Investors have been predicting this for a long time: Emerging managers are in trouble.
It’s already hard enough as it is to convince a limited partner to take a chance on you. While you may have a compelling pitch—or even a list of promising companies you backed the last fund you worked at, you’re still going to market with something pretty new—and without a strong track record.
Now, try doing that in this market—when pensions and endowments haven’t been getting any distributions and are entirely oversaturated in their exposure to the private markets. The money that they do have to spend on venture is likely not going to you. It’s headed in the direction of the decades-old, strong-performing firms that are already competitive to get into.
That’s what investors are saying, anyway. But just how bad is it out there, really? Well…If you look at the data, quite terrible, honestly. If this year continues the way it’s been going, it will be the worst year for emerging manager fundraising in more than a decade. As of mid-April of this year, emerging managers had only raised $2.3 billion in assets for 56 funds, according to PitchBook. Managers will have to step it up by the end of this year, and raise some 5x of that figure just to surpass fundraising metrics from 2013 or 2014.
Here’s a look at fundraising:
It’s no secret that this is a challenging market, so perhaps it shouldn’t surprise you that fewer fund managers are even trying to go to market with emerging funds in the first place. Here’s how many funds had been raised by mid-April:
And for those who are boldly going out and asking for checks—they’re not getting as many commitments. Here’s how fund size has changed for emerging managers since the Dot Com bust:
All that being said—if you were thinking about going it alone this year: Best of luck to you.
WeWork’s not workin’…Earlier this week, WeWork published a “going concern” warning alongside its earnings, warning investors that its losses have the company looking into “strategic alternatives”—including bankruptcy, as my colleague Will Daniel writes. WeWork shares are in penny territory on the news, giving the company a $270 million market cap—a mere shadow of the $47 billion valuation WeWork once held in 2019 before its botched IPO attempt. Read the story here.
Asia buyouts…While some investors may be pulling back from investments in Asia, private equity firm CVC Capital Partners is trying to up its game. In an SEC filing yesterday, CVC said it had raised $4.5 billion for its sixth fund focused on Asia. The buyout firm is still fundraising and this is not a final close, someone familiar with the matter said. A CVC spokesman declined to comment.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
– ADARx Pharmaceuticals, a San Diego-based clinical stage biotechnology company developing RNA therapeutics, raised $200 million in Series C funding. Bain Capital Life Sciences and TCGX co-led the round and were joined by Blackrock, Commodore Capital, Cormorant Asset Management, HBM Healthcare Investments, Invus, and others.
– Georgiamune, a Gaithersburg, Md.-based cancer and autoimmune disease-focused biotech company, raised $75 million in Series A funding. General Catalyst and Parker Institute for Cancer Immunotherapy co-led the round and were joined by Mubadala Capital, Alexandria Venture Investments, Catalio Capital Management, CJNV BioVenture, and Verition Fund Management.
– Weights & Biases, a San Francisco-based MLOps platform, raised $50 million in funding. Daniel Gross and Nat Friedman led the round and were joined by Coatue, Insight Partners, Felicis, BOND, and Bloomberg Beta.
– Endowus, a Hong Kong- and Singapore-based digital wealth platform, raised $35 million in funding. Citi Ventures, MUFG Innovation Partners, UBS Next, Singapore’s EDBI, Prosus Ventures, Lightspeed Venture Partners, Singtel Innov8 and others invested in the round.
– Capstan Medical, a Santa Cruz, Calif.-based minimally invasive technology developer to address heart valve disease, raised $31.4 million in Series B funding. Eclipse led the round and was joined by Intuitive Ventures and Puma Venture Capital.
– deepset.ai, a Berlin-based enterprise platform for building applications with LLMs, raised $30 million in funding. Balderton Capital led the round and was joined by GV and Harpoon Ventures.
– Fizz, a San Francisco-based social media platform for college students, raised $25 million in Series B funding. Owl Ventures led the round and was joined by NEA.
– Osano, an Austin-based data privacy management software, raised $25 million in Series B funding. Baird Capital led the round and was joined by Jump Capital, LiveOak Venture Partners, NextCoast Ventures, and TDF Ventures, and First Ascent Ventures.
