have historically had a more difficult time securing funding than their male counterparts, but even as pressures from investors rose, female founders fared relatively well in 2023.

In this webinar, four notable women will discuss how female founders and investors are navigating ongoing volatility in the US venture market, what wins we saw in 2023, and where we still see opportunities for growth. Key topics include:
  • The changing pace of funding received by female-founded companies.

  • Valuation trends across company life stages and deal activity in key sectors.

  • A gender breakdown of check writers and a look at the community building initiatives for a more diverse population of entrepreneurs.
Register now to secure your spot.
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PE Deals  
AstraZeneca is buying Nasdaq-listed Fusion Pharmaceuticals for up to $2.4 billion.

Francisco Partners has agreed to acquire Jama Software, a workflow software systems provider, from investors including Insight Partners and Madrona Ventures for $1.2 billion.

Trinity Hunt Partners has made a majority investment in Atlanta-based healthcare advisory firm Coker Group.

Growth equity-focused firm Ampersand Capital Partners has acquired Illinois-based biotech company Biologos.

Main Capital Partners-backed PeakAvenue has acquired UK-based Isograph, a safety engineering software provider.

Data.ai, which offers an AI analytics platform for the mobile application space, was purchased by Riverwood Capital-backed Sensor Tower.
 
Exits & IPOs  
Macquarie and Canada's Public Sector Pension Investment Board started a sales process for AirTrunk's data center business, which could be valued as high as A$15 billion (about $9.8 billion), the Australian Financial Review reported.

Select Medical Holdings' occupational health services unit Concentra Group has confidentially filed for an IPO.
 
Fundraising  
Saudi Arabia's PIF is in talks with Andreessen Horowitz to launch a $40 billion AI-focused VC fund, The New York Times reported. The fund would make Saudi Arabia the world's largest AI investor, according to the report.

PE firm L Catterton has raised just over $5 billion for its 10th flagship fund, according to an SEC filing.

Bay Area-based VC firm IVP has closed on $1.6 billion for its 18th fund.

Middle-market PE and credit firm Comvest Partners has closed its sixth flagship PE fund on $881 million.

B Capital has closed on $750 million for its B Capital Opportunities Fund II. The firm will invest in later-stage technology, healthcare and climate-tech companies.

Acre Venture Partners, an agtech-focused VC firm, has closed its third flagship fund on $140 million, AgFunderNews reported.
 
Corporate M&A  
Airbus has walked away from talks to buy the big data and cybersecurity unit of French IT company Atos.
 
Chart of the Day  
Source: H2 2023 Global Real Estate Report
 
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