Fintech's opportunity in open banking

Nov 3, 2023 @ 12:26 PM

Fintech's opportunity in open banking

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The Daily Pitch: VC

November 3, 2023

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

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

Enterprise fintech looks to open banking as its next big opportunity

With M&A's recovery shaken off track again, what's needed for a 2024 rebound?

Startups with specialized chips are gunning for Nvidia's semiconductor supremacy

Today's Top Stories

Enterprise fintech has strong role to play in open banking

The biggest slice of the fintech pie narrowed notably in Q3, with enterprise fintech startups capturing 63% of VC dollars compared with Q2's 71%. But deal value climbed to $4.1 billion, a 5.1% quarterly uptick from $3.9 billion.

Topics gathering buzz in Q3 included real-time payments, open banking, generative AI and partnerships, according to our latest Emerging Tech Research. Open banking, in which consumers can share financial data with outside applications, is one to watch in particular because all sides could benefit: consumers, companies and banks.

read the preview

M&A advisers share checklist for 2024 rebound

(jayk7/Getty Images)

In the last few weeks, financial market jitters and a sudden geopolitical shock buckled the M&A market's ongoing path to recovery.

With a return to normalcy in the market pushed back, dealmakers now hope an end to the interest-rate hike cycle, a narrowing valuation gap between sellers and buyers, and more global stability will buoy M&A volume in upcoming quarters.

A message from Pillsbury Winthrop Shaw Pittman

Climatetech VC investment slows, but major legislation presents opportunities

2023 saw record heat waves in several areas across the globe, underscoring ongoing climate concerns and accelerating discussions around climate-focused technologies. The climatetech sector has grown in recent years but has not been immune to the VC slowdown. Though questions remain regarding the best approach to investment, opportunities are emerging for innovations such as nuclear fusion, and advancements in areas like renewable fuel production serve as dependable drivers of the energy transition. Pillsbury Winthrop Shaw Pittman's Climatetech: Investment Trends & Macro Influences examines the climatetech VC ecosystem, including deal activity trends and growth in manufacturing investment, and features an expert discussion of the legislative and regulatory developments impacting clean energy investment.

Read the report

Can specialized AI chip startups take on Nvidia?

(Chloe Ladwig/PitchBook News)

Nvidia has been one of the biggest winners of the generative AI boom, riding the wave to a $1 trillion market cap on the back of its chipmaking prowess.

A cohort of startups has emerged to take on Nvidia with chips designed to power large language models with less energy and lower costs. They face an uphill battle, contending not only with the chipmaking goliath but also the big tech companies rapidly rolling out their own chips.

IPO rebound left in the lurch

2023 brought a limited crop of IPOs to market, and the results have been mixed—ranging from remarkable (Arm and Cava) to crummy (Instacart and Birkenstock).

Our IPO and S1 Navigator covers the essential data and valuation trends to chart a course for what's ahead. Key takeaways include:

Investors have high valuation expectations that are keeping a lid on the supply of new entrants.

These price expectations are at odds with a fresh dip in stocks and a higher-for-longer interest rate outlook.

Revenue growth is decelerating, pushing out the timeline for startups to grow into their former valuations.

read it now

Traditional finance pushes into crypto

Traditional financial institutions are starting to embrace crypto and its underlying technology, according to our latest Emerging Tech Research.

Firms are beginning to adopt some of the technology that's central to digital assets, like blockchain, to improve operations and provide crypto services for institutional investors. Our analysts lay out the future of a traditional finance network that would be more integrated with digital assets.

read it now

Recommended Reads

How weight-loss drugs turned Novo Nordisk into Europe's most valuable company and a startup-investment machine. [Sifted]

BlackRock study finds gender-balanced companies outperform peers. [Financial Times]

Startups are applying AI to just about everything, including your gut microbiome. [The Wall Street Journal]

Since yesterday, the PitchBook Platform added:

VC valuations

2131

People

535

Companies

Funds

See what our data software can do

The Daily Benchmark:
2020 Vintage Global Real Estate Funds

Median IRR

14.76%

Top Quartile IRR

22.43%

0.10x

Median DPI

Select top performers

PGIM Real Estate US Impact Value Partners

Exeter Industrial Value Fund V

ElmTree U.S. Net Lease Fund IV

*IRR: net of fees

37 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

People

Cibus Capital has hired Kristen Weldon as head of natural capital. Weldon arrives from BlackRock, where she was global head of sustainable investing in the firm's alternatives division.

