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The Daily Pitch: VC

June 28, 2024

Presented by Microsoft for Startups

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

Introducing our pharmatech coverage, which details the market landscape and dealmaking for PE and VC investors

Healthcare PE funds are exceeding fundraising targets on average

Venture investment in generative AI is soaring in Europe

Today's Top Stories

Introducing pharmatech VC and PE research

We're launching new coverage of the pharmatech sector, which includes contract organizations and outsourcing services for drug research, development and manufacturing. Kazi Helal, Ph.D., PitchBook's senior analyst for biotech, details the market landscape and dealmaking in our inaugural report on the space.

The sector, traditionally dominated by a few large companies, now sees PE and VC investors discovering opportunities and leveraging post-pandemic biomanufacturing needs.

Dealmaking in the pharmatech industry has moderated from post-pandemic peaks and faced continued pressure in 2024, with PE investors focusing on consolidating mature companies and VCs launching the future of pharmatech.

Investors are finding opportunities in novel technologies like generative AI for drug discovery and clinical trials, as well as maturing ones like cell and gene therapies—where high demand creates the need for scalable manufacturing.

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Venture opportunity funds may be coming back—in miniature

(Dev Images/Getty Images)

They sure don't make opportunity funds like they used to.

Propelled by the venture boom of 2020 and 2021, nine-figure vehicles used to double down on star portfolio companies became du jour. The strategy has since fallen out of favor as the venture landscape has slowed.

Early-stage investor Freeflow has raised $35 million via the firm's Fund Two and an additional $15 million in an opportunistic fund. The firm's approach shows how the opportunity fund playbook can be tweaked in a smaller, nimbler fashion.

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A message from Microsoft for Startups

Founders & investors go niche and earlier in AI

Venture investment in AI continues to remain resilient amid market volatility. Worldwide, close to 1,800 transactions have closed thus far in 2024 for an aggregate of $21.1 billion. This frenetic level of competition has prompted founders and investors to move upstream in the AI ecosystem, as detailed in Microsoft for Startups' latest report: AI in the Early-Stage Venture Ecosystem. The report maps out key trends defining early-stage dealmaking against macro context, including:

What financing metrics at the early stage reveal for valuations and deal sizes
Where business opportunities lie in budding regulations and increasingly costly technical hurdles
The role of corporate and nontraditional players for deals and partnerships

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VC investment in generative AI keeps breaking records in Europe

(Vertigo3d/Getty Images)

Roughly halfway through 2024, European generative AI startups have already raised a record amount of VC funding.

A handful of outsize deals, including those for Mistral AI and DeepL, have claimed a large portion of deal value.

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Healthcare fundraising activity outpaces other sectors

(Seng Kui Lim/Getty Images)

Despite the turbulent market backdrop, healthcare PE funds on average have managed to surpass their fundraising targets since the beginning of 2023.

In the midst of these market conditions, Concord Health Partners is seeking $250 million for its third flagship fund.

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Insurtech stumbles on road to recovery

VC investment in insurtech companies dropped across the board in the first quarter, according to our recent Emerging Tech Research. But as startups in the sector benefit from renewed momentum in tech stocks, our analysts anticipate a possible rebound in the coming quarters.

One area of interest: Startups like DigitalOwl and Federato are leveraging AI to streamline insurance underwriting and personalize policies. The report also covers key trends, deals and players in the industry, with company spotlights on Hyperexponential and Peppercorn AI.

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Seed investors are hightailing it from blue-chip VCs

(Chloe Ladwig/PitchBook News)

Becoming a GP at a major VC firm is a golden ticket for life. The initial whiplash can be extreme: You'll find yourself skiing in Aspen on the weekdays, swapping Aritzia for Balenciaga and shopping for timeshares in Sun Valley.

Leaving a well-established firm to launch an upstart fund is daunting in the best of times. So why would anyone ever leave a blue-chip firm to spin up their own vehicle?

