AI IPO gives VCs a reality check for exits

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The Daily Pitch: VC

June 14, 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:

After a plateau, dealmaking grew for the PE middle market

Tempus AI priced its IPO at a 38% cut from its valuation peak

Analysts dig into foodtech startups' solutions to supply chain disruptions and environmental challenges

Today's Top Stories

Tempus AI prices IPO at 38% cut from valuation peak

(LL28/Getty Images)

AI-powered precision medicine company Tempus AI raised nearly $411 million in its IPO at a fully diluted market capitalization of $6.38 billion—a 38% discount from its $10.25 billion valuation set in 2022, according to PitchBook data.

While a great result for many investors, the pricing is a tough pill to swallow for others like Google, which bought into the healthtech specialist at a valuation above $8 billion in 2020. The company's largest institutional shareholder, Baillie Gifford, held shares worth $350 million at the IPO price.

The IPO pricing is a reality check that shows even an AI-heavy roadshow pitch must still overcome an unforgiving exit environment for unprofitable VC-backed companies.

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People

Rachel Stock and Cecilia Kwan have been named chief compliance officer and CFO, respectively, of middle-market PE firm HGGC. Stock will also serve as general counsel.

VC Deals

Dublin-based AccountsIQ has received a €60 million Series C from Axiom Equity for its accounting platform.

Avava, a Massachusetts-based startup developing laser skin-pigmentation treatment, raised a $35 million Series C from Jeisys Medical and Catalio Capital.

Echion Technologies, a UK-based developer of advanced lithium-ion battery materials, has received a £29 million Series B led by Volta Energy Technologies.

Findigs, a New York-based company that develops property management software, raised a $27 million Series B led by Nyca Partners.

Better Health, a San Francisco-based medical supplies specialist, raised a $14 million round from investors including Healthworx, University of Miami Health System and Mosaic General Partnership.

Unigrid, a startup creating batteries for long-term energy storage, received a $12 million Series A led by Transition VC and Ritz Venture Capital.

Fuze, formerly known as ChargeFuze, raised an $11.5 million Series A led by Beverly Pacific for its pay-per-use charging devices.

Berlin-based Restate, which helps developers build distributed applications, has secured a $7 million seed investment from Repoint Ventures, Essence VC and Firstminute Capital.

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PE Deals

Remaining bidders for Aareon, the software business of Aareal Bank, include Hellman & Friedman, TPG and Vista Equity Partners, Bloomberg reported.

RedSail Technologies, a company providing pharmaceutical software solutions, received a strategic growth investment from Leonard Green & Partners. Francisco Partners has also reinvested in the company.

Ardian is in talks to buy a majority stake in Alstef Group, a company that offers robotic solutions for airports and logistics.

BGF has exited UK cybersecurity company Garrison Technology following its acquisition by TPG-backed Everfox.

Doozer, a Germany-based property management software company, has been acquired by Zig, its Netherlands-based peer backed by Main Capital.

Maven Capital has completed an exit from GradTouch, a platform for graduate employers, to Pelican Capital, generating a 1.7x return.

Exits & IPOs

Alamo Drafthouse Cinema, a dine-in movie theater chain with 35 locations, has been acquired by Sony Pictures Entertainment.

Penna Cement has agreed to be bought by Ambuja Cements, a company owned by publicly listed Adani Group, for 104.2 billion rupees (about $1.2 billion).

GLP Capital Partners, a real estate investment firm with assets across Asia, Europe and the Americas, is in talks to be acquired by Ares Management, Bloomberg reported.

NIP Group, a Sweden-based esports organization with professional teams in Europe and Asia, has filed for its US IPO.

Uizard, a Copenhagen-based product design platform provider, has been acquired by San Francisco-based visual workspace company Miro.

Fundraising

Paradigm, a VC firm investing in cryptocurrency technology, raised $850 million for its third fund, according to co-founder Matt Huang.

JP Morgan has closed its first life sciences PE fund on $500 million. The fund will target biotech companies focusing on weight loss drugs, Bloomberg reported.

Northleaf Capital Partners has raised $370 million for its third VC fund focused on Canadian startups. The Canadian government invested in the fund through the Venture Capital Catalyst Initiative.

Kensington Capital Partners has raised $290 million for its third VC fund, also receiving support from the Venture Capital Catalyst Initiative.

Chart of the Day

Source: Q1 2024 Medtech Report

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