Alright, good news, right? Sure, but there are still a lot of questions, particularly when it comes to what exits can look like. (Exit value, by the way, refers to the aggregate value generated when an investor sells equity in a portfolio company.)
So, sure, buyouts aren't much of an option, and acquisitions are more sparse for AI companies than they have been in recent memory. That leaves, of course, the toughest and most high-reward path for AI companies seeking an exit: an IPO. It'll be interesting to see how this data shifts next year, should the IPO window blast wide open again as so many hope and expect.
I was particularly fascinated by the declining deal value at the later stages, which appears set to hit a four-year low right now. Burke says part of the late-stage drag is that pre-generative AI boom companies have struggled to find their way, especially as investors have struggled with their own 2021 hangovers.
"Most pre-GenAI companies have struggled to find their next chapter as the underlying technology races by them and investors look for new ideas," he told Fortune via email. "Of the 546 AI & ML companies that raised a mega-deal of at least $100 million from 2020 to Q2 2022, only 287 have closed a deal since the VC downturn beginning in Q3 2022, including acquisitions."
I can't help but think it's a reminder: Sometimes what's old is new again, but sometimes what's old is, well, old. And regardless, it's clear there are still many corners yet to turn in the AI story.
Next week...Fortune Brainstorm AI is next week! It's my first Brainstorm conference as a co-chair, and I'm so grateful to all the incredible investors and firms who will be joining me onstage and in my Term Sheet Breakfast roundtable (which, by the way, is already at capacity, as I learned yesterday). If you're curious about the conference, you can learn more here. And those of you who are coming, thank you. I genuinely cannot wait to see you.
Elsewhere...Olympus Partners, a middle market private equity firm, has returned $3 billion to its investors this year, a person familiar with the situation told Fortune. Most, or $2 billion, came from Olympus's sale of staffing company Soliant earlier this year. Olympus also sold Rise Baking in September, which contributed another $1 billion in distributions, the person said. Olympus has produced over $6 billion in distributions since January 2022. -Luisa Beltran
Nina Ajemian curated the deals section of today's newsletter. Subscribe here.
VENTURE DEALS
- Public, a New York City-based multi-asset investing platform, raised $105 million in Series D-2 funding. Existing investor Accel led the round and was joined by others.
- American Industrial Partners acquired the U.S. and Canadian architectural coatings business of PPG, a Pittsburgh-based paints, coatings, and specialty materials company, and renamed it The Pittsburgh Paints Company. Financial terms were not disclosed.
- Astorg took Hamilton Thorne, a Beverly, Mass.-based assisted reproductive technologies provider, private and acquired the reproductive health business of Cook Medical, a Bloomington, Ind.-based medical devices developer, which will be combined with Hamilton Thorne. Financial terms were not disclosed.
- Insight Partners, with participation from Phillip Hazen and Gerry Coulter, acquired a majority stake in Cosmo Tech, a Lyon, France-based AI-simulation software developer for enterprises. Financial terms were not disclosed.
- Sequoia Financial Group, backed by Kudu Investment Management and Valeas Capital Partners, acquired the wealth management practice of Eide Bailly Advisors, a Fargo, N.D.-based business advisory, accounting and technology firm. Financial terms were not disclosed.
- CDW acquired Mission Cloud Services, a Los Angeles-based cloud services and solutions provider for AWS customers. Financial terms were not disclosed.
