PitchBook News - 7 predictions for VC in 2025

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The Daily Pitch: VC

December 17, 2024

Presented by Fidelity Private Shares^SM

🩺 PitchBook analysts take the pulse on trends expected to shape the VC and PE markets in the new year in our Healthcare & Life Sciences Outlook. It anticipates more concentrated dealmaking, an increased healthcare share of PE deals and side effects for the healthtech unicorn herd as the market opens itself up to more M&A transactions and IPOs. A highlight is the sector's evolution toward market maturity and specialized innovation. Read the outlook.

🦄 SoftBank will invest $100 billion into US companies, President-elect Donald Trump announced Monday with CEO Masayoshi Son. The colossal bet on US industry is Masa's latest effort to reassert SoftBank—and himself—as the world's leading tech investor after retreating to the sidelines in 2023. Full story.

✈️ Honeywell is considering selling its aerospace business, which may be opportune given an uptick in aerospace interest. Activist investor Elliott Investment Management, which owns a $5 billion stake, has pushed to break up the industrial conglomerate due to inconsistent financial results and an underperforming stock price. Read more.

2025 is looking like a brighter year for VC

Our venture analysts are feeling optimistic about 2025.

The state of the VC industry has been pretty dreary lately. Late-stage deals are few and far between, and tech IPOs are even scarcer. But the temporary pain could pave the way for a strong 2025, according to our 2025 US Venture Capital Outlook.

Interest rate cuts could jump-start some long-delayed public listings. Valuations are poised for a rebound. And we could see more acquisitions as investors face the acute pressure of liquidity generation. All in all, it's shaping up to be a good year.

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Should VCs spend slowly?

Do VC funds that put capital to work faster generate better returns? The short answer is often, no, according to our recent analyst note.

An LP that historically invested in VC funds that deployed more slowly than their vintage peers would've seen a net IRR 1.6 percentage points above that of an LP invested in fast-deployment funds. In short, LPs will need to keep a close eye on the pace of capital calls, especially as the market ramps up again in 2025.

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How investment will change in 2025

The 2025 investment landscape will look vastly different from 2024 as inflation and interest rates change course, according to Morningstar's 2025 Outlook.

The convergence of public and private markets will continue, led by private credit.

AI investment will shift from hardware and infrastructure to commercial applications.

Falling rates will push investors into longer-dated securities and away from cash.

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Since yesterday, the PitchBook Platform added:

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The Daily Benchmark:
2021 Vintage Global Real Assets Funds

Median IRR

10.07%

Top Quartile IRR

14.84%

0.03x

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CIM Infrastructure Fund III

QL Capital Partner Fund

*IRR: net of fees

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VC Deals

California-based Verkada, which specializes in security cameras and other hardware, is in talks to raise a $200 million round led by General Catalyst that values the startup at $4.5 billion, Bloomberg reported.

Precision Neuroscience, a startup developing thought-controlled devices, raised a $102 million Series C led by General Equity Holdings.

Unrivaled, a new women's professional basketball league, raised a $28 million Series A led by Don Berman.

Fluid Biomed, a Calgary-based biotech startup developing treatment for brain aneurysms, raised a $27 million Series A led by Amplitude Ventures and an undisclosed investor.

BILT, which provides 3D assembly instructions for various products, raised a $21 million Series B led by Silverton Partners, Axios reported.

Comand AI, a Paris-based developer of AI-powered defense software, raised an €8.5 million seed investment led by Eurazeo.

PE Deals

BC Partners is close to selling Dutch generic drugmaker Synthon International to Goldman Sachs Asset Management in a deal valuing the company at around €2 billion, while retaining a stake.

CVC Capital Partners is buying a €1 billion stake in Telecom Italia from Vivendi, Bloomberg reported.

Stonepeak acquired Forgital Group, an Italian aerospace and industrial components manufacturer, from The Carlyle Group.

Partners at Grant Thornton UK unanimously voted to approve the sale of a majority stake to Cinven, valuing the firm at up to £1.5 billion, Sky News reported.

A Blackstone-led consortium, including GIC and Abu Dhabi Investment Authority, is the preferred bidder for a 20% stake in Indian snacks producer, Haldiram, at an enterprise valuation of around $8 billion, Bloomberg reported.

IK Partners agreed to buy Dains, a UK accountancy firm backed by Horizon Capital. The company was previously reported to be valued at around £250 million.

Paragon, a surveillance software developer, was acquired by AE Industrial Partners for $500 million.

Exits

French broadcaster Canal+ listed on the London Stock Exchange at 290 pence per share.

Cylance, an endpoint security business, has been acquired by Minnesota-based Arctic Wolf from BlackBerry in a $160 million deal.

Fundraising

Warburg Pincus closed its first multi-asset continuation fund on over $2.2 billion in capital commitments.

Chicago-based Constellation Wealth Capital, which focuses on wealth management firms, raised $1 billion for its first fund.

G2 Venture Partners launched its third fund targeted at $750 million. G2 invests in climate and sustainability startups.

Corporate M&A

The UK government has approved the £5.3 billion sale of postal service Royal Mail to EP Group.

Chart of the Day

Source: 2024 Japan Private Capital Breakdown

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PitchBook News - 7 predictions for VC in 2025

Older messages

Databricks topples OpenAI in VC record

Scoping out medtech's future

Cybersecurity VC funding returns to growth

SpaceX tender offer boosts secondary sales

Should VCs spend slowly?

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