Private capital funds find firmer footing

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The Daily Pitch: VC

May 16, 2024

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

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

Calstrs' taps a new chief investment officer, and he has a vision for the pension fund

Private investment funds regained some footing in Q3, but strategy performance varied widely, our Global Fund Performance Report shows

There's a new unicorn in AI land—data storage and management startup Weka

Low-cost computer maker Raspberry Pi's IPO plan gives London's exchange a boost

Today's Top Stories

Private capital funds find firmer footing

Some private investment funds found firmer footing at the end of Q3 2023, but the story varied significantly by strategy, data from our Global Fund Performance Report shows.

The good: Private equity led with a 10.4% one-year IRR, followed by private debt at 9.8%. Real assets notched 8.4% in the period, helped by steady returns in infrastructure funds.

The bad: VC remained a laggard with a -7.7% one-year IRR as the IPO market stayed quiet. Real estate recorded a -2.6% return, hurt by distress in the office and multifamily sectors. Funds-of-funds, whose performance tends to trail behind other strategies by a quarter or two, came in at -2.1%.

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Nvidia-backed Weka becomes the latest AI unicorn with $140M raise

(Weiquan Lin/Getty Images)

The enormous cost of AI computing has spawned a new unicorn.

Data storage and management company Weka has raised a $140 million Series E at a $1.6 billion valuation, more than double what it was worth in late 2022. Two of the biggest AI startups—Stability AI and Midjourney—are using Weka as tackling storage and infrastructure issues have become top priorities.

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Can the good times roll for private capital?

Private markets now control $14.7 trillion in AUM after growing at an annualized rate of 12.8% from 2012 to 2022, vastly outpacing publicly traded stocks and bonds.

High interest rates and an exit drought are challenging that growth, but LPs appear bullish on private allocations. Our recent analyst note explores how private capital AUM could expand over the next five years.

We forecast global private capital to reach nearly $20 trillion by 2028. That figure could stretch to almost $24 trillion in a positive macro environment.

Not all strategies will benefit equally: PE, private debt, and real assets have a steeper forecasted growth trajectory than VC and real estate.

Secondaries are expected to contribute to the boom, growing from $462.5 billion to over $700 billion in our base-case scenario.

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The Daily Benchmark:
2014 Vintage Global Real Estate Funds

Median IRR

10.17%

Top Quartile IRR

15.28%

1.04x

Median DPI

Select top performers

Exeter Industrial Value Fund III

L-A Saturn Acquisition

Activum SG Real Estate Fund III

*IRR: net of fees

68 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Humanity Protocol, a cybersecurity company using blockchain technology, has achieved unicorn status with a $30 million round led by Kingsway Capital.

Alkira, a cloud software developer based in San Jose, raised a $100 million Series C led by Tiger Global.

UK-based nuclear energy startup Newcleo has raised €87 million from undisclosed investors, Sifted reported.

New York-based fintech startup Cover Genius raised an $80 million Series E led by Spark Capital.

Polymarket, a New York-based developer of a crypto-trading platform, raised $70 million across two rounds: a $25 million Series A led by General Catalyst and a $45 million Series B led by Founders Fund.

German battery recycling startup Cylib has secured a €55 million Series A co-led by World Fund and Porsche Ventures.

Brixton Biosciences, a Massachusetts-based biotech startup specializing in pain management, raised a $33 million Series B led by Schooner Capital.

PayHOA, a Kentucky-based provider of HOA management software, raised a $27.5 million Series A.

Red.Health, an Indian medical-emergency responder, has received a $20 million Series B led by Jungle Ventures.

Malted AI, a UK-based startup that helps businesses build low-cost AI models, has raised €6.9 million in seed funding led by Hoxton Ventures.

PE Deals

ChrysCapital has invested $100 million in New Delhi-based Centre for Sight, which operates a single-speciality hospital chain throughout India.

Kilmer Sports Ventures is in talks to acquire French soccer club AS Saint-Étienne.

FalconPoint is investing more than $250 million in Jennmar, an infrastructure provider for the mining industry.

Restaurant365, which provides restaurant-management software, has raised $175 million led by Iconiq Growth, with KKR and L Catterton participating.

Mill Point Capital has agreed to acquire a majority stake in iQor, an enterprise customer engagement specialist.

HG Automation has acquired Michigan-based Treva Automation, an automation and integration services specialist for the transportation sector.

The Brydon Group has agreed to buy Micro-Dyn, which offers healthcare-claims software.

Avathon Capital, which invests in lower-middle-market education and workforce companies, has acquired Summit Professional Education, a professional education provider for physical, occupational and speech therapists.

Portfolio Companies

Project Liberty, former LA Dodgers owner Frank McCourt's IT consulting company, is forming a consortium to try to buy TikTok. President Biden recently signed a law forcing owner ByteDance to sell TikTok by early 2025 to continue operations in the US.

Exits & IPOs

A group of investors including Blackstone and Singapore's sovereign wealth fund GIC have sold the £1.6 billion stake in London Stock Exchange Group that they had inherited following its 2021 acquisition of data service firm Refinitiv.

Main Capital has exited Dutch ecommerce software company Optimizers to France-based software group Orisha.

Equistone Partners has agreed to sell a majority stake in Andra Tech, a Netherlands-based maker of high-tech precision parts, to Castik Capital.

Atom Finance, a fintech startup last valued at $150 million in 2021, has been acquired by Toggle AI.

HomePace, a fintech startup focused on home equity investments, has been acquired by EasyKnock.

DW Partners has sold Paramount, a provider of commercial janitorial services, to Canada-listed GDI Integrated Facility Services.

SJL Partners has exited its minority stake in silicones provider Momentive, which has been fully acquired by its majority stakeholder KCC.

Fundraising

Astorg has held a €4.4 billion final close on Astorg VIII—the Paris-based firm's largest flagship fund to date.

Luxembourg-based VC firm PeakBridge has closed its second growth fund on $187 million.

Calpers, the public pension plan for public employees in California, is deploying more than $25 billion into green-related private market investments, the Financial Times reported.

London-based growth buyout midmarket firm Capital D has closed its second fund on $169 million.

Nonprofit VC firm Accion launched a $125.5 million fund targeting financial services startups. The fund will focus on financial inclusivity for small business.

Chart of the Day

Source: Q1 2024 PitchBook-NVCA Venture Monitor

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Private capital funds find firmer footing

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