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10 climate-tech startups likely to go public; PE fundraising timelines stretch to 1.5 years; can PE's growing liquidity demands be met?
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The Daily Pitch: VC
July 11, 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:
Today's Top Stories  
A new reality sets in for VC
At a glance, Q2's venture numbers look promising: With $55.6 billion invested, deal value rose to an eight-quarter high. But $14.6 billion of that capital was concentrated in just two companies—CoreWeave and xAI. For everyone else, fundraising is a challenge as LPs remain reluctant to double down on the asset class, according to the Q2 2024 PitchBook-NVCA Venture Monitor, sponsored by J.P. Morgan, Dentons, Deloitte and Juniper Square.

Takeaways include:
  • The market has bottomed out and valuations are rebounding—but those up rounds are concentrated within a small cohort of high-growth startups, while middle-of-the-road startups are struggling.

  • Sluggish stock performance for companies outside of the Magnificent 7 is dampening the exit outlook, further entrenching LPs' caution.

  • As distribution-to-AUM rates continue to worsen, more VCs are taking to the secondaries market to secure much-needed liquidity.
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The typical PE fund now takes 1.5 years to close
(benedek/Getty Images)
PE's capital raising process is taking longer than it has in over a decade.

Bogged down by a lack of exits and plummeting distributions to LPs, the median time to close across US PE funds climbed to 18.1 months in H1 2024, up from 14.7 months in 2023 and 11.2 months in 2022, according to our Q2 2024 US PE Breakdown.
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IPO Watchlist: 10 climate-tech startups likely to go public
(UCG/Universal Images Group/Getty Images)
Climate-tech startups are having a strong year supported by regulatory tailwinds, high energy prices and investment. Exits remain a tricky proposition in the sector, but there are plenty of startups with proven commercial viability and traction.

Here are 10 venture-backed climate companies with a high likelihood of going public, according to PitchBook's VC Exit Predictor.
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Wave of PE liquidity needs fast approaches secondary market
(Drew Sanders/PitchBook News)
The secondary market isn't big enough to meet the growing tidal wave of PE's liquidity demands, and if primary exit avenues don't come back soon, LP portfolios may be caught in the wreckage.

In the limited exit environment, money managers have turned to alternative liquidity options like GP-led continuation vehicles and LP-led stake sales to return capital to their investors. But secondary funds' capital supply is only 10% to 20% of what is needed to meet the exit demands of aging funds.
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Why some European startups are picking debt over equity
(AntonioSolano/Getty Images)
Venture debt deal value is on track to reach new heights in Europe this year as a challenging equity market pushes startups toward alternatives.

Some €17.8 billion in venture debt has been invested so far this year. And at this pace, the annual total will likely surpass 2022's record levels.
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Matthew Savino has been appointed global capital markets head at PE firm The Carlyle Group following the departure of former head Brian Lindley. Savino previously worked at BlackRock as a managing director.
VC Deals  
Skild AI, a Pittsburgh-based startup building intelligence for robotics, raised a $300 million Series A led by Lightspeed, Coatue, SoftBank and Bezos Expeditions.

Hayden AI, a company using AI to develop a traffic management platform for cities, raised a $90 million Series C led by The Rise Fund.

X-Bow, which produces solid rocket motors, raised a $70 million Series B led by Razor's Edge, a national security-focused investor.

Epilot raised €10 million from Expedition Growth Capital. The German company offers software for utilities and grid operators focused on the energy transition.

Phyron raised €10 million in a Series B led by Round2 Capital. The Stockholm-based company offers an AI content creation platform for car dealers.
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Elevated interest rates have limited the debt that sponsors are able to raise and, by extension, the number of LBOs they are able to support. Despite this, recent spread compression and a wave of refinancing and extension activity have opened the door for a potential M&A issuance revival.

Join our panel of credit experts as they discuss the factors influencing the US leveraged loan and private credit markets and look at what's to come in 2024. Key topics include:
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  • Is the end of the repricing wave finally in sight for weary lenders?

  • Will CLOs maintain a record pace of issuance?
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PE Deals  
Summit Partners has picked up a stake in Revizto, a Switzerland-based provider of software used in the architecture, engineering and construction industries.

Levine Leichtman Capital Partners has invested in Improve International Group, a UK specialist in veterinary postgraduate training and education.

BGF has picked up a minority stake in Scotland-headquartered energy services company Glacier Energy.

Team.blue, a Belgium-based provider of digital transformation services to businesses in Europe, has sold Hg's 20% stake to the Canada Pension Plan Investment Board for about €550 million. The deal values the business at €4.8 billion.

Medicus IT, a company providing IT-related services in the healthcare sector, has received an investment from FFL Partners.

Beauty Bakerie, a makeup and skincare brand, has been acquired by Los Angeles-based PE firm West Lane Capital Partners.

Pro Food Solutions, a collection of three portfolio companies of IMB Partners that supply food to the military, has closed on debt financing totaling $153 million.
Exits & IPOs  
Hi-Tech Apparel has acquired Unmade, a VC-backed custom-clothing software company based in the UK.

Limerston Capital has completed its exit of Village Bakery, a premium private-label baked goods company, to French industrial bakery business Menissez. The exit generated a 3.5x money multiple and a 50% IRR.

Fluent BioSciences, a biotech startup developing technology for cell analysis, has been acquired by Nasdaq-listed DNA sequencing company Illumina.

Mibelle Group, the cosmetic products business of Switzerland-based Migros, could be sold for up to 500 million francs, Bloomberg reported.
Hahn & Company, one of the top PE firms in Asia, closed its latest fund on $3.4 billion, Bloomberg reported. The vehicle will target companies in South Korea.

Index Ventures, a VC backer of companies like Mistral, Discord and Figma, raised $2.3 billion in its latest fund targeted at AI development.

Avesi Partners, a Connecticut-based PE firm, raised $1.35 billion for its latest fund. Avesi focuses on healthcare and business services.

Astorg has raised €1.4 billion for a continuation fund formed to acquire Normec, a provider of testing and inspection services, held in Astorg VII.

Truelink Capital, a Los Angeles-based PE firm, has raised $875 million for its latest fund. Truelink primarily invests in technology-enabled services and the industrial sector.

Benchmark, a Bay Area-based VC firm, has raised $425 million for its latest fund targeted at AI startups, Axios reported.

Iceland's Frumtak Ventures has reached a $87 million close of its fourth sector-agnostic fund.
Unseen Capital, a VC firm targeting investments in healthcare startups founded by underrepresented entrepreneurs, has been acquired by fellow VC Firm Seae Ventures after the death of Unseen's founder Kayode Owens.

Cosmetics brand The Body Shop could be bought by Aurea Group, a firm led by British investor Mike Jatania, Bloomberg reported. The Body Shop went into administration after its last deal fell through.
Chart of the Day  
Source: Q2 2024 US PE Breakdown
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