PitchBook News - ESG and Impact in 2024

Also: From startups to IPOs, AI & ML and SaaS in VC; Ranking 2023's top PE lenders; New research on private debt, real estate, e-commerce and more...
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The Research Pitch
March 23, 2024
PE's most active lenders: The full-year numbers for our 2023 Annual PE Lending League Tables are in! You can sort the rankings by deal type, geography, sector, and more. Check them out.

Sneak peek: We'll give a wide release to two new pieces of research on Monday, but weekend readers can access them early: E-Commerce Report, Electric Boats.
 
ESG and Impact investing in 2024
The private market landscape has been molded by the tectonic forces of inflation, fears of a recession, and high cost of capital over the past few years—and sustainable investment strategies have not been immune.

Economic pressures have had disparate effects on asset managers' use of ESG as well as their willingness to advertise around it. Some have leaned into it as a value creation and protection tool, while others have substantially decreased their focus on or mention of it.

In our most recent research on ESG and Impact investing, we identify and unravel the key trends shaping the sustainable investing space in 2024 and beyond.
 
Get more performance data in the free research.

We use data to address some of the questions that have become even more pressing given the current environment—like whether ESG or Impact investing necessitates sacrificing returns and if Impact investors are struggling to fundraise more than their non-Impact counterparts.

We also explore developments in the perceived materiality of environmental risks, the retraction of the pandemic-era embrace of diversity, equity, and inclusion, and the reasons for heightened vigilance around governance risks. Hint: AI is partially to blame.

Plus, we take a first look at the fund-level SFDR data we have collected thus far and touch on which kinds of Impact and Impact investors are receiving the greatest shares of capital from allocators.

For all this and more, download our free analyst note: The State of Private Market ESG and Impact in 2024
 
Best,

Anikka Villegas
Senior Analyst, Fund Strategies &
Sustainable Investing
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From startups to IPOs: AI & ML and SaaS in VC
In the sluggish venture capital landscape, one standout sector has emerged: AI & machine learning.

In 2023, AI & ML captured the attention of private market investors, fueled by the late 2022 release of OpenAI's ChatGPT.

AI stocks have also become some of the hottest in the public market, with Nvidia's 239% stock price growth last year and VC-backed Astera Labs' strong debut this week highlighting the excitement for the sector.

The promise of lucrative opportunities spurred a shift in investment interests, with VCs seeking to capitalize on the potential of these cutting-edge technologies in startup land.

As companies begin to introduce disruptive AI solutions, VC investment in AI & ML is poised for takeoff. Plus, after a prolonged IPO drought, the amount of capital that could be unlocked should the exit environment improve suggests a return to growth is on the horizon. In 2024, companies with strong fundamentals are expected to test the waters of the public market.
 


Despite the hype, AI & ML startups have yet to fully demonstrate their market advantage compared with firms in more established verticals like software as a service. Our new report seeks to give a quantitative comparison of SaaS and AI & ML in an ever-changing venture market.

As the tech landscape continues to evolve and mature, strategic investments in AI & ML startups could pave the way for groundbreaking innovations and transformative growth opportunities. Whether they take up the mantle from SaaS as VC's vertical of choice remains to be seen.

For more details on the dynamics of SaaS and AI & ML, as well as the trends, challenges, and opportunities that lie ahead, download the free report: Quantitative Perspectives: Cleared for Takeoff?
 
Best,

Susan Hu
Associate Quantitative Research Analyst
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Market Updates  
 
Private debt funds have delivered an estimated net return of 8.2% for the 12 months ended Q3 2023—the second highest among private market strategies during that span.

Private debt was also the second-largest fundraising strategy of the year, overtaking VC, according to our new Global Private Debt Report.

When the final numbers are in, the total value of private debt funds closed in 2023 will likely exceed $200 billion for the fourth consecutive year:
read the free report
 
 
Closed-end private real estate funds raised only $99 billion in 2023, and when the data is finalized, this may be the lowest fundraising figure since 2012.

Opportunistic and distressed strategies stacked the most commitments as asset managers and lenders offloaded office portfolios at steep discounts.

Our new Global Real Estate Report breaks down which strategies are still fundraising successfully in the challenging environment, touching on China's struggling market, public vs. private performance, and more:
read the free report
 
 
Thematic Research  

Takeaways From the 2024 McDermott Will & Emery HPE Conference

Banker pipelines and federal regulators' antitrust push were the talk of McDermott Will & Emery's Healthcare Private Equity conference earlier this month in Miami.

The cross-agency federal probe, as well as investment opportunities in pharma services and the larger PE slowdown, stood out in panels and side conversations.

