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As AI claims more and more capital, VC’s power law is becoming steeper, according to investors at AI conference HumanX in Amsterdam last week.
Venture, as an asset class, has always been governed by the principle that most investments will fail and that a small number of portfolio companies will generate the vast majority of a firm’s returns. AI is accelerating the divide between the “winners” and the rest. READ MORE
A few years back, I talked to a medium-sized economic development professional who told me, with total confidence, exactly how entrepreneurial ecosystem funding should work. Put in a dollar. Get back three. Simple math. He'd built his whole career on that math, having recruited a data center and a couple of brand-name distribution centers in his region.
I want to scream as loud as I can that entrepreneurial ecosystems don't do math like that. READ MORE
If you’re a senior executive preparing your executive résumé for a shift into private equity, you may be concerned that a lack of prior PE experience will detract from your candidacy. The data below should ease that concern, and I’ll outline the strengths PE firms find most attractive in a candidate. READ MORE
A 10-year Treasury yield above 5% is creating a fresh challenge for private equity firms: convincing investors to lock up capital when government bonds offer a meaningful return with far less risk and more liquidity.
“At a 5% risk-free rate, private equity has to work much harder to justify locking up capital for years,” Mark Spindel, senior advisor and partner at Pilot Wave Holdings, told Benzinga. READ MORE
In 2024, Blackstone—the world's largest private equity firm at the time, with $1 trillion in capital under management—announced it was buying the sandwich chain Jersey Mike's. Founded on the Jersey Shore in 1975 by a 17-year-old Peter Cancro, who purchased the first shop with a loan from his high school football coach, Jersey Mike's had become one of the fastest-growing restaurant brands in America. READ MORE
Every week another founder shows up building the same business: an AI agent that does something useful for small and medium businesses. Website agents. Booking agents. Customer service agents. Most of them are asking the same question right now — whether to raise venture capital to go after it.
The honest answer for most of these businesses is no. Not because the idea is bad, but because the business model underneath it has a revenue problem baked in, and the numbers on that problem are already public. READ MORE
Sit in on a corporate venture investment committee meeting before a term sheet goes out, and you’ll hear a specific kind of conversation. Is the founding team strong enough to execute? Does this deal open a channel, a technology, or a capability our parent company couldn’t get any other way? The financial model is on the table too, but it alone doesn’t decide the room. A corporate writes the cheque because the strategic case is worth something beyond the multiple.
But when the deal closes, somewhere between the term sheet and the first quarterly business review, that strategic thinking quietly leaves the room. READ MORE
Sandhya Venkatachalam spent the first half of her career building technology companies. She led product at an early data center hardware company that was sold to Cisco, then became a product executive at Skype before its sale to Microsoft. Those roles brought her into data and machine learning years before AI became venture capital’s dominant theme.
She later became a general partner at Social Capital, where she led early institutional investments in AI chipmaker Groq, and later invested at Khosla Ventures. Now she’s founder and managing partner of Axiom Partners, a $52 million fund backing startups that use AI to do work in industries such as construction, industrials and insurance. READ MORE
For roughly a decade before the pandemic, middle market private equity operated against a generally favorable backdrop. Debt was inexpensive and readily available, valuations generally rose over a five-year holding period, and exit markets were dependably open. These conditions rewarded investing discipline but also forgave missteps – a private equity fund manager (“sponsor”) who bought a good business at a reasonable price could deliver an acceptable return with little more than a ‘buy and hold’ strategy. We believe that backdrop has changed. Macroeconomic growth has slowed and volatility has risen across consumer demand, input costs, labor markets, and trade policy, compressing the margin for error. READ MORE
Secondaries have become an increasingly important part of private markets. What began as a relatively small and specialized strategy has evolved alongside the growth of private equity, helping investors actively manage portfolios and providing greater flexibility across long-term investments.
