PitchBook News - Climate change & fund performance

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The Research Pitch

November 2, 2024

Presented by RSM

Growing pressure on VC: Unicorns account for two-thirds of VC market value, but nearly 40% of US unicorns are at least nine years old. How is that impacting an industry with a standard fund life of 10 years? Read our new research.

October performance: US markets slipped last month, as the S&P 500 posted its first monthly loss since April. For a breakdown of results across a range of indexes and sectors, read our new Global Markets Snapshot.

Webinar week: We've got two live events coming up soon. On Tuesday, we'll dive into the future of decentralized infrastructure and intelligent networks. On Wednesday, we'll discuss the state of European VC.

A message from RSM

The future of M&A due diligence is here

Data analytics is transforming M&A due diligence by enabling more thorough, faster and insightful evaluations of target companies. Advanced data tools are helping uncover potential risks and growth opportunities, improve decision making and provide more accurate financial projections.

This evolution allows dealmakers to move beyond traditional methods of financial analysis, using real-time data and predictive modeling to assess operational efficiencies, compliance risks and customer trends. The integration of AI and machine learning in this process is helping firms better navigate complex transactions and optimize value.

Companies that master the combination of cutting-edge tools and diverse data sources will gain a distinct advantage, making quicker, more informed decisions and positioning themselves for long-term success. Explore the full article to learn more

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Infrastructure's surge of energy transition investment

As global temperatures have continued to climb and the effects of climate change have become more severe, governments have increasingly made pledges to achieve net-zero carbon emissions and allocators have faced growing stakeholder pressure to decarbonize portfolios.

As a result, private investment in energy transition infrastructure (renewables, carbon capture, etc.) has gained momentum, while fundraising for other real assets investment products has diminished.

In total, $892 billion has been committed to private funds with at least some degree of exposure to energy transition infrastructure since 2014.

The proportion of capital that has gone to specialists—funds investing exclusively in the space—has scaled considerably in that time. Specialists collectively raised an average of $10.8 billion per year from 2014 to 2018 and an average of $29.8 billion per year from 2019 to 2023.

Newer energy transition funds have performed better.

With nearly 80% of all capital committed to infrastructure funds from 2014 onward allocated to funds that engage in some energy transition investment, the question arises of how these funds perform.

The answer is complicated. Historically, performance has been challenged. Generalist funds—which invest in energy transition infrastructure alongside other sectors—and specialist funds both underperformed compared to those that did not invest in the space.

However, the returns of recent vintages suggest a reversal of fortunes for energy transition funds, with specialists showing the potential for substantial upside compared with generalists and funds not investing in energy transition infrastructure.

Generalists have demonstrated the most consistency in returns among newer-vintage funds, while vehicles not investing in the space have shown more extreme downside.

Although energy transition infrastructure still faces challenges, there are reasons to be optimistic about performance over the next decade.

We discuss why this is and more in our free analyst note: Infrastructure Funds Fuel the Energy Transition

Best,

Anikka Villegas
Analyst, Fund Strategies &
Sustainable Investing

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Thematic Research

Exploring APAC's Fintech Pathways

Geopolitical tensions and regulatory shifts are among the many challenges fintech startups face in Asia-Pacific, leading to declining VC deal count and value since 2018.

Our new research spotlights APAC's fintech ecosystem, broken down by geography, to highlight local trends:

• Japan
• Southeast Asia
• India
• Greater China
• Australia & New Zealand

Read the free research

Top Takeaways From HLTH USA 2024

Couldn't make it to Las Vegas? We've got highlights from the healthtech industry's No. 1 networking event.

We also weigh in on AI in healthcare, debates surrounding the emergence of GLP-1 weight loss drugs, and our view on the investment categories generating the most buzz:

Read the free research

Industry & Tech Research

Carbon & Emissions Tech Report

Deal value in the carbon tech vertical is down 73% YoY.

As the US elections near, differences in how the two major parties view climate change have cast a shadow of uncertainty over the startup ecosystem.

Clients can access the full market map.

Amid the slowdown, companies using biological methods to remove emissions are recapturing investor interest.

Check out our Q3 vertical update, key deals, and more:

Read a free preview

Next-Generation Nuclear Fission

From supplying power for datacenters to global decarbonization efforts, nuclear technology is evolving to meet the new demands of our world.

Our brief highlights how next-gen fission reactors are helping to put nuclear energy back into the spotlight:

Read the free brief

Webinars & Events

A reminder of our upcoming events:

Nov. 12-14: Visit us at ILPA Summit New York and join our lead quantitative and funds analyst, Zane Carmean, for a presentation on the evolution of private markets.

Nov. 19: European CLOs are on track to end the year with record issuance, which has boosted loan demand and set off 2024's third repricing wave. We'll discuss this and more in our European leveraged finance outlook. Register here.

In the News

Our insights and data featured in the press:

Handicapping OpenAI, xAI, and the capital-intensive AI arms race. [Fast Company]

Generalist investors' rush to AI has added to funding woes for climate-tech startups. [Bloomberg]

More than 40% of the $93 billion invested by VCs in the first half of this year went to AI startups. [FT]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

More of our recent research (* - report preview):

Market updates

Thematic research

Industry & tech research

Information Security Overview*

Coming next week (subject to change)

US VC Valuations Report
Launch: Food & Beverage CPG Report
Healthcare Services PE Update
PitchBook Private Capital Indexes
Agtech Report*
Gaming Report*
Emerging Space Brief: Commercial Space Launch

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PitchBook News - Climate change & fund performance

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