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People

Anne Fazioli-Khiari has been named partner and chief operating officer at G2 Venture Partners. Fazioli-Khiari has previously worked at JP Morgan, General Electric and BrightSource Energy.

VC Deals

SpaceX will launch its latest tender offer at a price that raises the startup's valuation to about $210 billion, or $112 per insider share, Bloomberg reported.

Sila, a company developing silicon-based battery technology for electric vehicles, raised a $375 million round from investors including T. Rowe Price, Sutter Hill Ventures and others.

ClearSky Global, a Canada-based producer of low-carbon fuel, raised $168 million.

Axelera, a Netherlands-based startup developing AI chip hardware and software, raised a $68 million Series B from investors including Invest-NL, Samsung Catalyst Fund and others.

Odaseva, the developer of the data security platform used by Salesforce, raised a $54 million Series C led by Silver Lake Waterman.

KarmaCheck, a startup optimizing background checks and credentialing for hiring processes, raised a $45 million Series B led by Parameter Ventures.

Li Industries, which is developing battery recycling technology, raised a $42 million Series B from investors including GM Ventures, DNX Ventures, TechEnergy Ventures and others.

Dust, a Paris-based company designing specialized AI assistants, raised $16 million in a round led by Sequoia.

Bling, the Berlin-based developer of a finance app for families, closed a $12 million Series A led by Owl Ventures.

PE Deals

TPG has acquired Altimetrik, a technology consulting service company specializing in digital business methodology.

Bain Capital and CVC Capital Partners are among PE firms considering bids for French software company Orisha, Bloomberg reported. A deal could value the company at €2 billion.

LDC has invested $12 million in Waterscan, an ESG-focused water management consultancy.

Clariti, which provides permitting solutions to local governments, has received $10 million in growth financing from CIBC Innovation Banking.

M Group Services, a UK-based company that offers infrastructure maintenance services, has been acquired by CVC Capital Partners for about £1 billion from PAI Partners.

Main Capital Partners has acquired SoftProject, a business process management software company based in Germany.

London-based firm Waterland Private Equity has invested in Black & White Engineering, an engineering design consultancy.

Warwick Capital Partners has bought a majority stake in Danforth Care Homes, which operates 18 care homes across the UK, from LNT Care Developments.

Wise Equity has agreed to acquire Absolute, an Italy-based manufacturer of luxury yachts.

PortSwigger, a UK-based provider of application security software, has received a $112 million investment from Brighton Park Capital.

Exits & IPOs

Blackstone is considering a sale of Legence, which provides sustainability consulting services to the utility and building construction industries. The company could be valued at up to $5 billion, Bloomberg reported.

Blackstone-backed Emcure Pharmaceuticals has set its Mumbai IPO date for July 3 and is looking to raise around 8 billion rupees (about $96 million) by issuing new shares.

Fundraising

Faropoint, a real estate investment firm, closed its latest fund after raising $915 million.

Presto Ventures, a Prague-based VC firm, has launched a €150 million fund targeting security- and defense-tech investments alongside Czechoslovak Group.

Blackhorn Ventures, a Denver-based VC firm investing in climate-tech and energy startups, raised $150 million for its third fund, Axios reported.

AI Fund, the VC incubator and firm founded by Andrew Ng, launched its second fund with a target of $120 million, according to SEC filings.

Ironspring Ventures, which invests in construction and manufacturing startups, raised a $100 million fund targeting industrial innovation.

Courtside Ventures, a VC investor focused on sports, gaming and lifestyle brands, launched its fourth fund with a target of $100 million.

Purple Ventures, a Czech early-stage investor, has launched a €40 million fund.

Corporate M&A

French manufacturing multinational Saint-Gobain has agreed to acquire Fosroc, a construction chemicals company based in Dubai, for €960 million.

Chart of the Day

Source: Q2 2024 PitchBook Analyst Note: Behind the J-Curve

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PitchBook News - Introducing pharmatech VC research

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