– Atmosfy, a San Francisco-based video platform for reviewing live dining and nightlife experiences, raised $12 million in seed funding. Redpoint Ventures led the round and was joined by Kygo, Streamlined Ventures, Industry Ventures, Canaan Partners, Village Global, Progression Fund, and Convivialite Ventures.
– Sweet Security, a Tel Aviv-based cloud security company, raised $12 million in seed funding. Glilot Capital Partners led the round and was joined by CyberArk Ventures and other angels.
– Matter, a Bristol, U.K.-based microplastic technology and innovation company, raised $10 million in Series A funding co-led by S2G Ventures and SOUNDWaves.
– Treehouse, a Detroit-based EV charging installation company, raised $10 million in funding. Montage Ventures and Trucks Venture Capital co-led the round and were joined by CarMax, Assurant Ventures, Acrew Capital, Gutter Capital, Detroit Venture Partners, Holman, and Automotive Ventures.
– ShapesXR, a Palo Alto-based VR design and collaboration platform, raised $8.6 million in seed funding. Supernode Global led the round and was joined by Triptyq VC, Boost VC, Hartmann Capital, and Geek Ventures.
– SphereX, a Tel Aviv-based web3 security startup, raised $8.2 million in funding. Aleph, Pillar VC, Fabric Ventures, and Mensch Capital Partners invested in the round.
– Endear Health, a Miami-based digital health engagement platform, raised $8 million in funding. Optum Ventures, Blue Cross of Idaho, 8VC, and others invested in the round.
– Middleware, a San Francisco-based, cloud observability platform provider, raised $6.5 million in seed funding. 8VC led the round and was joined by Fin Capital and other angels.
– Kivera, a New York-based cloud cybersecurity company, raised $3.5 million in seed funding. General Advance, Round 13 Capital, and other angels.
– Nuclearn.ai, a Phoenix-based process automation solutions provider for the nuclear industry, raised $2.5 million in seed funding. AZ-VC led the round and was joined by Nucleation Capital.
– Grapevine, a New York-based collaborative giving platform, raised $1.85 million in seed funding. PJC led the round and was joined by Ulu Ventures, WTI, and Focus Impact Partners.
PRIVATE EQUITY
– Allure Labs, backed by TJC, acquired a majority stake in Kleen Concepts, a Scottsdale, Ariz.-based development, manufacturing, account management and turnkey services to beauty and personal care brands. Financial terms were not disclosed.
– Juniper Landscaping, a Bregal Partners portfolio company, acquired Flawless Lawncare & Landscaping, a Palm Bay, Fla.-based landscape maintenance services provider. Financial terms were not disclosed.
– Schneider Geospatial, an Align Capital Partners portfolio company, acquired Spatialest, a Charlotte, N.C.-based property assessment software platform. Financial terms were not disclosed.
– Strata Information Group, a Fort Point Capital portfolio company, acquired Triaxiom Security, a Charlotte, N.C.-based cybersecurity services provider. Financial terms were not disclosed.
– Tango, a Berkshire Partners portfolio company, acquired WatchWire, a New York-based sustainability and energy data management company. Financial terms were not disclosed.
– Tech24, backed by HCI Equity Partners, acquired Pronto Repairs, a Tappan, N.Y.-based hot- and cold-side services provider. Financial terms were not disclosed.
EXITS
– TA Associates and Warburg Pincus, acquired Epassi Group, an Espoo, Finland-based employee benefits company, from Bregal Milestone. Financial terms were not disclosed.
OTHER
– Dave Portnoy, the founder of Barstool Sports, a New York-based sports and media entertainment company, bought back 100% of Barstool Sports from PENN Entertainment. Financial terms were not disclosed, but PENN said in a statement that the deal included certain non-compete and other restrictive covenants, and that PENN has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale.
– DISH Network Corporation, an Englewood, Colo.-based television provider, and EchoStar Corporation, an Englewood, Colo.-based satellite communication and Internet services provider, agreed to a merger. Financial terms were not disclosed.
– Noggin Guru acquired BankersHub, a Placitas, N.M.-based online banking and financial services provider. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– Georgian, a Toronto-based venture capital firm, has raised $877 million for its sixth growth fund, according to an SEC filing. The filing states Georgian is seeking $1 billion in total.
