PitchBook News - Israeli VC's year of strain, resilience

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The Daily Pitch: VC

October 28, 2024

Presented by SVB

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

Israel's venture industry reflects on one year of strain and resilience

Our analysts track a VC rebound in the information security industry

Funding for female-founded startups drops 44% back to recent levels

VC funding for a key digital health segment has grown for four quarters straight

Our Q3 2024 US PE Breakdown examines how rate cuts and a presidential election could affect the current dealmaking surge

Today's Top Stories

A year on, war has not undone Israeli VC—but leaves indelible mark

A memorial message is shown Oct. 6 on a building in Tel Aviv.
(Alexi J. Rosenfeld/Getty Images)

After more than a year of war, Israel's VC ecosystem has proved resilient, but the conflict with Hamas is set to have a lasting impact on its future.

Since the Oct. 7 attacks of last year, Israel's broader economy has been strained. Yet the high-tech sector, which accounts for 20% of the country's economic output, is still growing and continues to attract VC investment.

"People were expecting [Israel's tech ecosystem] to fall apart, but it never happened," said Jon Medved, CEO of Israeli VC firm OurCrowd. "Of course, it's been hard, but venture capital, by nature, is a high-risk asset class."

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Tracking VC's rebound in information security

VC funding for the information security industry is rebounding after a period of flat growth. The sector has collected nearly $9 billion so far in 2024, on pace to surpass the previous year's total of nearly $11 billion.

With a loaded IPO pipeline and shifting demands from chief security executives, the market is projected to build on its rebound. Our updated taxonomy and expanded data provide insights into the six segments driving the space forward.

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Funding for US female founders falls back to Earth in Q3

(Julia Midkiff/PitchBook News)

After a blockbuster Q2, funding for US startups founded by women fell back to recent levels, declining over 44% quarter-over-quarter, according to our female founders dashboard.

Startups with at least one female founder garnered $7.2 billion across 595 deals in Q3 2024, down from $13 billion in Q2. That brings the total amount of money raised to $27.4 billion over 2,268 deals for the year.

Notable deals in Q3 included a $277 million Series D for Element Biosciences, a genetic analysis tools developer co-founded by CEO Molly He, as well as a $125 million Series F for Maven, a digital health startup founded by CEO Katherine Ryder.

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DPC: the hidden jewel of value-based healthcare

Direct primary care, where employers contract directly to offer patient-centered primary healthcare and care navigation services for their employees, is often absent from the spotlight. But it has proven to be a hidden gem for savvy investors, according to our recent analyst note.

These companies are seeing continued demand as employee health benefit costs rise. Although they can be challenging to scale, DPC providers benefit from diversified, predictable revenue bases, making them appealing targets for PE firms seeking to invest in value-based care.

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Market Map: Digital care, treatments stabilize a VC sector's vitals

(Fotogrin/Shutterstock)

VC investment in digital care and treatments, a segment of digital health, has grown four quarters straight as investors bet on startups using new technologies to improve patient outcomes.

Startups in this space frequently leverage generative AI to improve areas of care like patient treatment, recovery and intervention. Our latest market map spotlights the segment, highlighting the categories and companies generating the most funding.

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US PE's breakout quarter

Private equity had a breakout quarter in Q3, pushing buy-side deal value up 24% year to date. This comes amid two major developments in the dealmaking landscape: a change in interest rate policy and the US presidential election.

Our Q3 2024 US PE Breakdown, sponsored by Weaver and Ramp, examines how these events have historically affected PE and whether the recent strength in dealmaking is likely to be impeded or further accelerated as a result.

What insights did our look back in time uncover? The results point to a post-election December "bump" and a deal market already primed by "stealth" rate cuts administered by lending markets.

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People

LGT Wealth Management named Phoebe Stone as its first chief sustainability officer in the UK.

VC Deals

Autonomous driving startup Waymo raised a $5.6 billion round led by Alphabet.

Clean energy startup Pacific Fusion launched and raised over $900 million in a Series A led by General Catalyst.

Zero Motorcycles, a company specializing in electric motorcycles, has raised about $100 million of a targeted $120 million round, according to SEC filings.

Sustech, a Tokyo-based energy startup, is set to raise $50 million at an $800-million-plus valuation, Reuters reported.

Healthify, an Indian health and fitness app, secured $20 million in a round led by Khosla Ventures and LeapFrog Investments, The Economic Times reported.

Alimetry, a New Zealand-based developer of medical devices for gastric disorders, raised $18 million in a round led by GD1.

AI video solutions startup Vyntelligence, based in London, received an investment from Octopus Ventures.

PE Deals

Nexus Capital Management raised $765 million in order to acquire Big Lots out of bankruptcy. The acquisition was approved by a federal judge.

Singapore-based GLP's plans to sell its businesses based in China to Guangdong Holdings has stalled, Bloomberg reported.

Ohio-based tax and assurance firm Cohen & Company received a growth investment from Lovell Minnick Partners.

Exits & IPOs

Chinese autonomous driving company WeRide raised $441 million through a US IPO and a private placement, after pricing at the low end of its range.

DigitalBridge is considering a sale of Brazil-based Scala Data Centers in a deal that could value the company at $2 billion.

VC-backed Septerna, which develops treatments in endocrinology, immunology and inflammation, raised $288 million in an IPO and made its trading debut.

Fundraising

Rhode Island-based PE firm Nautic Partners closed on $4.5 billion for its 11th fund. The firm invests in the healthcare, industrial and services sectors.

HRZ Han River, a Bay Area-based VC firm, launched a $100 million fund targeted at investing in startups in Silicon Valley and South Korea.

Newly established UK manager Hypha secured £70 million for its maiden PE fund, targeting £100 million.

Chart of the Day

Source: Defense-tech boom spawns wave of new European GPs

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PitchBook News - Israeli VC's year of strain, resilience

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