VC Deals

Insuretech startup Next Insurance raised $265 million from Allstate and Allianz.

UK-based challenger bank Atom Bank has raised over £100 million from BBVA, Toscafund and Infinity Investment Partners.

Open-source software security startup Chainguard raised a $61 million Series B led by Spark Capital.

Memo Therapeutics, a Zurich-based developer of therapeutic antibodies, has closed a 25 million Swiss franc (around $25.4 million) Series C led by Pureos Bioventures.

HR benefit automation company Payroll Integrations raised a $20 million Series A led by Arthur Ventures.

Finnish hyperspectral satellite imagery startup Kuva Space has secured €16.6 million in a round led by Voima Ventures and Nordic Foodtech VC.

Govly raised a $9.5 million Series A led by Insight Partners for its government contract market network for vendors.

AI-powered cybersecurity startup SpiderSilk raised $9 million led by Wa'ed Ventures.

Nu Quantum, a UK-based quantum networking startup, has received a £7 million pre-Series A led by Amadeus Capital Partners, Expeditions Fund and IQ Capital.

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The current state of re-commerce and the near-term outlook.

Re-commerce enablement technology trends, opportunities and challenges.

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PE Deals

A Brookfield and EIG-led consortium is to continue with its A$16.4 billion (about $10.5 billion) takeover bid of Australian-listed Origin Energy after the company's largest shareholder, AustralianSuper, rejected the offer.

An Affinity Partners-led consortium and TPG-backed hospital operator Columbia Asia are on the shortlist of competing bidders for Malaysia-based Ramsay Sime Darby Health Care, which was recently valued at around $1.35 billion, The Wall Street Journal reported.

Apollo-backed Italian gambling company Lottomatica has acquired sector peer SKS365 in a deal that values the company at around €639 million.

Apollo agreed to acquire a majority stake in New York-based Modern Aviation from Tiger Infrastructure Partners, which created the fixed-base operator specialist in 2017 and continues to hold part of the company.

Syz Capital and Saturnus Capital acquired Swiss digital media and analytics solution provider Capture Media.

Healthcare-focused PE firm Havencrest Capital Management acquired Focus Staff Services, a Dallas-based temporary nursing staff agency.

York Capital Management made a growth investment in Comprehensive Rehab Consultants, an Illinois-based healthcare staffing company that serves post-acute care facilities such as nursing homes.

Exits & IPOs

MBK Partners is seeking to sell Japan-based jewelry brand Tasaki for about $500 million and has reached out to at least two other PE firms as potential buyers, Reuters reported.

A subsidiary of The Williams Companies agreed to acquire Denver-based midstream oil and gas platform Cureton Front Range from Ares Management and Tailwater Capital.

Fundraising

Bioluminescence Ventures, a biotech VC firm, emerged from stealth and has raised $477 million across its Ventures Fund I and Fund II.

Tokyo-based financial services group SBI Holdings has committed $40 million to Africa-focused VC firm Novastar Ventures’ future funds, TechCrunch reported.

Ex/ante, a new seed VC firm spun out of Schmidt Futures, raised $33 million with backing from Cendana Capital, Marc Andreessen, the Ford Foundation and USV, Forbes reported.

London-based 2100 Ventures has launched a €30 million fund targeting pre-seed and seed-stage B2B European startups.

Corporate M&A

Amusement park operators Six Flags and Cedar Fair agreed to merge into one company with an enterprise value of about $8 billion. The combined entity will be known as Six Flags, and Cedar Fair's president and CEO will run it.

Chart of the Day

"The VC investments/exits ratio ticks higher but is still lower than the historical average. The ratio has markedly risen from the 10-year historical trough of 13.8x in 2021 to 17.6x in 2023. Looking at a more normalised market environment prior to the COVID-19 pandemic, the average sat at 18.4x from 2013 to 2019, suggesting that the number of investments to exits is still lower than what it has historically been in the UK."

Source: 2023 UK Private Capital Breakdown

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