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The Daily Pitch: VC

April 30, 2024

Presented by Forge

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

We've launched Capital Pool, a weekly newsletter focused on what's driving LP decision-making. Subscribe here

Our analysts find the top emerging fund managers can offer higher upside potential than established firms

These 10 VC-backed digital health unicorns have a high likelihood of going public

General Catalyst, a16z wrap up 44% of LP capital committed to US VC funds in 2024

Today's Top Stories

The upside of up-and-coming managers

Established managers have an edge in the downtrodden fundraising market—and with good reason. They have earned trust with LPs and can pin their reputation on real returns.

But there's a risk to overlooking upstarts. The top emerging managers in multiple strategies can offer higher upside potential than tried-and-true firms, according to our latest analyst note—which covers performance trends across PE, VC, real estate and private debt funds.

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Our new LP-focused newsletter

(Julia Midkiff/PitchBook News)

The head of real assets at the New Jersey Division of Investment spoke to senior reporter Jessica Hamlin about how he accomplished an overhaul of the plan's fossil fuel-heavy portfolio.

Niraj Agarwal is in the process of offloading the pension plan's legacy investments in upstream oil, gas, mining and metals and making new allocations to digital infrastructure and the energy transition.

Since 2021, when he joined the investment team that manages the some $96.8 billion in assets from the state's seven public pension plans, he has reduced the portfolio's conventional energy exposure from around 60% to 25%.

This story originally appeared in our new Capital Pool newsletter, which features exclusive reporting and commentary on what's driving LP decision-making.

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A message from Forge

Get deeper insights into the secondary market from Forge

The secondary market for pre-IPO shares seems to be gaining momentum once again. As a leader in private company trading, Forge provides institutional investors with proprietary data, technology, and insights to bring transparency and access to a notoriously opaque space. The Forge team helps investors around the world navigate this market.

The quarterly Forge Investment Outlook highlights key trends and data to empower investors to understand this evolving market.

Get the new Q2 report to find out how recent successful exits, increasing demand for high-profile unicorns, more transparent pricing, and other factors continue to drive investor interest in the private market.

Download the Forge Investment Outlook today

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General Catalyst, a16z capture 44% of US VC fundraising in 2024

General Catalyst CEO Hemant Taneja
(Sam Barnes/Getty Images)

Despite a major LP pullback from venture, an elite cohort of VC firms is still successfully raising huge sums of LP capital.

General Catalyst, which has led rounds for companies like Snap, Warby Parker and Deliveroo, is wrapping up a $6 billion VC fund, the Financial Times reported. Earlier this month, Andreessen Horowitz announced it had raised $7.2 billion across five fund strategies.

That combined $13.2 billion represents about 44% of the total LP capital committed to US VC funds since the start of the year, according to PitchBook data.

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IPO Watchlist: The digital health unicorns most likely to go public

(SOPA Images/Getty Images)

Among the digital health contenders for a near-term IPO are healthcare provider marketplace Zocdoc, telehealth specialist Ro, and Hinge Health, the developer of a virtual physical therapist for musculoskeletal conditions.

These 10 US VC-backed digital health unicorns have a high likelihood of going public according to PitchBook's VC Exit Predictor.

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Divestitures rise as PE firms seek value

For nearly a decade, PE investors sought growth over value—a strategy that was rewarded as long as multiples expanded. But higher borrowing costs have capped valuations and sent investors flocking to a strategy long out of vogue: divestitures.

PE-led acquisitions of corporate divestitures have risen steadily as a share of all buyouts from an all-time low of 5.7% in Q4 2021 to 12.6% in Q1 2024, our recent analyst note explains. Divested assets tend to be cheaper, allowing firms with a clear valuation strategy to win big at a time when financial leverage is less impactful.

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A comeback for European VC?

European VC deal value bounced back in Q1 with an increase of more than 19% year-over-year and more than 16% from Q4. Fewer rounds took place than in the previous quarter as investors prioritized quality over quantity, according to our Q1 2024 European Venture Report, sponsored by J.P. Morgan.

Exit activity for European VC-backed companies has shown little sign of recovery. At its current pace, 2024's exit figures would likely fall below last year's.

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Since yesterday, the PitchBook Platform added:

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Funds

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The Daily Benchmark:
2018 Vintage European Real Assets Funds

Median IRR

11.09%

Top Quartile IRR

12.30%

0.17x

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EQT Infrastructure Fund IV

Partners Group Global Infrastructure 2018

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VC Deals

Crypto company Tether invested $200 million in brain-computer interface developer Blackrock Neurotech.

AI edge computing startup Blaize raised $106 million from investors including Franklin Templeton, Mercedes Benz and Temasek.

Molecular diagnostics startup Variantyx raised $36 million from investors including New Era Capital Partners and Peregrine Ventures.

Electronic materials startup Thintronics raised a $23 million Series A led by Maverick Capital and Translink Capital.

Mental health care startup Amae Health closed a $15 million Series A led by Quiet Capital.

UK-based orthobiologics startup Locate Bio raised £9.2 million from Mercia Ventures and BGF.

X Shore, a developer of electric boats, secured 100 million Swedish kronor (around $9.1 million) from existing investors.

Lightsmith Group joined the $50 million Series C for AI sustainability startup AiDash, bringing the round's total to $58.5 million, The Wall Street Journal reported.

Madrid's Indigitall closed a €6 million Series A led by Data Point Capital, GoHub Ventures and Adara Ventures for its digital marketing automation platform.

Don't miss our upcoming webinar

Venture capital is off to a slow start in 2024, with 100 US venture funds raising just $9.3 billion in the first quarter. What could this mean for the remainder of the year?

Join PitchBook analysts and experts from our partner NVCA and sponsors J.P. Morgan, Dentons, and Deloitte on May 1 for a live discussion of our latest Venture Monitor report, diving into the themes and trends of the current US venture market.

Register now to secure your spot.

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PE Deals

Music rights company Hipgnosis Songs Fund
has agreed to a $1.56 billion renewed takeover offer from Blackstone. The firm is offering $1.30 per share, outdoing a $1.25-per-share bid made by rival suitor Concord Chorus last week.

Valtech, a UK-based digital marketing company backed by BC Partners, has completed its acquisition of the digital transformation consultancy Kin + Carta.

General Mills is exploring options to sell its North American Yoplait yogurt business, which could be worth more than $2 billion, Reuters reported.

Reinold Geiger, the billionaire owner of Hong Kong-listed L'Occitane International, is nearing a deal to take the skincare company private for potentially $7 billion, Bloomberg reported.

Pine Gate Renewables, a developer and operator of utility-scale solar farms, has received a $650 million investment from Generate Capital.

Exits & IPOs

The Carlyle Group is working with Tamko Building Products' majority family owners on a possible sale of the Kansas-based roof-shingles manufacturer, which could fetch more than $3.5 billion, Bloomberg reported.

Fundraising

In a second close on $265 million, UK-based infrastructure firm NextEnergy Capital brought the total raised for its fifth fund for investment in solar and battery storage to $745 million.

Chart of the Day

Source: VC Investment in Climate Tech

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PitchBook News - A case for emerging managers

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