Forecasting a cloudy 2023 for VC

Agtech plows through turmoil; investors to stick with private debt in 2023; Europe's top 10 PE buyouts of 2022
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The Daily Pitch: VC, PE and M&A
December 19, 2022
The Daily Pitch is powered by PitchBook's industry-defining research and best-in-class data
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In today's Daily Pitch, you'll find:
  • Our latest Emerging Tech Research explores agtech's resilience amid rough terrain.

  • PitchBook analysts predict another rocky year for VC in our 2023 US Venture Capital Outlook.

  • Chart of the day: VC deal value by country, from our DACH Private Capital Breakdown.
 
Today's Top Stories  
Agtech plows through turmoil
Extreme weather events, geopolitical turmoil, supply chain disruptions: There is no doubt that 2022 has been a crazy year. And the crazier it's gotten, the more apparent it has become that investors should be focusing on what really matters: food.

While macroeconomic factors have battered other sectors, they've buoyed agtech investment, making Q3 the vertical's third-strongest quarter on record for deal value. However, the sector isn't immune to other funding challenges.

Our latest Emerging Tech Research report unpacks VC activity in agtech, explores emerging opportunities in weeding robots and regenerative agriculture software, and spotlights innovative startups driving forward insect production and farmland investing.
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Down, down and down around
2022 has nearly come to an end. Many investors will be happy to turn the corner on a year that saw crypto ride a remarkable rollercoaster and had VC firms clutching their pearls. But it may not be over quite yet, according to PitchBook analysts.

Next year is shaping up to be an even more stress-inducing ride for investors, according to our 2023 US Venture Capital Outlook. But while our analysts predict some downward movement, there is of course always some upside—if you know where to look.
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A message from Silicon Valley Bank  
SVB survey reveals fundraising expectations
SVB's data analysis and fund CFO survey indicate that despite a market slowdown, the private equity industry shows strong momentum. Dry powder levels remain near record highs, and investment levels are above pre-pandemic levels. On the fundraising side, 44% of surveyed fund CFOs expect fundraising to reach 2021 levels within 1 to 3 years.

In fact, downturns have historically brought great opportunity, with funds raised during recessions outperforming those of surrounding years.

Nevertheless, industry-specific challenges proliferate, such as persistently elevated valuations and the denominator effect. Fund managers and limited partners are grappling with these and other issues in an increasingly difficult environment.

Read our report every quarter to stay on top of private equity trends CFOs need to know.

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Private debt outlook 2023: Risk and opportunity co-exist
(kudla/Shutterstock)
While private debt deal flow and fundraising pace have slowed from last year's record highs, the industry still ended this year on solid footing. But 2023, which is expected to be a tumultuous year, will present the industry with a series of challenges.

Anticipating greater uncertainty in the economy and more rate hikes from the Federal Reserve, investors still view private debt as attractive. However, they will want more downside protections for their private credit investments in this environment.
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Energy, infrastructure star in Europe's top 10 PE buyouts in 2022
(Bullstar/Shutterstock)
With many parts of the European economy affected by rising inflation, assets that are more insulated to its effects have become sought after.

A look at the top PE buyouts this year shows that infrastructure assets, including those in renewable energy, are attractive to investors.
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Recommended Reads
Gener8tor is the biggest startup accelerator you've never heard of. [TechCrunch]

Will the US try to curb China's tech ambitions as the latter ramps up production of decade-old chip tech? [Reuters]

Bio-based plastics aim to capture carbon. But at what cost? [Wired]
 
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Quick Takes  
  The Daily Benchmark  
  2014 Vintage North American Real Estate Funds  
  VC Deals  
  Amber raises $300M for crypto trading  
  Virgio rakes in $37M Series A  
  Element Energy pockets $28M  
  Influencer marketing specialist Howl secures $27M  
  Big banks lead $24M round for Acin  
  Plenna raises $4.4M  
  PE Deals  
  Advent strikes $6.4B take-private deal with Maxar  
  EQT wraps up $1.7B Billtrust take-private  
  Thoma Bravo closes $710M acquisition of Nearmap  
  Blackstone's Tallgrass to buy Ruby Pipeline  
  Arcadia raises $125M in growth equity  
  Exits & IPOs  
  Ridgemont's Hatch sells oil and gas rights  
 
