Weekly update #69

Welcome to this edition of the weekly newsletter. The idea behind this is to gather all the information in the startup ecosystem in one place, with a special focus on the fintech market and the VC industry.

No episode of Builders this week, the podcast will be back next week with a very interesting guest from the VC industry. But you can always recover the last one with Cam Rail, CFA and Joseph Pizzolato, founders of Defiant VC here on Youtube, and the audio here on Spotify and here on Apple Podcast.

Coming back to us, I’ve been reading a very interesting report this week, the “ Global Private Equity market report 2025: Private Equity emerging from the fog” from McKinsey & Company. The report is a comprehensive study of the private markets in 2024, with an interesting outlook on 2025. Here my main takeaways:

Despite ongoing challenges, private equity (PE) showed signs of recovery in 2024 after two years of stagnation. Fundraising for traditional commingled funds fell by 24% year-over-year, but distributions to limited partners (LPs) exceeded capital contributions for the first time since 2015, marking the third-highest level on record. This recovery was supported by a more favorable financing environment, with lower buyout financing costs and nearly doubled new-issue loan value for PE-backed borrowers. Dealmaking rebounded, especially for large deals above $500 million, while exit activity, notably sponsor-to-sponsor exits, also picked up.

This recovery contrasts sharply with the turbulence of 2022–2023, when rising interest rates, inflation, and geopolitical uncertainties disrupted dealmaking and portfolio valuations. However, PE is emerging more resilient, with 30% of LPs planning to increase allocations in 2025, driven by the asset class’s historical outperformance of the S&P 500. General partners (GPs) are adapting by tapping alternative capital sources such as separately managed accounts, co-investments, and high-net-worth investors. In Europe, public-to-private transactions rose by 65%.

Sponsor-to-sponsor exits saw a notable increase, rising 16% by value and 10% by share of deal count. This uptick suggests a potential narrowing of bid–ask spreads as sellers adjusted their valuation expectations. However, despite the rebound in equity markets, initial public offerings (IPOs) remained a difficult exit route for private equity (PE) firms. PE-backed IPOs, including reverse mergers, dropped by 7% in value to $154 billion and by 20% in deal count. Additionally, the share of equity floated in IPOs continued to decline, making it more challenging for sponsors to achieve liquidity and distributions through this pathway.

The IPO market is particularly significant for larger sponsors, as IPOs represented just 5% of total PE-backed exit counts but accounted for nearly 22% of exits valued above $500 million. As fund sizes have grown, general partners (GPs) have acquired larger companies, which face fewer viable exit options. Larger companies typically attract a narrower pool of potential buyers, especially when valuations rise before exit.

Fundraising faced continued challenges, declining for the third consecutive year by 24% to $589 billion. This downturn affected all major regions, with North America and Asia experiencing significant declines, while Europe saw a comparatively smaller drop of 11%. Fundraising across buyout, growth equity, and venture capital segments fell uniformly by 23–25%, contrasting with 2023 when buyouts outperformed, partly due to a few megafund closures that skewed results. The overall fundraising environment remained difficult, reflecting broader market uncertainties and cautious investor sentiment.

Additionally, general partners (GPs) faced prolonged fundraising cycles, with funds closed in 2024 remaining open for a record 21.9 months, up from 19.6 months in 2023 and 14.1 months in 2018. The total number of closed PE funds fell to the lowest level in a decade, with only about 420 buyout funds closing—below the ten-year average of 460. Despite these pressures, the long-term outlook remains positive, as investor appetite for PE persists, supported by the asset class’s historical performance and diversification benefits.

Liquidity became a key focus for limited partners (LPs) in private equity (PE), as distributions surpassed capital calls for the first half of the year. This trend positions 2024 to be the first full year since 2015 where LPs experience net positive cash flows, indicating that general partners (GPs) proactively addressed investors' increasing liquidity demands. However, despite the improvement in cash flows, PE returns across sub-asset classes continued to decline. The industry-wide internal rate of return (IRR) for the nine months ending September 30, 2024, dropped to approximately 3.8%, down from 5.7% the previous year and significantly below the historical average of 14.5% since 2010.

Among the various sub-asset classes, buyouts remained the strongest performer through the first three quarters of 2024, delivering a 4.5% IRR, consistent with historical patterns. Growth equity followed with a 4.2% IRR, while venture capital lagged behind at 1.9%. These declining returns highlight ongoing challenges in the PE market, despite the positive shift in liquidity. The combination of improved cash flows and lower returns suggests that while GPs managed to meet LPs’ short-term liquidity needs, sustaining long-term performance remains a critical concern for the industry.

