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The Daily Pitch: VC

October 17, 2024

Presented by Fidelity Private Shares^SM

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

Venture growth emerges as a bright spot as Europe's VC dealmaking struggles

AI chip builder Lightmatter raises a $400 million Series D, nearly quadrupling its valuation

The IT sector leads a quiet quarter for unicorn creation

Our Q3 valuations data for public companies in the enterprise SaaS sector

Today's Top Stories

Lightmatter's latest raise nearly quadruples valuation to $4.4B

(Thanasis/Getty Images)

Lightmatter, a company building chips using light to process data, has raised a $400 million Series D—nearly quadrupling its valuation to $4.4 billion. The round highlights the remarkably quick growth of the company, which has raising $709 million in the past 18 months.

It also demonstrates the appetite of investors to find novel solutions to the AI computing crunch.

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Dealmaking struggles, but bright spots emerge for Europe's VC market

European VC dealmaking is set for another year of decline, with deal value projected to come in 9.7% below 2023's annual total. Venture growth has been the most resilient stage, accounting for over half of Q3's top 10 deals, according to our Q3 2024 European Venture Report, sponsored by J.P. Morgan.

AI is a highlight for Europe's VC dealmaking, with total deal value pacing 24% above 2023. SaaS and life sciences are also performing well this year. Recovery is finally on the horizon for the exit markets, and higher valuations are being commanded for public listings.

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Q3 marked another quiet quarter for unicorn creation

The rate of unicorn creation remained steady in Q3, according to our tracker. Some 26 startups crossed the billion-dollar-valuation mark—for a total of 94 unicorns so far in 2024, compared to 103 for all of last year.

Outside of a strong Q1, unicorn creation in 2024 has been consistent with what was seen in 2023, with fewer than 30 new startups minted each quarter.

The IT sector had the most new unicorns: 13 companies.

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Public enterprise SaaS companies continue to struggle

The current market landscape has not been kind to the enterprise SaaS sector, with enterprise value descending to a new low and median revenue growth rates declining past the lowest rate recorded in 2016. Even enterprise resource planning, a historically strong sector, is expected to experience decelerating revenue growth rates compared to 2023. A positive general market outlook is likely needed for companies to spring back.

Our Q3 2024 Enterprise SaaS Public Comp Sheet and Valuation Guide tracks stock performance, valuations, revenue growth, and EBITDA margins for key publicly traded companies.

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Is rising use of dividend recaps a worry?

(Megan Woodard/PitchBook News)

Dividend recaps have long been used by both public and private companies. But for the latter, their use has been ramping up.

As of Sept. 24, dividend recap volume in the US for PE-backed companies stood at over $69 billion for 2024—with this year's annual total is expected to surpass 2021's record high of $76 billion, according to PitchBook-LCD data.

Such arrangements, where a company issues debt so proceeds can be used to pay shareholders a dividend, are raising eyebrows. Critics claim they benefit investors at the expense of the long-term health of portfolio companies. But does this criticism give an accurate picture of dividend recaps and their impact?

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Since yesterday, the PitchBook Platform added:

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VC Deals

Praxis, a real estate tech and crypto startup focused on building a utopian city, raised $525 million; $500 million from GEM Digital and $25 million from Arch Lending, The Wall Street Journal reported.

Nuclear reactor technology company X-energy raised a $500 million Series C1 led by Amazon.

Nuclera, a UK-based biotech startup, raised $75 million in a round led by Elevage Medical Technologies.

Decagon, a San Francisco-based AI customer support startup, raised a $65 million Series B led by Bain Capital Ventures.

Digestive health company Oshi Health raised a $60 million Series C led by Oak HC/FT.

Vanilla, which creates estate planning software, raised $35 million, Axios reported.

New York-based Everstage, which develops a sales management platform to monitor performance, raised a $30 million Series B led by Eight Roads Ventures.

Capacity, a startup developing tools to automate customer support, raised a $26 million Series D from investors including TVC Capital and Toloka.vc.

Autone, a London-based AI-powered inventory management company, completed a $17 million Series A led by General Catalyst.

Gladia, a Paris-based developer of audio AI infrastructure, closed a $16 million Series A led by XAnge.

PE Deals

General Atlantic has bought a minority stake in treasury and finance management software developer Kyriba from Bridgepoint Group in a deal valuing the company over $3 billion.

Nagarro, a Germany-based IT services company, is in talks to be taken private in a buyout by Warburg Pincus, Bloomberg reported.

Stone Point Capital acquired a majority stake in wealth management company Kestra Holdings from Warburg Pincus.

Fintech company Options Technology received an investment from Vitruvian Partners.

Blue Owl Capital will sell 10% of its third GP stakes fund to Eldridge Industries, Bloomberg reported.

Exits & IPOs

Rail operator Tokyo Metro has raised 348.6 billion yen (around $2.3 billion) in its Tokyo IPO after pricing at the top of its range, making it Japan's biggest IPO in six years. The Japan Government and Tokyo Metropolitan Government, which own 53.4% and 46.6%, respectively, are selling half of their shares.

Neon, an immersive entertainment company backed by Temasek, has hired banks for its Singapore IPO for which it is aiming to raise as much as S$500 million, Bloomberg reported.

KKR is looking to sell Goodpack, a Singapore-based shipping container and logistics services provider, for around $1.8 billion, Reuters reported.

Kellstrom Aerospace, a PE-backed company providing services to the aerospace industry, has been acquired by Nasdaq-listed VSE.

HRB, which develops hair and skincare products, has been acquired by Sodalis Group from Tengram Capital Partners.

Fundraising

Dutch life sciences investor Forbion raised €1.2 billion for its third growth opportunities fund and €890 million for Forbion Ventures VII.

Stockholm-based early-stage VC firm Node.vc closed its debut fund on €71 million.

HSBC Asset Management is launching its seventh PE fund—Vision Private Equity 2025—next month. Its predecessor reached a $403 million close in June.

KdT Ventures raised $100 million for its fourth fund targeted at early rounds for science-driven startups.

Chart of the Day

Source: PitchBook Private Capital Return Barometers

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PitchBook News - Chipmaker's $4B+ light-speed valuation

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