Read more of our takeaways from the event:
read the free research
 
 
Industry & Tech Research  
 
Electric vehicle growth is slowing. Autonomous taxi operators are scaling back.

At this inflection point for automotive tech, VC investors are now focused on solutions that promise to power the next generation of manufacturing capabilities.

According to our new Mobility Tech Report, the trend is helped by intense international competition and significant US investment in domestic production:
read a free preview
 
 
2023 was the second year in a row that VC investment in foodtech fell by more than half.

Food costs and inflation are some ingredients that have made for a difficult environment, but there are still reasons for optimism, according to our new Foodtech Report.

From startups operating within the plant-based proteins space to a resurgence in the food e-commerce segment, our research serves up the key trends and datasets:
read a free preview
 
 
Webinars & Events  

Be sure to add these events to your calendar:

March 27: Continuing our series of webinars discussing the findings from our new All In reports, we'll talk about the European landscape for women in VC. Register here.

April 4: Join us and J. Thelander Consulting for a discussion on how compensation at VC and PE firms has changed in recent years. Register here.

April 9: Our senior analyst Brendan Burke will discuss the structure and state of the LLM app stack with Yujian Tang, a developer advocate at Zilliz. Register here.

April 29-May 1: Come visit us at DealMAX in Las Vegas, where our lead PE analyst Tim Clarke will lead a session discussing where and when private equity firms will find exit opportunities. Register here.
 
 
Commentary  

Senior tech analyst Brendan Burke weighs in on the report that Nvidia is in advanced talks to buy Run:AI in a deal that could reach as much as $1 billion.

"This in-progress deal confirms our view that among AI semiconductor startups, value will be created in software.

"This acquisition [would follow] Databricks' acquisition of MosaicML for $1.3 billion last year in the same category of AI hardware acceleration.

"While Nvidia already has the canonical CUDA platform for AI deployment on GPUs, its software doesn't natively support multi-GPU scheduling with Kubernetes, leading the company to partner with and now [look to] acquire Run:AI.

"Currently, additional Nvidia software must be installed for containerized deployment that isn't widely popular.

"An arms race is developing to corner the market on developer- and infrastructure-friendly GPU orchestration software libraries. AMD recently acquired Mipsology and Nod.AI while partnering with Lamini AI to bolster its software ecosystem.

"Intel will be encouraged to make further inroads in generative AI optimization, particularly in the open-source ecosystem, to bolster its position."

 
Brendan Burke

Senior Emerging Technology Analyst
AI & Machine Learning
 
In the News  

Our insights and data featured in the press:
  • Can AI hype fuel an IPO resurgence? [Fortune]

  • "Reddit has been built on its users, so at the very least, this is a goodwill building effort." [Bloomberg]

  • If VCs begin to raise smaller funds, LPs may not need as much money allocated to the strategy. [TechCrunch]

  • Foodtech funding fell ~60% in 2023. [The Spoon]

  • Why bitcoin ETFs have seen record outflows. [Fortune Crypto]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.
 
 
ICYMI  

More of our recent research (* - report preview):

Market updates
Thematic research
Industry & tech research
Credit research
Coming next week (subject to change)
  • Digital Health Report*
  • Healthcare IT Report*
  • Launch Report: Data Analytics*
  • Vertical Snapshot: Advanced Manufacturing*
  • France Market Snapshot
  • Emerging Space Brief: Thermal Batteries
  • The rise of mega-funds in Europe
 

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The latest in ESG, impact investing

Friday, March 22, 2024

Mobility's manufacturing moment; Frontline's transatlantic ambitions; Greenly bags $52M for carbon accounting Read online | Don't want to receive these emails? Manage your subscription. Log

Private debt ranks 2nd in returns, fundraising

Thursday, March 21, 2024

Reddit IPO among Sam Altman's top wins; Astera nabs 1st AI IPO for 2024; VCs target B2C in SE Asia Read online | Don't want to receive these emails? Manage your subscription. Log in The Daily

Eyes on pharma services at healthcare PE event

Wednesday, March 20, 2024

2024 kicks off with GP leverage over founders; ranking mid-market's prolific GPs; PIF, a16z discuss $40B AI VC fund Read online | Don't want to receive these emails? Manage your subscription.

Real estate's rocky road

Tuesday, March 19, 2024

Ranking 2023's busiest lenders; 10 nuclear fusion startups with the most cash; biopharma focuses on quality over quantity Read online | Don't want to receive these emails? Manage your

Can AI stand up to Saas?

Monday, March 18, 2024

Investors dine and dash on foodtech; could France become Europe's biggest PE market?; mid-market gains upper hand in PE Read online | Don't want to receive these emails? Manage your

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