Anyway we saw some very interesting news in the market this week. Revolut just unveiled its new office in Canary Dwarf, while Klarna strikes a partnership with FINN in the car industry. Tomorrow introduced saving accounts in partnership with Solaris SE, and Viva.com acquired a majority stake in fiskaltrust. In the VC industry, many new funds this week: Greenfield Partners led the way with a $400 million fund, but also Antler with a $100 million, NextView Ventures with $135 million and 4Founders Capital with $65 million. In the Italian market, we saw a corporate risiko when Poste Italiane and CDP Cassa Depositi e Prestiti exchanged their respective stakes in TIM and Nexi Group, while TimeFlow raised $4 million. Finally, some very interesting funding rounds from fintech startups like MANSA, Bluebook, Relive, Ziglu, Stacks, lite, Pulse and many others.

But let's take a closer look at the main news of the last seven days.

Closed deals

• Chinese Vc Gaorong Ventures invests $30 million in HashKey Group
• Stockholm based Bluebook raises €2.8 million for its AI-powered software for accounting firms
• Portuguese proptech Relive secures a $5.5 million series A
• Stablecoin startup Plasma closes a $20 million series A
• Index lands $3.5m seed round from Blackbird and Bain
• Ziglu raises $5 million and plans to launch a Ziglu coin
• London based fintech E-Money Markets secures a £700,000 pre-seed to transform how SMEs can access FX payments
• Berlin based handly secures $3.75 million to remove barrier for tradespeople to become entrepreneurs
• Creandum led the latest round of international payment platform Capi Money
• AI-powered accounting startup Stacks raises a $10 million round
• Saudi fintech lite raises a $3.2 million pre-seed round
• Tether.io led the $10 million pre-seed round raised by stable coin MANSA
• Varo Bank has so far closed only $29 million out of its $55 million target for their Series G
• Curve Finance founder Michael Egorov raised $5 million at a $50 million valuation for its latest project, Yield Basis
• Pulse raises a $3.9 million pre-seed to fight again PDFs and OCR tools
• DiligentIQ raises a $12 million series A to reshape how Private Equity does due diligence
• MyPass Global secures a $7.5 million round from OneVentures
• Paris based fintech 73 Strings secures a $55 million series B round
• Blockaid closes a $50 million round led by Ribbit Capital

Insights on the VC industry

• Antler closes a second $100 million nordic fund
• Fåhraeus Startup & Growth closes a second fund at $75 million
• naturalX Health Ventures unveils a $100 million health tech fund for European startups
• Israeli based investor Greenfield Partners closes $400 million in new capital
• NextView Ventures is raising $135 million for its sixth fund
• 4Founders Capital launches its third funds closing at $65 million
• Swizzle Ventures closes a first $6.6 million fund to focus on women's health and wealth

News on the market

• Market Pay announces the acquisition of Danish payment provider AltaPay
• Argentina's president Milei is accused of burning $4.5 billion of investors savings by promoting a memecoin
• Tomorrow introduces savings accounts in partnership with Solaris SE
• Viva.com acquires majority stake in fiskaltrust
• Revolut unveils its new office in London and continues to commit to hybrid working
• Shift4 acquires payments and technology provider to luxury brands Global Blue for $2.5 billion
• Klarna partners with FINN to bring flexible monthly payments to the car subscription market

A special look in the Italian market

• Corporate domino between the big tech of Borsa Italiana:: Poste Italiane acquires 9,81% of TIM and sells 3,78% of Nexi Group to CDP Cassa Depositi e Prestiti
• Milan based TimeFlow raises $4 million to scale IT resource management platform

And here some useful resources for everyone involved in the ecosystem:

Events you don’t want to miss

• 0100 DACH - Wien (Austria) | 18-20.02.2025 (Link to the event)
• Tech Arena - Stockholm (Sweden) | 20-21.02.2025 (Link to the event)

You have a cool event you want to mention or to sponsor? Feel free to send me a DM.

Startups raising funds

• Loyyal - Loyalty platform from the MENA region, with entities in the US and South East Asia, provides a B2B2C platform to handle multiple loyalty programs and earn rewards all over the world. Raising a $6M Series A
• Freedhome - Proptech and fintech platform, enabling people to be able to gain profit from real estate by renting them to intermediaries. Raising a $1M seed round

• Tutornow - Edtech that provides an online tutoring platform for students with learning disorders. Raising $500k to $1M.
• Weagle - B2B Tech startup that provides the very first browser designed for company, with total security for sensitive data. Raising $6 millions for their seed round.

• Shoppy Code:Gift card platform that offers a points based loyalty program. They share part of the profits coming from marketing budgets with their customers. Raising $500k.

Take also a look at the last edition of the newsletter, Weekly update #68