PitchBook News - VC bottoms out, but fails to bounce

Europe's VC debt dealmaking picks up; AI, biopharma propel unicorn indexes to new highs; tracking public gaming valuations
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The Daily Pitch: VC
October 23, 2024
Presented by SRS Acquiom
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Today's Top Stories  
VC dealmaking bottoms, but fails to bounce
Venture investment is on pace to top $175 billion this year, surpassing both last year and 2020 levels. But a more forceful recovery is being held back by the ongoing lack of liquidity, according to the Q3 2024 PitchBook-NVCA Venture Monitor, sponsored by J.P. Morgan, Dentons and Deloitte.

The slowdown has spurred some VC firms to ramp up due diligence and push for more investor protections in term sheets. But many other investors have simply left the market, either because their funds have dried up or because they are hesitant to call more LP capital.
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Venture debt activity on the rebound in Europe
(Image courtesy of Northvolt)
After a significant drop last year, venture debt dealmaking in Europe is on the rise, with deal value for 2024 already exceeding last year's total.

Mature VC-backed companies are driving the rebound and pushing deal sizes higher.
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A message from SRS Acquiom  
Are you prepared for larger post-closing claims that take longer to resolve?
Of the 28% of private-target deals that feature a post-closing indemnification claim, 1 in 27 ultimately require litigation or arbitration to resolve—a 4x increase in only two years. For buyers and sellers alike, that means a lot more preparation and patience are required when it comes to navigating post-closings.

The SRS Acquiom 2024 M&A Claims Insight Report is full of exclusive insights like this, drawn from more than 850 private-target acquisitions. In total, these deals were valued at approximately $168 billion, and SRS Acquiom served as shareholder representative for all of them.

Most of the data is not publicly available and won't be found anywhere else. That makes this report essential reading for any deal party aiming to enter—and execute—their next transaction with an edge.

Get the edge
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Public markets bet on gambling companies
Within the gaming sector, public companies generally underperformed major indexes this quarter. Esports has seen its value plummet, and nearly 13,000 gaming workers have lost their jobs so far in 2024.

The bright spot for the sector lies with gambling companies, which still face headwinds but are set to continue growth and improve customer experiences. Thirty-eight states have legalized sports betting, with two more pursuing ballot measures for legalization, which will ultimately benefit the gambling segment.

Our Q3 2024 Gaming Public Comp Sheet and Valuation Guide tracks stock performance, valuations, revenue growth, and EBITDA margins for key publicly traded companies.
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Mubadala targets mid-market assets amid PE exit dry spell
(Extreme-Photographer/Getty Images)
Mubadala, the investment arm of Abu Dhabi's sovereign wealth fund, has closed a $3.1 billion vehicle to cash in on the exit drought in the PE industry, where many GPs are drowning in unsold investments and under pressure to return capital to LPs.

The new fund will target PE-backed companies in the middle market and write checks for between $50 million and $150 million.
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Biopharma, AI propel unicorn indexes to new highs
The PitchBook-Morningstar unicorn indexes have been rising faster than at any other point this year, a hopeful signal for the mountain of billion-dollar VC-backed companies waiting to go public.

Since August, our global and US unicorn indexes have climbed 11%, bringing their growth in the past 12 months to 30%. At the industry level, biopharma unicorns have led the way, followed by AI and fintech companies.
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VC Deals  
Kneron is in talks to raise $300 million at a $1 billion valuation. The round is expected to be the AI chip startup's last before going public, Bloomberg reported.

Biotech startup AvenCell Therapeutics raised a $112 million Series B led by Novo Holdings.

One Zero, a Tel Aviv-based digital bank, is raising $100 million, TechCrunch reported.

Globality, a Bay Area-based developer of sourcing software that uses AI, raised a $47 million Series D preferred stock offering.

Open-source supply chain security company Socket raised a $40 million Series B led by Abstract Ventures.

OneStep, a healthtech startup, raised a $36 million Series B led by Team8 and Vintage Investment Partners, Axios reported.

Neysa, a Mumbai-based provider of AI acceleration cloud systems, received a $30 million Series A led by NTTVC, Z47 and Nexus Venture Partners.

AI video generation startup Genmo raised a $28.4 million Series A led by NEA.

Oxla, a Warsaw-based distributed analytical database, raised an $11 million seed round from investors including TQ Ventures, Lead Ventures and 4growth VC.
 
PE Deals  
Mubadala is nearing a deal to acquire a minority stake in Zelis that would value the healthtech specialist at around $17 billion, Bloomberg reported.

Dye & Durham, a Canada-based legal software provider, is in talks to be acquired by potential buyers that include US-based PE firms, Bloomberg reported.

Morgan Stanley Investment Partners invested in Flexential, which operates data centers across the US.

The Carlyle Group has dropped out of the bidding process for Thyssenkrupp's marine systems unit, Bloomberg reported.

Tech support specialist Likewize has been acquired by Genstar Capital after the firm increased its investment to a majority stake.

Voortman Cookies, the cookie business of J.M. Smucker, has been sold to Second Nature Brands, a portfolio company of CapVest Partners.

HIG Capital acquired Rainham Industrial Services, a UK-based provider of industrial installation, maintenance and refurbishment services.

Main Capital Partners exited German HR software provider Perbility to Rivean Capital.
 
Exits & IPOs  
Autonomous driving company Horizon Robotics, based in China, priced its Hong Kong IPO at HK$5.4 billion (about $696 million).

Materia, a VC-backed startup developing an AI tax and accounting platform, has been acquired by Thomson Reuters.

IFCO, a company that makes plastic containers, is in talks to be sold by Triton Partners in a deal that could value it at around €5 billion, Bloomberg reported.
 
Fundraising  
Miami-based Trivest Partners raised $730 million at the close of its third growth investment fund.

Stifel Financial gained federal approval for a new fund targeted at aerospace and defense manufacturers in the US.

Texas-based Greenridge Growth Partners raised $255 million for its second fund, which will invest in B2B software companies.

London-based consumer-focused VC firm Dmg Ventures closed a £25 million early-stage fund and a £25 million growth-stage fund.
 
Corporate M&A  
Paris-based investment firm Wendel has agreed to buy 75% of private credit-focused asset manager Monroe Capital for $1.13 billion.
 
Chart of the Day  
Source: Q3 2024 PitchBook-NVCA Venture Monitor
 
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