PitchBook News - SEC pivots to litigation

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The Daily Pitch: VC

September 17, 2024

Presented by Deloitte Audit & Assurance

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

Our Greater China Private Capital Breakdown unpacks the state of PE and VC in the region

Thwarted at rulemaking, SEC chair shifts focus to litigation

Salesforce's VC arm has launched a new $500 million AI fund

AI and machine learning kept their VC crown in Q2, our Emerging Tech Indicator shows

Both capital raised and fund counts are dropping for Europe's first-time PE funds

Today's Top Stories

SEC turns to litigation to address rulemaking failures

SEC chair Gary Gensler (Drew Angerer/Getty Images)

After a final thwarting of the SEC's efforts to govern the private funds industry, the agency has moved to forgo rulemaking in favor of litigation.

It became clear this month that the SEC would not act to challenge the Supreme Court's June decision to throw out proposed requirements for more transparency around fees and preferential treatment practices. The SEC's inaction was seen as the nail in the coffin in its protracted efforts to invoke rule changes to regulate the industry.

Now, chair Gary Gensler is guiding an effort to effect change through enforcement actions and litigation instead. To add to his challenges, recent Supreme Court developments have chipped away at the power of federal agencies to introduce rule changes.

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China's private market dealmaking sinks further

China's private markets are experiencing a significant slowdown, with 2024's annual dealmaking totals projected to land at their lowest levels since 2015. Heightened macroeconomic challenges, regulatory shifts and elevated US-China tensions have taken their toll on PE and VC activity in the region, according to our 2024 Greater China Private Capital Breakdown.

Exit opportunities for VC- and PE-backed companies are currently limited in the region and overseas, leading to a more active secondaries market. The pullback of North American institutional investors has increased the importance of domestic LPs, particularly those that are government affiliated. The report is available in English, traditional Chinese and simplified Chinese.

read the report

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A message from Deloitte Audit & Assurance

Road to Next—More than a report, a gateway to the VC industry future

Deloitte's quarterly report provides a comprehensive analysis of emerging trends, market dynamics, and VC investment opportunities. Get exclusive insights from Deloitte's Private Growth leader, Heather Gates, in every issue. This issue's guest contributors include Kevan Flanigan, Private Risk & Financial Advisory Leader, and Jamie Rapps, Audit & Assurance Senior Manager. Subscribe today for these insiders' points of view.

Want to catch up on what's trending now? Download the current report focusing on expansion-stage exits. Read how the liquidity crunch has impacted the private markets, from startups seeking capital to investors raising new funds—and how inside and down rounds point to stronger dealmaking ahead.

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Salesforce's VC arm doubles AI firepower to $1B

Salesforce CEO Marc Benioff
(Kevin Dietsch/Getty Images)

Salesforce's VC arm has launched a new $500 million AI fund, doubling the capital it has earmarked for such investments.

Salesforce Ventures has deployed checks into highly competitive rounds for AI startups like Cohere, Hugging Face and Mistral AI. The software giant was also one of the first firms to launch a dedicated AI fund—but it's now far from alone.

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AI extends dominance with top tech VCs

The AI fever has yet to break at some of the biggest venture capital firms.

According to our latest Emerging Tech Indicator, which covers the startups backed by a subset of the most successful firms, total deal value soared to $11.9 billion in Q2 2024—with AI deals accounting for $8.4 billion of the total. The biotech vertical was a distant second, with crypto lagging behind.

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Calpers' long-term plan yet to kick in, memo shows

(Max Whittaker/Getty Images)

Calpers' $63.5 billion-plus private equity portfolio is still significantly trailing its benchmark, according to investment consultant Meketa. The update comes after the pension moved to increase its PE allocation earlier this year.

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Europe's first-time PE fund closes still dropping

(Alexsl/Getty Images)

Economic uncertainties are leading more LPs to invest in more experienced funds, and this is showing in the ongoing decline in the number of European first-time funds reaching a close.

Both capital raised and fund counts are dropping for these vehicles with little sign of recovery.

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Since yesterday, the PitchBook Platform added:

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Funds

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The Daily Benchmark:
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0.02x

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VC Deals

Paris-based Akur8, which offers an insurance pricing and reserving platform, raised a $120 million Series C led by One Peak.

Manual, a London-based men's health startup, raised £29.2 million from investors including Felix Capital, Cherry Ventures and Octopus Ventures, Sifted reported.

TeamBridge, a startup developing HR-automation software for hourly workers, secured a $28 million Series B led by Mayfield.

Workflow automation software developer 11x.ai, based in San Francisco, raised a $24 million Series A led by Benchmark.

Supermaven, a startup developing an AI-powered text editor, raised a $12 million Series A led by Bessemer Venture Partners.

Smalt, a Berlin-based training specialist for green energy installation, completed an €8 million seed round led by Noa.

PE Deals

Achilles, a UK supply chain risk-management company backed by Bridgepoint, agreed to buy Spanish supply chain management company GoSupply

London-listed auto parts supplier TI Fluid Systems rejected a takeover bid from Apollo-backed ABC Technologies worth more than £800 million.

Temasek is close to acquiring a significant minority stake in Blackstone-backed VFS Global, a Dubai-based outsourced government services provider, at a $7 billion valuation, Bloomberg reported.

Real estate finance firm North Bridge, which focuses on specific private credit lending strategies, received a minority investment from The Carlyle Group. The PE firm will also supply up to $1 billion to facilitate loans for North Bridge.

Switzerland-based cloud technology provider SoftwareOne is in talks to merge with Crayon, a Norway-based competitor. Both companies, which are publicly listed, would become private in a merger involving PE firm Apax Partners, Bloomberg reported.

London-based Mayfair Equity Partners made a €35 million investment in BizAway, an Italian B2B travel management company.

Exits & IPOs

Bain Capital is preparing for a possible sale of UK auto and home insurer Esure in a deal that could be worth at least £1 billion, Reuters reported.

Generative AI startup Typeface has acquired two companies: Treat and Narrato. Treat specializes in AI-created photo products, and Narrato uses AI in content creation.

Nouryon, a Carlyle Group-backed company producing specialty chemicals for various industries, is considering an IPO.

Natural gas company BKV Corporation has launched the IPO of its common stock. The company first filed with the SEC to go public in 2022.

BingEx, a Beijing-based online shopping delivery service company, has filed for an IPO according to SEC filings.

Fundraising

Paris-based VC firm Noteus has launched with its first fund targeted at €600 million, the Financial Times reported.

Switzerland-based LGT Capital Partners raised at least $7 billion for its latest secondaries flagship fund, Secondaries Investor reported.

Silver Point Capital has raised $4.6 billion for a new opportunistic credit fund targeted at traded credit and global restructuring.

Chart of the Day

Source: Q2 2024 US PE Breakdown

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PitchBook News - SEC pivots to litigation

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