 
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The Daily Benchmark  
2014 Vintage North American Real Estate Funds
Median IRR
13.60%
Top Quartile IRR
16.52%
1.50x
Median TVPI
Select top performers
Cortland Partners Fund I
L-A Saturn Acquisition
Exeter Industrial Value Fund III
*IRR: net of fees
42 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
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VC Deals  
Amber raises $300M for crypto trading
Amber, a crypto trading platform, has closed a $300 million Series C led by Fenbushi Capital. The startup had been closing on an extension of its Series B when it decided to move forward on a Series C instead.
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Virgio rakes in $37M Series A
Fashion tech startup Virgio has raised a $37 million Series A led by Prosus Ventures, Accel and Alpha Wave, bringing the company's valuation to $161 million.
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Element Energy pockets $28M
Element Energy, a startup specializing in battery management and storage, has secured a $28 million Series B co-led by Cohort Ventures, with participation from investors including LG Technology Ventures and Prelude Ventures.
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Influencer marketing specialist Howl secures $27M
Howl, a startup focused on influencer advertising and marketing, has raised a $27 million Series A led by Highland Capital Partners, The Information reported. Founded in 2020, the startup counts Sephora and Samsung among its clients.
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Big banks lead $24M round for Acin
Acin, a startup that offers risk assessment and analysis software, has closed a $24 million Series B led by several high-profile banks, including JP Morgan, Citi Bank, BNP Paribas and Barclays. Notion Capital, Talis Capital and Fitch Ventures also participated.
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Plenna raises $4.4M
Plenna, a Mexico City-based women's health startup, has raised $4.4 million in a seed round led by Urban Innovation Fund, with backing from firms including 500 Global, Canary and Bridge Latam.
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PE Deals  
Advent strikes $6.4B take-private deal with Maxar
Advent International has agreed to purchase Maxar Technologies for $53 per share in an all-cash deal valuing the company at $6.4 billion. Maxar makes satellites and provides space intelligence to government and commercial customers.
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EQT wraps up $1.7B Billtrust take-private
EQT has closed on its acquisition of Nasdaq-listed BTRS Holdings, known as Billtrust, a cloud-based B2B billing software provider. The deal, announced in September, values Billtrust at $1.7 billion, based on EQT's cash purchase of $9.50 per share.
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Thoma Bravo closes $710M acquisition of Nearmap
Thoma Bravo has acquired Nearmap, an aerial survey company that captures high-resolution images in Australia, New Zealand, Canada and the US. The A$1.06 billion (about $710 million) all-cash deal, announced in August, takes the Australian Securities Exchange-listed company private.
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Blackstone's Tallgrass to buy Ruby Pipeline
Blackstone-backed Tallgrass, a midstream oil and gas company, has agreed to acquire Ruby Pipeline, a 683-mile natural gas pipeline that runs from Wyoming to Oregon. Ruby Pipeline, jointly owned by Kinder Morgan and Pembina Pipeline, filed for Chapter 11 bankruptcy protection in March.
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Arcadia raises $125M in growth equity
Magnetar Capital has led a $125 million growth equity funding round for Arcadia, an energy data and community solar management company. A green investing division of Macquarie Asset Management and existing investor Keyframe Capital Partners also participated.
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Exits & IPOs  
Ridgemont's Hatch sells oil and gas rights
Ridgemont Equity Partners portfolio company Hatch Royalty has sold oil and gas mineral and royalty interests to Kimbell Royalty Partners for roughly $270.7 million in cash and stock.
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Chart of the Day  
"Given its size relative to Germany, Switzerland's VC activity has been strong in recent years. For example, VC deal value was approximately three times larger in Germany than Switzerland through Q3 2022, while Germany's GDP was €4.2 trillion in 2021, roughly five times bigger than Switzerland's €812.9 billion."

Source: PitchBook's 2022 DACH Private Capital Breakdown
 
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