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The Daily Pitch: VC

October 18, 2024

Presented by Fidelity Private Shares^SM

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

Higher valuations and fewer IPOs are forcing VCs to reconsider where opportunity funds lie

Cyera buys fellow startup Trail Security as AI turbocharges the need for rapid growth in the cybersecurity space

Blackstone's earnings showcase its surging credit business

Our Q3 valuations data for public companies in the medtech and mobility tech sectors

Five charts show Europe's VC dealmaking struggles

Today's Top Stories

VCs are rewriting the opportunity fund playbook—or scrapping it entirely

(Hello Africa/Getty Images)

Demand for VC funds that double down on winning investments is shifting as investors see their best companies as overvalued, overcapitalized and without a clear path to go public. GPs typically run opportunity funds to back standout portfolio companies, but with the IPO slowdown, that pitch has fallen flat.

VCs have dialed back their opportunity offerings—or reoriented those strategies to go after secondary stakes in startups or other venture funds. In extreme cases, investors are abandoning capital they've already raised.

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PE fundraising hit a snag in Q3 amid mega-fund drought

(EtiAmmos/Getty Images)

The pace of PE fundraising slowed in the third quarter after a brief bounceback in Q2, signaling the hoped-for turnaround is still some time away.

The capital raised for US-based PE funds totaled nearly $74 billion in Q3, a plunge of 38% year-over-year. Only two mega-funds closed during the quarter, raising 45% less capital than in Q2.

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The Daily Benchmark:
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VC Deals

Blockchain and bitcoin infrastructure startup Blockstream raised a $210 million round led by Fulgur Ventures.

Aira, a Stockholm-based air source heat pump startup, raised €63 million from investors including Temasek, Statkraft Ventures and Kinnevik.

CorPower Ocean, a Swedish developer of wave energy technology, secured €32 million led by NordicNinja VC, SEB Greentech and EIT InnoEnergy.

Yellow Card, a startup developing a crypto platform focused on the African market, raised a $33 million Series C led by Blockchain Capital, TechCrunch reported.

Horizon Surgical Systems, a medtech company developing robotics for microsurgery, raised a $30 million Series A led by ExSight Ventures.

Toronto-based Fable, which provides accessibility expertise to startups developing new products, raised a $25 million Series B led by Five Elms Capital.

SynthBee, developer of a computing intelligence platform, raised a $20 million seed round from Crosspoint Capital Partners.

INSHUR, which provides insurance to rideshare drivers and fleet managers, raised a $19 million round led by Viola Growth.

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PE Deals

Pittsburgh-based PPG has sold its architectural coatings business to American Industrial Partners in a transaction valuing the unit at $550 million.

NYSE-listed software company Zuora, which is backed by activist stockholder Scalar Gauge, has been acquired by Silver Lake and GIC in a $1.7 billion take-private.

Advent International is planning a take-private offer worth over £2.8 billion for Tate & Lyle, a London-listed UK food and beverage ingredient manufacturer.

RapidAir, which creates compressed air products, has been acquired by PE firm Gryphon Investors.

Charterhouse Capital Partners portfolio company Two Circles has acquired sports and entertainment business software provider KORE.

Exits & IPOs

CVC-backed Polish convenience store Zabka saw its share price jump as much as 9% during its first day of trading on Thursday, following a Warsaw IPO in which it secured a valuation of 6.45 billion zlotys ($1.62 billion).

Pony.ai, a California-based autonomous driving start-up backed by Toyota, is looking to raise up to $300 million in a US IPO, Bloomberg reported.

Carlyle-backed Rigaku Holdings, a Japanese X-ray equipment maker, priced its IPO at the top of the marketed range to raise $751 million.

Dialpad, an AI-powered communications intelligence platform, is acquiring Surfboard, a workforce management company backed by investors including Nomad Capital Partners and Speedinvest.

Texas-based startup Bridge, which specializes in stablecoin transfers, is in talks to be acquired by payments company Stripe, Bloomberg reported.

Ammega, a European company that manufactures conveyor belts and is owned by Partners Group, is in talks to be sold or file for an IPO that could value the company around $4.6 billion, Bloomberg reported.

Fundraising

Acrew Capital has raised an additional $700 million across several funds in its portfolio. The firm focuses on investing in data security, fintech and healthcare startups.

New York-based PE firm Victor Capital Partners raised $310 million at the close of its second fund targeted at specialty consumer, industrial technology and business services companies.

Investors

Swedish PE giant EQT saw its investments across all its funds swell to €6 billion (around $6.5 billion) in Q3, up from €2 billion in the same period last year, according to a quarterly statement.

Chart of the Day

Source: Q3 2024 US PE Breakdown

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PitchBook News - VC scraps opportunity funds playbook

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