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The Daily Pitch: VC

August 23, 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:

A high bar for exits has caught up with biopharma startups

After accounting for the fact that valuations tend to rise over time, startup prices aren't as high as they appear

Advance Auto Parts agrees to sell its Worldpac unit to The Carlyle Group for $1.5 billion

PE fundraising in Asia is on track to top $48 billion, well ahead of last year's total

Today's Top Stories

A high bar for exits hits biopharma startups

Biopharma remains a strong VC sector, showing resilience through funding rounds. But overall exit value has sharply declined quarter-over-quarter—from $10 billion in Q1 2024 to less than half that amount in Q2, according to our latest Emerging Tech Research.

Only biopharma companies with robust clinical data are succeeding in IPOs, leaving the majority of startups facing significant barriers to exit. This suggests many—particularly those focusing on gene editing, targeted cancer treatment and AI drug discovery platforms—may need to continue their development independently rather than seeking acquisition by Big Pharma.

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Early-stage VC valuations are more reasonable than they appear

(Dimitri Otis/Getty Images)

Investors hoping for a steep drop in early-stage startup valuations have so far been disappointed, but prices for these companies are cheaper than they first appear—signaling an era for better returns may be on the horizon.

Early-stage startup valuations have remained sticky despite a steep downturn in VC investment. But after accounting for the fact that valuations tend to rise over time, today's startup prices are lower than in periods of blatant excess, such as the dot-com era or the tech boom that ended in 2022.

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Advance Auto Parts sheds Worldpac unit to Carlyle for $1.5B

(Imaginestock/Getty Images)

Advance Auto Parts has agreed to sell Worldpac, its automotive parts wholesale distribution unit, to The Carlyle Group for $1.5 billion in cash, as carveouts fall slightly from their recent peak.

The transaction comes as carveouts' share of total PE buyouts declined from a Q1 peak of 11.7% to 10.3% last quarter, according to data featured in our latest US PE Breakdown.

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Measuring private markets' mixed performance

PitchBook's Q1 2024 Private Capital Indexes provide insights and quarterly return benchmarks for the private markets, offering a view of how the year has gone so far.

2024 has been a bit of a mixed bag—with returns in some sectors such as real estate turning negative, while venture capital eked out a small gain after more than two years of negative returns.

The report also includes indexed returns for private equity, real assets, private debt, funds-of-funds and secondaries. It provides risk-modeling data, including adjusted volatility estimates, correlations with public indexes and peak-to-trough drawdowns over select market environments.

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Asia's PE fundraising rebounds, far outpacing 2023

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PE fundraising in Asia is picking up again and on track to top $48 billion, well ahead of last year's total.

Hong Kong remains a major fundraising hub—five out of the seven biggest fundraises in the last five years involved vehicles based there.

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Digital infrastructure is LPs' latest hot-ticket item

(George Frey/Getty Images)

Limited partners are allocating more and more capital to digital infrastructure strategies.

Over the past decade, allocators have poured capital into infrastructure and real estate funds investing in digital infrastructure, capitalizing on the sector's historical outperformance. In fact, from 2014 to 2023, private funds with either investments in digital infrastructure or a specified mandate to invest in the sector brought in a collective $800 billion in capital commitments.

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Funds

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2021 Vintage Global Debt Funds

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Star Asia Japan Special Situations V

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VC Deals

Borealis Biosciences, a biotech company developing RNA medicines to treat kidney disease, raised a $150 million Series A from Versant Ventures and Novartis.

Story Protocol, a San Francisco-based startup creating blockchain technology to prevent AI from stealing intellectual property, raised an $80 million round led by Andreessen Horowitz that values the company at $2.25 billion, according to reports.

Openwater, a startup developing a hardware and software platform for medical device makers, raised $54 million from investors including Plum Alley Ventures, Khosla Ventures and Bold Capital Partners, Axios reported.

Opkey, a California-based startup developing an AI platform to test workplace software, raised a $47 million Series B led by PeakSpan Capital, TechCrunch reported.

Human Longevity, which is developing technology related to human aging and healthcare, raised a $39.8 million Series B led by TVM Capital Healthcare.

Vandria, a Swiss biopharmaceutical startup, secured a $30.7 million Series A led by ND Capital.

Siepe, which provides software for private credit and collateralized loan obligation teams, raised a $30 million Series B led by WestCap.

XO Life, a Munich-based digital health specialist, raised €7 million in a round led by Sandwater and Grazia Equity.

Workpay, the Kenyan developer of an HR and payroll platform, secured a $5 million Series A led by Norrsken22.

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PE Deals

YA Group, a forensic and risk-mitigation consultancy company working with insurance carriers, has been acquired by THL Partners.

TickPick, a company that runs an online shopping platform for buying event tickets, received $250 million from Brighton Park Capital and Symphony Ventures.

DMI Finance is raising $330 million from Mitsubishi UFJ Financial Group, Bloomberg reported. The deal values the India-based provider of personal and business loans at $3 billion.

Germany's GFOS, an HR-tech company, received an investment from The Riverside Company.

Inflexion Private Equity Partners acquired Cutwel, a UK-based machinery tool provider, from NorthEdge.

Knowtion Health, a company providing revenue cycle-management technology, has been acquired by Arsenal Capital Partners.

Exits & IPOs

PS, a company operating private airport terminals in Los Angeles and Atlanta, has been acquired by Groupe ADP from TPG.

Reclaim.ai, a San Francisco-based startup developing an automated calendar tool, has been acquired by Nasdaq-listed Dropbox.

Salucro Healthcare Solutions, an Arizona-based company developing financial technology for the healthcare industry, has been acquired by U.S. Bank.

APK, a Germany-based company developing recycling technologies, will be acquired by LyondellBasell.

Blameless, a company specializing in software incident management, has been acquired by New York-based Firehydrant.

Fundraising

Multiples Alternative Asset Management is raising $300 million for a continuation fund to retain Vastu Housing Finance and APAC Financial Services, Bloomberg reported.

Illumina Ventures, a Bay Area-based healthcare VC firm, launched Illumina Innovation Fund III with a target of $300 million, according to SEC filings.

Google and several other California-based tech companies have established a partnership to invest in a new vehicle, the News Transformation Fund, which will support local news outlets.

Corporate M&A

Max Büsser & Friends, a Switzerland-based watch brand, sold a 25% stake to Chanel.

Chart of the Day

Source: Every PE connection to Europe's top football clubs

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PitchBook News - A high bar for biopharma exits

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