VCs seize ‘unique moment’ for healthcare AI. Plus: Finding favorable fund fees and terms in a shifting market

Welcome to the weekly round-up of highlights from our free daily Preqin First Close newsletter, your go-to guide to the global alternatives industry. I’m Jayda Etienne, Deputy Editor, and every Friday I select exclusive news and insights from over the past week.?????

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Let’s kick things off with some trivia – Facing yet another US ban, the race is on for TikTok to secure an American buyer. Chinese parent company ByteDance has repeatedly said it refuses to sell, but that hasn’t stopped potential buyers from coming forward. Who are the latest contenders for the popular social video platform???

a) Apple, Mark Cuban, Elon Musk??

b) Oracle, Amazon, Alphabet Inc??

c) Jimmy Donaldson (aka MrBeast), Microsoft, Jesse Tinsley??

Find the answer at the end of the newsletter.

Healthcare AI could be a $188bn market opportunity for VC?

With DeepSeek AI triggering markets and headlines, it’s a good time to consider AI’s potential impact on key industries.???

In healthcare, for example, the challenge is for strategic investment to not only accelerate development of disruptive technology, but also support its ethical integration into highly sensitive activities.??

‘An explosion of new entrants and exceptionally high market demand for solutions from established incumbents’ make this a ‘unique moment’ in healthcare AI, argues Bessemer Venture Partners .?

The global market was worth over $11bn in 2021, but could accelerate to $188bn by 2030, according to Statista . The US, with by far the largest healthcare sector in the world, could potentially dominate innovation. And private capital will play a big part.

贝恩公司 ’s Global Healthcare Private Equity Report shows fundraising for mid-market buyout vehicles ($500mn–4bn) has soared by 40% in the past three years, compared with the preceding three. What’s more, they’ve outperformed larger funds and maintained deal volume, according to the management consultancy.??

In VC, healthcare AUM has more than quadrupled from $63bn in 2013 to $293bn at the end of 2023. Notable healthcare AI deals this month could set the tone for a revolutionary year:???

Innovaccer provides software and data to power value-based care programs, modernize the patient experience, and reduce the administrative burden on providers. The San Francisco-based venture has raised $275mn in its series F round from B Capital Group , Banner Health , Danaher Ventures, Generation Investment Management , Kaiser Permanente , and M12, Microsoft's Venture Fund .??

Qventus, a Mountain View-based developer of AI-based care automation software, has attracted $105mn in a KKR-led series D round that also includes BVP , plus new strategic investors Northwestern Medicine , HonorHealth , and Allina Health .??

On Monday, Manas AI, a cancer drug discovery venture co-founded by LinkedIn’s Reid Hoffman , announced it had raised a $24.6mn seed round. The New York-based company has partnered with 微软 and is backed by General Catalyst , Greylock Partners, and strategic investors.?

Redwood City-based Retro Biosciences , already backed by OpenAI 's Sam Altman, aims to create therapies that reverse age-related diseases. It’s raising a further $1bn, according to the Financial Times last week.??

There are going to be some growing pains. But healthcare AI will be transformative.??

By Alina Garcia , Marketing Manager, Insights+.

Fund fees and terms continue to move in favor of selective LPs?

With the pace of fundraising in private markets forecast to pick up over the next two years, the negotiating balance between LPs and GPs could change again.?

In a new Research Note for Insights+ subscribers, Brigid Connor, CFA, CAIA , Fees Research Lead, examines investor sentiment about fees and terms, based on Preqin’s bi-annual investor survey. Although they typically change slowly, there were some notable developments in 2024:?

• The proportion of investors seeing significant change in fees and terms in their favor has jumped to 7%, the highest level in three years.
• In 2024, 41% of investors reported fund terms changing in favor of LPs, down 3ppts from 2023. Meanwhile, 11% of investors reported terms changing in favor of GPs, up 1ppt from 2023.??
• Historically, the largest LPs have received the most favorable terms. But in 2024, market dynamics benefited smaller LPs (with less than $0.5bn AUM), particularly on management fees.???
• Perceptions diverged across regions. While Europe and LatAm investors reported management fees ranked highest in the terms that changed, North America and Asia agreed that the most significant shift seemed to be in transparency.?

Get the full story here.?

Taking a creative approach to emerging managers in private equity. Shaun Beaney , Editor of?Preqin First Close asks Kim Pochon , Global Head of Primary Investments, Private Equity, at Unigestion about the pros and cons of backing first-time funds, supporting emerging managers, and the importance of innovation.?

HongShan Capital Group spends $1.2bn to acquire a majority stake in speaker giant Marshall Group – it’s largest investment in Europe. The Marshall family will retain a 20% stake in the company, as they look to ‘amplify the love for music and the Marshall brand for decades to come.’?

Weekly People Moves from LPs & GPs around the globe including, Evercore Wealth Management, Coller Capital, and Candriam.???

c) Jimmy Donaldson (aka MrBeast), Microsoft, Jesse Tinsley??

Donald Trump announced earlier this week that 微软 was in discussions to acquire TikTok , but he also admitted that he would like to see a bidding war over the app. The US president may get his wish. Jimmy Donaldson , the biggest YouTuber in the world, recently teamed up with Jesse Tinsley, tech entrepreneur and founder of employer.com, to make an all-cash offer for TikTok’s American operations.???

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