Will software startups offer VCs the easiest exits?

Plus: 20 VC-backed IPO candidates, and GPs accrue cash to stake other GPs

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Software-as-a-service startups are the bread and butter of venture, offering capital-lite business models with high profit margins. VC's preoccupation with SaaS isn't a coincidence. Historically, it has been one of the most lucrative areas for investors.

Now, new research from PitchBook shows that the expected future returns for SaaS far outpace other venture tech verticals. The annualized expected returns for early-stage SaaS companies were 5.5% higher than the average of 10 VC tech verticals. That advantage has grown in recent years, up from 3.2% in 2017.

M&A tends to be the target outcome for a vast chunk of SaaS companies, writes PitchBook's Rosie Bradbury. There is a huge number of strategic acquirers with the motivation and capital to ingest enterprise software companies, especially when compared to verticals like foodtech and agtech where potential acquirers for venture-scale businesses are few and far between.

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20 companies most likely to IPO in 2024

After a slow two years, the IPO market is expected to pick up in the back half of 2024. In anticipation of this mass liquidity event, PitchBook's Emerging Tech Research analysts plotted the 20 VC-backed companies most likely to IPO with their newest valuation and revenue figures in our latest analyst note.

Among the top picks are renewable battery company Northvolt, cybersecurity darling Rubrik and, of course, fintech giant Stripe. Can you guess the rest?

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GPs are ready to ramp up buying pieces of peers

The world's largest asset managers spent less money buying stakes in other GPs in 2023 than they have in a decade, but they're ready to deploy capital in 2024.

Bogged down with market uncertainty, buyers and sellers of GP stakes retreated from the market in 2023, reports PitchBook's Jessica Hamlin. Minority ownership positions encompassed only 17.2% of the total value of deals involving GPs as targets—a steep decline from historical norms.

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• Drones and robots pull VCs back to the agtech sector.
• ?? A look at Germany's VC ecosystem across dealmaking, fundraising and exits.
• PE firm Ares Management tapped banking talent to help expand its offerings in the asset-based credit market.

• With fundraising starting from a low point, power may transfer to the LPs this year.
• ??? For climate-tech startups, 2023 was a year of highs and lows.
• Dive into the data on female founders and investors in the VC ecosystem—with a US edition and a European edition.