PitchBook News - Secondaries' rock-star moment

Plus: Gen AI's impact on data analytics; health care also faces AI; the uncertain future of manufacturing & more
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The Weekend Pitch
March 31, 2024
Presented by Masterworks
(Jenna O'Malley/PitchBook News)
Secondaries are certainly having a bit of a moment.

Secondaries funds raised $78.3 billion last year, according to PitchBook's 2023 Annual Global Private Market Fundraising Report. That total has been surpassed only once before, in 2020, when they pulled in $84.8 billion.

However, the 2023 tally was spread across just 72 funds—the lowest fund count since 2019—and just four funds accounted for 60.7% of the total. Much like in broader private equity fundraising, the success of several large funds is heavily skewing the numbers.

Secondaries funds also continue to account for only a small share of the overall market—6.7% of private capital raised last year, and just 3% of total private capital assets under management (as of June 30, 2023).

My point here isn't to pour cold water on the buzz around secondaries, but to emphasize it is still relatively early days for the growth of the strategy—particularly on the GP-led side, which has been responsible for much of the recent enthusiasm. For the secondaries universe to reach the next stage in its evolution, further specialization is inevitable, as is better alignment of interests between GPs and LPs.

This is The Weekend Pitch, and I'm Marie Kemplay. You can reach me at marie.kemplay@pitchbook.com.
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A message from Masterworks  
Elton John's $1.9 million Banksy sale reveals unexpected investment opportunity
Just last month, an iconic Banksy painting from the collection of Sir Elton John shattered expectations when it sold for a whopping $1.9 million at auction. But even more surprising is a group of investors also celebrating this sale: 61,000 everyday users of one investment platform.

Why? Because that platform, called Masterworks, enables anyone to invest in shares of blue-chip paintings by artists like Banksy, Basquiat, and Picasso. This way, not only the music moguls and billionaires of the world can benefit from the art market.

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Trivia

A darling during the pandemic, the digital health vertical has been on the decline following explosive growth in 2020 and 2021. It has begun to stabilize, however. According to Pitchbook's latest Digital Health Report, how much did startups raise within the digital health space in Q4 2023?

A) $899 million
B) $2.7 billion
C) $1.1 billion
D) $3.3 billion

Find your answer at the bottom of The Weekend Pitch!
 

The Gen AI opportunity in data analytics

(Yuichiro Chino/Getty Images)
The next era of the high-growth data analytics industry may be defined by how incumbents and startups maneuver to incorporate generative AI capabilities. For database leaders, generative AI is a core part of product road maps—whether through new platform launches or M&A.

Our inaugural Data Analytics report unpacks the opportunities for generative AI spanning data infrastructure, analytics platforms and vertical applications.
 
 

Shaping the future of manufacturing

(Gorodenkoff/Getty Images)
The advanced manufacturing sector is at a pivotal juncture. Driven by a skills and labor shortage, increased geopolitical pressures and renewed domestic interest, the vertical is seeing rapid growth—and plenty of attention from VC investors.

Our latest Emerging Tech Research provides a deep dive into the state of advanced manufacturing, touching on industry dynamics, key players and deals, and emerging opportunities for investors.
 

The will-they, won't-they of Gen AI and healthcare IT

(Solskin/Getty Images)
Large language models have renewed healthcare IT interest in using AI as part of diagnosis and treatment planning, an unproven use case for the sector. Our Emerging Tech Research explores the pros and cons of the emerging opportunity.

Overall, healthcare IT's Q4 2023 VC activity was at its weakest for the year, and PE's momentum stayed flat. Both strategies tallied up annual totals at a decline from the year before.
 

Quote/Unquote

(Courtesy of Tola Capital)
"A big part of venture is being able to actually work with and help companies and have capabilities that are super relevant to them. Microsoft is a nice training ground to be able to say, 'Oh, I understand product development; I understand the technical side; I understand marketing; I understand sales.'"

Tola Capital managing director Sheila Gulati on why so many of her former peers at Microsoft have jumped into venture investing.
 

Stay tuned

Keep an eye out for these insights and research reports coming out this week:
  • Q1 2024 PitchBook-NVCA Venture Monitor First Look
  • March 2024 Global Markets Snapshot
  • Emerging Space Brief: Trust & Safety Tech
  • Takeaways from the Game Developers Conference 2024
  • Future Food-Tech Conference Recap
 

Trivia

(Yuichiro Chino/Getty Images)
Answer: C)

In Q4 2023, digital health startups generated $1.1 billion in deal value across 57 deals, a slight increase of 1.7% from Q3. You can read more about the vertical, the new opportunities for investors and other key data points in the report.

This edition of The Weekend Pitch was written by Marie Kemplay, James Thorne, Clarinda Simpson and Jacob Robbins. It was edited by Andrew Woodman and Ron Prichard.

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