PitchBook News - Legal tech takes AI slow and steady

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The Daily Pitch: VC

July 24, 2024

Presented by Fidelity Private Shares^SM

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

VCs bet big on legal-tech companies like Harvey and Clio as founders take the slow and steady approach to AI

AI-enabled robotics bolsters otherwise slow dealmaking for warehouse and supply chain tech

Blackstone puts the spotlight on opportunities in Japan with a $1.2 billion retail fund

The Q2 2024 PitchBook-NVCA Venture Monitor dives into the latest trends in the US VC market

Today's Top Stories

AI-powered legal-tech startups cut the hype, gain more traction

(Jenna O'Malley/PitchBook News)

The legal-tech vertical has gotten a jump-start, driven by AI-infused startups attracting investors' capital and attention. But what's behind the rush?

In one word: restraint. Counter to the hype-driven frenzy surrounding AI, VCs and startups are taking a more measured approach, with some "handholding" lawyers as the AI transition begins.

Yesterday, legal-tech specialist Harvey raised a $100 million Series C led by GV at a $1.5 billion valuation. Meanwhile, Clio picked up $900 million in a Series F led by NEA, valuing the company at $3 billion.

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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.

read it now

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A message from Fidelity Private Shares

Unlocking startup success: cap table optimization & runway extension

Join Fidelity Private Shares for a conversation with industry experts as they delve into essential strategies for cap table optimization, effective fundraising models, and capital efficiency techniques.

In this virtual session, they'll cover how to structure a cap table for better growth and investor relations, best practices for building an investor and fundraising pipeline, as well as how to manage cash flow and fundraising cycles to help extend runway.

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Ex-Tesla Bot chief raises $78M for Mytra as AI robotics heats up

(Courtesy of Mytra)

Mytra, a robotics company for warehouse automation, launched from stealth yesterday with $78 million raised across three rounds, including a $50 million Series B led by Greenoaks.

The company joins a rapidly growing group of startups developing AI-enabled robotics, an emerging technology that is bolstering an otherwise slow dealmaking landscape for warehouse and supply chain technology.

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Shares for kitchen robots shine amid foodtech's difficulties

As the S&P 500 rose, the stock prices of most foodtech companies fell in Q2. Public kitchen technology companies alone broke away, overtaking the S&P 500 with 10% average growth. The share price of Circus Growth, which provides food-service robots and automation, rocketed up 140%.

With Steakholder Foods gutted by 93%, meat-alternative stocks deepened their slide, and food-delivery marketplaces followed them down.

Our Q2 2024 Foodtech Public Comp Sheet and Valuation Guide tracks performance, valuations, and market caps for key publicly traded companies.

see the data

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Blackstone hooks Japan's wealthy in $1.2B PE raise

(Wong Yu Liang/Getty Images)

Blackstone has sourced capital from wealthy Japanese individuals, featuring a minimum investment of around $50,000, as investors in the region start to allocate capital to alternatives amid times of inflation.

The PE market across Asia is seeing an uptick in capital inflows as managers seek more exposure. And fund launches by US managers of Asia-focused vehicles have increased: 2023's seven fund launches were a step up from three funds in 2022.

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LBO update: High demand signals dealmaking potential

(JamesBrey/Getty Images)

While leveraged loan activity backing LBOs was modest in the second quarter, evolving market dynamics—including improved sentiment, strong demand and potential rate cuts—suggest an active second half of the year.

Our LBO update takes a detailed look at the financing landscape, including competition between the broadly syndicated loan market and private credit.

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Since yesterday, the PitchBook Platform added:

11

VC valuations

2334

People

907

Companies

29

Funds

See what our data software can do

The Daily Benchmark:
2014 Vintage Global Funds-of-Funds

Median IRR

20.53%

Top Quartile IRR

23.59%

1.50x

Median DPI

Select top performers

Union Grove Partners Direct Venture Fund

Union Grove Partners Venture Access Fund

Spectra Private Equity II

*IRR: net of fees

68 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Brenig, a startup developing drugs using an AI and machine learning-based platform, raised a $65 million Series A led by NEA.

Gcore, a Luxembourg-based provider of IT infrastructure for the media and entertainment industry, raised a $60 million Series A led by Wargaming.

QA Wolf, a Seattle-based startup creating automated quality assurance software and testing for web applications, raised a $36 million Series B led by Scale Venture Partners.

Loyal, an Atlanta-based startup developing technology to help patients navigate digital healthcare systems, raised a $33.5 million Series B from investors including Concord Health Partners.

Cormint, a bitcoin mining company, raised a $29 million Series B led by investors including Paragon Equity Partners, Sixth Horizon and Cormint CEO James McAvity.

Plum, the London-based developer of a money saving app, raised a €19 million Series B. €15.8 million came from investors including Eurobank, iGrow Venture Capital and Venture Friends, and €3.2 million came from crowdfunding.

Rebellions, a South Korean AI chip designer, raised $15 million from Saudi Arabian state-owned oil group Aramco's VC arm, Bloomberg reported.

PE Deals

Docupace, the developer of a cloud-based document storage platform for wealth management companies, received a majority investment from Genstar Capital.

Gridiron Capital agreed to sell GSM Outdoors, which manages a variety of outdoor and sports goods brands, to Platinum Equity.

Finnish buyout firm CapMan partnered with Innofactor's founder Sami Ensio to launch a take-private offer for the Finnish cloud solutions provider.

KKR signed an exclusive pact with Italian oil and gas company Eni for a potential acquisition of a minority stake in its biofuel subsidiary, Enilive. The deal relates to a 20% to 25% stake that values Enilive at between €11.5 billion and €12.5 billion, including debt.

HIG Capital acquired Milan-based organic beauty and personal care brand Naturalia Tantum in partnership with the company's management team.

IK Partners agreed to acquire Defibrion, a Dutch distributor of automated external defibrillators, from shareholders including Holland Capital. Co-founder and CEO Joshua Valkenier and the management team intend to reinvest in the company alongside IK.

Exits & IPOs

Total Operations and Production Services, a company that provides low-emission natural gas compressors and compression services in the Permian Basin, has been acquired by NYSE-listed Archrock for $983 million.

Estafeta, a Mexico-based parcel delivery company, has been acquired by UPS as the company expands internationally.

Mott, a company that creates filtration and flow supplies for equipment across various industries, has been acquired by NYSE-listed industrial equipment maker Idex for $1 billion.

Medline, an Illinois-based company that manufactures medical supplies, is exploring a 2025 IPO that could value the company up to $50 billion, Bloomberg reported.

Cyabra, an Israeli startup that helps companies find accounts spreading misinformation on social media, plans to go public on the Nasdaq via a SPAC merger with Trailblazer Merger Corporation.

Capital Dynamics, a Switzerland-based asset management firm, exited US residential waste collection company Best Trash from a vehicle managed by Amberjack Capital Partners.

South Asian ridesharing and food delivery service provider Grab acquired Singapore's Chope, which offers a dining reservation platform.

Fundraising

Johannesburg-based buyout firm Metier held its final close of Metier Capital Growth Fund III on $219 million. The fund, which is focused on sub-Saharan Africa, has made three investments to date in the telecommunications, IT and energy sectors.

Liberty Mutual Strategic Ventures launched its second VC fund with $200 million. The vehicle will be used to invest in startups in the insurance industry.

Chart of the Day

Source: The typical private equity fund now takes 1.5 years to close

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PitchBook News - Legal tech takes AI slow and steady

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