PitchBook News - Startups face up to valuation cuts

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The Daily Pitch: VC

August 12, 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:

How the crypto industry can energize smaller AI startups

Flat and down VC rounds are at a decade high, as startups that last raised in 2021 come back to market

Strategic buyers are paying a premium for PE assets

Retail investment platform provider Hargreaves Lansdown is delisting from the London Stock Exchange in a nearly $7 billion take-private

Today's Top Stories

Nearly 30% of VC deals are flat or down rounds

(Sebastien Bozon/Getty Images)

The pandemic-era highs are long gone, and for many startups that means finally coming to grips with a cut to their valuation.

Flat and down rounds for VC-backed companies hit a decade-high in the first half of 2024, comprising nearly 30% of all deals, according to PitchBook's latest US VC Valuations Report.

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How crypto can boost generative AI

As the demand for AI has exploded, so has the need for computing resources to handle and train large-scale models. And as costs soar, smaller startups are finding the needed computing power inaccessible.

Enter crypto. Our latest Emerging Tech Research covers dealmaking and trends in the crypto market in Q2 2024. As the sector has seen three straight quarters of growth, with total deal value hitting $2.7 billion in Q2, it is looking to be a part of what's next to keep its momentum going.

The crypto industry's decentralized GPU networks—blockchain-based marketplaces where people can share and monetize their unused computing resources—could help cut costs and expand access for AI startups.

read the preview

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Strategic buyers pay up for PE assets

(PM Images/Getty Images)

PE firms are increasingly pursuing sales to strategic acquirers, who are able to shoulder heftier premiums. The median deal value for PE assets sold to strategic buyers in the first half of 2024 stood at $480 million—up more than 70% from the same period last year, according to PitchBook data.

The expanding pool of bidders presents a mixed bag for PE dealmakers. On one hand, it eases the exit pressure faced by many firms, but on the other it increases competition in the deal market, industry participants say.

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Abu Dhabi's ADQ to pick up stake in Sotheby's

(Isaac Lawrence/Getty Images)

Abu Dhabi's sovereign wealth fund ADQ is set to acquire a minority stake in art auction house Sotheby's.

The fund will invest about $1 billion in the fine art vendor in an effort to further diversify its portfolio across new markets.

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Tracking public PE firms' performance

Public US PE firms are pouring money into AI, data centers and the energy transition. Meanwhile, these firms reported an improved exit environment and prospering credit businesses in their Q2 earnings calls.

Read more in our US PE Earnings Dashboard, which tracks trends in key performance metrics for public US PE firms.

explore the dashboard

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Hargreaves Lansdown to delist in nearly $7B UK take-private

(SOPA Images/LightRocket/Getty Images)

Hargreaves Lansdown has agreed to delist from the London Stock Exchange in a £5.4 billion (nearly $7 billion) take-private deal by a consortium that includes CVC Capital Partners.

PE sponsors are increasingly collaborating through club deals as they hunt for bargains.

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Since yesterday, the PitchBook Platform added:

1

VC valuations

350

People

120

Companies

14

Funds

See what our data software can do

The Daily Benchmark:
2016 Vintage Global Funds-of-Funds

Median IRR

16.63%

Top Quartile IRR

19.61%

0.55x

Median DPI

Select top performers

Spectra Investments III

Glouston Ohio Midwest Fund III

Drum Special Situation Partners IV

*IRR: net of fees

49 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Glean, a Bay Area-based startup developing an AI-powered search engine for business, is in talks to raise a $250 million round led by DST Global that would value the company at $4.5 billion, The Wall Street Journal reported.

Shiprocket, an Indian logistics startup, aims to raise $120 million from investors including Tribe Capital and Koch Group, Mint reported.

DevRev, a startup designing an AI-native platform for customer support and other development uses, raised a $100 million Series A led by Khosla Ventures that values the company at $1.15 billion.

Miru, which uses electrochromic technology to make windows, raised a $20 million Series A led by BDC Capital and Angelo Paletta of TNG Capital.

Levitate, a startup specializing in software for customer relationship management, raised a $15 million Series D led by Harbert Growth Partners, Northwestern Mutual Future Ventures and Bull City Venture Partners.

Syso, a company developing battery storage and renewable energy technologies, raised a $14.5 million Series B led by Kimmeridge.

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PE Deals

Trend Micro, a Japanese cybersecurity company valued at about 950 billion yen (roughly $6.5 billion), is exploring being taken private by a PE buyer, Reuters reported.

Esker, which provides cloud-based document management software, is in talks to be acquired by UK-based PE firm Bridgepoint, Bloomberg reported.

The renewable energy business of Algonquin Power & Utilities will be sold to New York-based LS Power in a transaction of up to $2.5 billion.

Les Schwab Tire Centers, a car tire and wheel distributor owned by Meritage Group, is in talks to be sold to another PE firm for around $7 billion including debt, Reuters reported.

Iteris, a Texas-based public company developing mobility and transportation infrastructure software, was acquired by PE-backed Almaviva for $335 million.

Electrical Builders Industries, a Minnesota-based company providing electric and industrial services for nuclear power facilities, was acquired by Pelican Energy Partners.

Exits & IPOs

Weride, a China-based autonomous vehicle startup, is seeking about $400 million in its US IPO, Bloomberg reported.

Ola Electric, an Indian electric vehicle company backed by investors including SoftBank, raised over $730 million in its IPO, valuing it at $4.8 billion.

Techem, a Germany-based energy management and billing company, is being considered for an IPO by controlling PE firm Partners Group, Bloomberg reported.

Fintech company Finastra's capital markets division may be sold by Vista Equity Partners in a deal that could value the business at more than $2 billion, Bloomberg reported.

ABC Fitness Solutions, a company developing software for the management of fitness centers, is being considered for a sale by Thoma Bravo for about $3 billion including debt, Reuters reported.

Fundraising

Flint Capital, a Boston-based VC firm, raised $160 million for its third fund targeted at information technology, cybersecurity, fintech and more.

Pebblebed, a San Francisco-based VC firm investing in tech companies, launched its second fund targeted at $125 million, according to SEC filings.

Chart of the Day

Source: Q2 2024 US PE Breakdown

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PitchBook News - Startups face up to valuation cuts

Older messages

How much debt is too much?

Valuations are worse than they look

Can crypto fix AI's computing crunch?

Running out of runway

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