00:00 Speaker A
Kyle, thanks so much. Talk to us a little bit more uh about AI and what we’re seeing with AI. How does the IPO picture look like going into 2026?
00:15 Kyle
Sure, yeah. I mean, I think there’s a lot going on with AI and so you know, getting into deep into that is going to be really tough, but what we’ve seen really from investors is that they aren’t looking to touch much outside of AI. We had 40% of deals this year in 2025 were AI deals. Uh 65% of the capital invested was into AI companies. obviously you have open AI and anthropic really boosting those numbers. But the market has shifted from kind of your your SAS uh based investment thesis to AI, right? And so AI again is not going to be this singular uh sector. It’s going to be in life sciences, it’s in Fintech, it’s in enterprise SAS. It’s kind of everywhere now. and I think the more that that expands, you’re going to see companies that aren’t harnessing AI as their kind of fundamental business story having a really difficult time raising capital, right? And you talked about the you know, growth of the public markets on the backs of AI. We have, you know, GDP growth uh starting to accelerate through in Q3 on the back of AI. And so I think 2026 is going to be a very fast investment environment for AI companies and VC and a really strong looking uh market for venture capital overall.
01:31 Speaker A
Kyle, looking through some of your research, your research mentions a quality gap in the market. So, what are some of the characteristics, for example, of the winners raising outsized rounds and preparing for exits versus those that may be lagging or struggling.
01:50 Kyle
Sure, right? I think you hear a lot about ARR ARR right now. Um and you see some of these AI companies that are maybe two or three years old, driving huge growth in their ARR figures. And so, you know, what used to be uh, you know, raising a series A on a 1 million uh ARR figure is going to be much higher now. So the KPIs that these companies are trying to get to and benchmarks they need to hit before they receive investment is really, really high. Right? We do see really strong investment up through series A. at series B, you start to see uh this kind of cliff forming where you see companies really starting to accelerate their growth there, raising very outsized rounds, uh and really kind of uh you know, capturing the growth capital in the market and the companies that are struggling are having a tough time to raise. So, you know, I think, you know, where the benchmarks got higher in 2022, now they’re even higher and kind of supercharged because of AI.
02:51 Speaker A
And one of the sectors that has seen a number of IPOs this year has been the crypto and the broader Fintech space. For example, Circle’s IPO that came just uh before around the time of the passage of the Genius Act. So, are these IPO windows sort of coinciding with policies and regulations? And if so, which sectors or companies would benefit from uh that policy or regulation coming in 2026?
03:19 Kyle
Yeah, and I don’t think it’s just crypto. We’ve seen a lot of the IPOs in 2025 and the expectation is for it to stay the same in 2026, following these administration policies, right? You have crypto, you have AI, you have defense and and space companies that are are going public. Uh you know, all following kind of the the pathway that the Trump administration has laid out, right? Obviously, crypto was the big investment in 2017, 2018, you know, up through uh you know, 2020. now with the regulations uh starting to come for and help to you kind of bolster that floor, I guess for crypto, you start to see those companies like Circle going public. I think, you know, next year AI is where where we’re looking at. We also think defense tech companies and someone like All Space, uh SpaceX has obviously talked about their 2026 IPO and those are going to follow along those Trump administration policies and receive the tailwinds uh that those policies are are providing. Headwinds is going to be life sciences, right? We have had seen life sciences have a really difficult 2025. I think whether it be from uh early stage financing to uh potential price caps uh is all going to have an impact on that future expect or future return expectation. So life Sciences has had a pretty difficult year this year and and next year will probably be very similar.
04:47 Speaker A
And what about the hard-to-reach tier of IPOs that may run well into the hundreds of billions, uh the mega unicorns, if you will. So, which companies do you see at the top of that list that could be a possibility for next year?
05:05 Kyle
I mean it’s tough to say, right? You obviously have SpaceX who’s going out and saying that they’re ready to IPO. Uh, you know, Stripe and Databricks have been a little uh less forthcoming with their IPO plans. Uh, and they’re probably all possibilities, but I think SpaceX is going to be the one that, you know, we’re obviously, you know, know is is uh should be the expectation. But I think it’s also possibility that none of those companies go public. I mean, SpaceX might but databricks and in space and uh Stripe have a, you know, on seemingly unlimited amount of capital in the private markets to raise. And so if they need $2 billion or $3 billion to for growth or they need $10 billion to get liquidity for their early investors and employees. I think that’s still in still there in the in the private market. So there’s not this mega incentive for those companies to go public in this market.
06:05 Speaker A
That would be something to see if SpaceX did go public. Quite a lot of interest in that. Thank you so much, Kyle, and happy holidays.