In this video, David Rubenstein explores how the secondaries market developed over time, the events that accelerated its growth, and the expanding role it plays for investors and private equity managers. READ MORE
PE investors routinely underwrite businesses based on their future state. For example, an investment thesis may assume a restaurant company will double its unit count, accelerate franchising, expand geographically, complete acquisitions, improve margins, or become significantly more institutionalized during the hold period. Executive hiring, however, often remains anchored to the present, according to a new article from Wray Executive Search’s Ray Kelley.
“A company identifies its current problems, defines a position around those problems, and searches for an executive who has successfully solved similar challenges before,” he explained. “That approach is logical, and often effective. The problem emerges when the business changes faster than the leadership profile.” READ MORE
Early-stage climate investors should always ask a basic question before writing a check into a pre-revenue company: If this technology works, who will finance the actual business that gets it into widespread use?
In my conversations this week at the once again jam-packed NY Climate Week, I hear plenty of enthusiasm for technological breakthroughs. There are also plenty of investors eager to back growth stage, already-scaling businesses. For entrepreneurs trying to turn their first commercial success into actual repeatable sales, however, the investment dollars are much harder to find. READ MORE
What do top venture capitalists really think off the record?
Here at Newcomer we’ve established an unusual level of trust with venture capitalists — we’re skeptical enough to write truthfully about the startup industry and savvy enough to really listen to what smart investors are saying. READ MORE
The size of a Series A round for a hot startup is on the rise.
So far this year, global startups have secured at least 114 Series A rounds of $100 million or more, per Crunchbase data. That’s the highest annual total in years and on track to top the all-time peak. READ MORE
Private equity dealmakers in the US are poised for higher borrowing costs as the Federal Reserve on Wednesday raised interest rates for the first time since 2023.
The rate-setting committee unanimously agreed to raise its benchmark target range by a quarter of a percentage point, and officials largely agreed that, at the current trend, one more hike would be needed in 2026. READ MORE
Artificial intelligence has become the dominant force in global venture capital, capturing more than three-quarters of venture dollars, while the exit market remained concentrated among a small group of large IPOs, according to HSBC.
AI and machine learning accounted for 77% of global venture deal value in the six months through June 30, up from 30% in 2023, while its share of deal count rose more modestly to 36% from 26%, analysts led by Shiva Joon said in an HSBC report. The gap showed that capital was increasingly flowing into a smaller number of much larger AI rounds. READ MORE
For every VC-funded company that goes out of business, is there really an outsize success like Facebook or Google? Who are these investors with this track record?
Harvard cites research suggesting that up to 75% of startups fail. If failure is that common, how many Facebook- or Google-sized home runs are there really? The statement does not mean that half of VC-funded ventures become Facebooks or Googles. There can be many ventures between failure and outsize success. READ MORE
When Andreessen Horowitz launched its venture capital firm under the brand A16Z in 2009, it broke venture’s unwritten rule: don’t seek the spotlight.
Marc Andreessen and Ben Horowitz faced a classic cold-start problem. To win the best deals, founders had to view their firm as top-tier; to become top-tier, they needed the best deals. So they manufactured attention before they had the track record, working with PR strategist Margit Wennmachers to orchestrate a highly visible media presence from the outset. READ MORE
When Miles Schwartz co-founded payment company Zum Rails in Montreal in 2019, he knocked on almost every Canadian venture capitalist’s door looking for funds. They all turned him down.
So by 2024, Zum Rails was working on a U.S. expansion, and Schwartz moved to Miami. The company raised 10.5 million Canadian dollars ($7.5 million) from U.S.-based growth equity firm Arthur Ventures that year. READ MORE
It has just four investment professionals, keeps an extraordinarily low profile and has quietly amassed one of the most valuable stakes in Silicon Valley. Meet Vy Capital, the investment firm that made an extraordinary bet on Elon Musk.
Elon Musk has never exactly struggled to attract attention. The investors behind him, however, are another matter. And few have been more successful at remaining in the shadows than Vy Capital. READ MORE
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