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| Hello. In today's Daily Pitch, we check in with Churchill Asset Management about financing data center buildouts. We also break down cybersecurity's new low—and a two-year high in ecommerce VC. |
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| VC funding for climate risk startups cools |
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By Rosie Bradbury, Sr. Venture Capital Reporter
The Los Angeles wildfires this past January sparked widespread interest in wildfire detection technology and climate resilience. But nearly a year later, dealmaking appears to have cooled.
Climate risk analytics and management startups are on track to raise around $163 million in VC funding this year worldwide, according to our latest analyst note. This represents 0.76% of overall climate-tech deal activity, down from 0.9% the previous year. |
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The sector faces a set of challenges akin to climate tech broadly: few outsized exits and significant capital expenditure needs.
"My suspicion is that the space won't grow linearly: It'll bop up and down until we see a few large outcomes, and then investors will pile in," said Abe Yokell, managing partner at climate-tech firm Congruent Ventures.
Climate scientists agree that natural disasters and resource shortages will only worsen, and that the growing AI infrastructure buildout could exacerbate the strain in some parts of the country, especially in drought-prone areas.
By 2028, new data centers are expected to require an additional 44 gigawatts of energy from the US grid, equivalent to the annual output of 44 nuclear reactors, according to S&P Global Energy.
Conversely, this infrastructure buildout—and its energy and resource demands—also represents an untapped opportunity for climate resilience, notes the PitchBook research.
"Every time one of these data centers that is mission-critical is built, everyone is thinking about the local resources available to it, and there's a lot of solutions going into that," Yokell said. |
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| A message from Alvarez & Marsal |
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| A year of recalibration and resilience: European private equity in 2025 |
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Private equity funds have had to be resilient through rising geopolitical tensions, the shock from US tariffs and several years of subdued deal flow and limited exits.
But as 2025 comes to a close, European private equity is showing signs of stability.
A&M’s Private Equity Performance Improvement team has seen firsthand how the PE market has recalibrated this year. A&M has helped clients find new sources of growth, expand margins through operational efficiency and navigate market volatility in large-scale, complex transformations.
In this review of the year, A&M shares its reflections, learnings and achievements across the following topics:
- Portfolio company transformation
- Integrated due diligence
- AI use cases in PE
- Finance transformation
Click to read more |
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• India's private markets got a boost from wider economic stability and domestic liquidity in Q3, according to our latest country snapshot. Explore it now
• Startups offering tech to support ecommerce collected $3.8 billion in Q3—representing a quarter-over-quarter jump of 35% and the sector's strongest funding performance in over two years. Read the report
• VC funding for the cybersecurity industry hit a multi-year low in Q3 amid shifting enterprise security priorities. Access the analysis
• PitchBook LCD's US Credit Market Outlook offers an analysis of key credit markets, including leveraged loans, private credit and CLOs, for the year ahead. Download the report |
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| Q&A: How Churchill is underwriting the AI-fueled credit boom |
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| Kevin Meyer |
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By Madeline Shi, Sr. Private Equity Reporter
Deep-pocketed private credit managers are increasingly stepping in to finance technology giants' capital-intensive data-center buildouts.
Blue Owl and PIMCO, for instance, led a roughly $30 billion financing package for Meta's data-center expansion in rural Louisiana this year.
But some private lenders are taking a more cautious stance, worrying that the surging demand in this market may prove short-lived.
Among them is Kevin Meyer, head of origination and capital markets at Churchill Asset Management, a middle-market lender that manages about $30 billion in senior lending funds.
Meyer said only a small portion of Churchill's loan portfolio was made to data center-related service providers. He added that the firm favors companies that can generate recurring revenue and serve multiple industries, rather than focusing solely on AI and data centers.
It's difficult to predict "the future cash flows of businesses" that are poised to benefit almost exclusively from a one-time boom, Meyer said.
"With the amount of capital coming in here in such a rapid time frame, it will create this air pocket, and some companies may fail. It takes expertise to understand and pick those winners and losers."
Churchill recently turned down an opportunity to finance a company whose EBITDA had grown substantially in recent years because most of that growth was driven by the data center expansion.
Commenting on the recent push by some big-name GPs into data-center construction, he said that trend is driven in part by these managers' pressure to deploy capital. They have raised significant capital from retail investors and now find that expansion is catching up with them, as sourcing deals has become increasingly challenging. |
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Smart reads that caught our eye.
• Europe is backpedaling on its ban of new petrol and diesel cars. Policymakers are discussing a revision to the original plan to prohibit all combustion engine production by 2035. [Financial Times]
• Blackstone might struggle to get value from its massive real estate portfolio. As the largest PE real estate investor, Blackstone has acquired a wealth of assets, but with real estate valuations plummeting, who wants to buy them? [Bloomberg]
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