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Tens of thousands of organizations could be affected by a hack of Microsoft is a share Point software.
Plus all eyes on Tesla, Alphabet IBM.
This week is big tech earnings get underway and stop benchmarks, hit new records and how Tesla, SpaceX and Xai are struggling to deal with the fallout from must feud with Trump and his wild beast. But first, one key stop we're looking at, which is managing to shrug off initial anxiety that you saw at the Sardle trade around this global vulnerability.
Share Point the software where you.
Can be It's a data management application for Microsoft, and indeed it could be exposed two hackers. Tens of thousands of businesses could be affected.
Let's get to it.
Bloomberg's Brodie Ford and it's not a share impact, but it could be a real impact for users.
That is absolutely right. If you have a coworker who sends you a file, there's a good chance it's on SharePoint. I mean, this is a very well used, pervasive program from Microsoft. And what is interesting about this situation is it is about one year after a very fateful day for Microsoft, which is when that issue with CrowdStrike caused all those flights to go down. And so Microsoft Cybersecurity Division has had a lot of heat lately. Today it just got a little hotter.
It did over the course of the weekend.
The US Cybersecurity and Infrastructure Security Agency CEESA put out this warning. And it's not the first time that the US government has called out Microsoft for these sorts of vulnerabilities.
Absolutely, and you could say that this is a really small sub sect of customers likely, right, this is folks who are using SharePoint on premise. That's likely a small subsect of the larger group. And it's those who maybe should have updated to the cloud and this maybe wouldn't
have happened. But it doesn't matter, right, If you're a customer and you got your SharePoint hacked and now you have hackers going between your files to your teams and pulling out emails and god knows what, you certainly might take a second look before staying with Microsoft or certain security products.
Has Microsoft responded and how well they've sent out some instructions on Hey, here's how to patch your system, here's what to do if you think you may have been impacted.
But this is a pretty quick moving thing.
I mean.
Also, Microsoft earnings are next week, and so I'm certainly expecting to hear some questions about, hey, is this impacting any kind of customer.
Behavior yet Census Silas Cutler and your story saying it's a dream for ransomware operators.
Yeah, yes, Brody.
Ford, thank you, thanks for reporting on it for us. Meanwhile, let's just get a bit broader, because we were just hearing from Brody that big tech earnings are coming up. Indeed, Microsoft is one of them. Amazon that's happening later this month too. This week, we've got Tesla, Alphabet, IBM, to name but a few. Let's bring in Bloomberg's Denitza Takover Dinitza. Look, are we expecting red you to be improving for the likes of.
Alphabet at least? I know that test a story. But let's talk on about Alphabet.
We actually saw an upgrade on Alphabet from Morgan's family. They're very optimistic both on Alphabet and Meta, but they're up grading. The press saga at Alphabet just because the violations of META is pretty high. But what we're seeing now, we're obviously at record high SMP traits at twenty times twenty two times forward turnings, just incredible rally here, we're also seeing a very high bar. There is a big punishment for those who miss on learnings, the biggest in
three years. And for those who actually overperform outperform, it's like the best in about a year, So the bar is higher, especially if you disappoint. Artificial intelligence spending has really made a big difference in the Magnificent seven. We see meta, we see Microsoft and Video leading the games, and obviously Apple were struggling.
Amazon is another interesting story. They're up just about three percent year.
To date, which compared to the incredible spending metadid and the reward investors have given to that companies up more than twenty percent.
So we're seeing a big gap opening.
And with this year earning season happening without too many economic reports, too much happening in the macro, it's all about the earnings right now.
And I love that you bring up the spending.
The metro is done because Boomberg Intelligence manly it's saying writing that Alphabet. We are anticipating maybe even increasing capex coming from then. We're also anticipating all the fact that they've boosted some of the prices of their ad targeting. Maybe that's going to be reaping dividend. You can go and read more about the preview that our colleagues over at Bloomberg Intelligence have. But he said, go back to maybe the other key proof point this week is Tesla.
Now what's interesting is sometimes the fundamentals don't matter for this business. We expect revenue to full, profitability to full. There's more about what Elon says.
It's really fascinating because he was very active this week and he was saying he was working twenty four to seven. He's even sleeping there.
She did so big reaction today.
In pre market there was some optimism, but today the stock is actually down. We also have news the tests, so it's set to fight California Department of Motor Vehicles over there claims that the company has exaggerated their capitabilities of sale driving. And no, we're not seeing a major move. Obviously, after that quarrel with President Trump, the stock was under roll of pressure. It has recovered some of that, but
there is a whole universe of investments. Try to even musk that has been under pressure and hasn't received that big social social sentiment we saw after the election in the beginning of the year. So with that boost absence, the question is whether investors will really penalize a missing earnings.
Particularly the retail funds.
We're going to dig into Tesla much more in a moment with Max Traffick can but with the numbers was Denisa Teikova.
We thank you very much now that.
She's bringing a broader perspective as we think about earnings, we think about idias in crime news. Like Microsoft's Michael Reynolds is with US vice president Investment Strategy of at glen Mead. You've got a call forty five billion dollars in assets under management, and I go to you first about the optimism already baked in the market. We're at record highs again, How high is the bar for earnings this week?
Thanks for having me on. The bar is pretty high.
As we come into Q two, it seems like a lot of companies are really posting some or expected to post some results that are relatively resilient, especially compared to where people thought tariffs were going to be in early April that the thought that that was going to hit margins pretty materially.
We're looking at Q two numbers.
In the aggregate that are actually holding up pretty well. Sm P five hundred expected to post five percent earnings growth on a year over year basis. Tech is a pretty big contributor to that, and they may be relative beneficiaries from the tariffs that have been announced and have gone into effect so far. So overall, the story of earning season as the rubber sit in the road is resilient so far.
More surprisingly, stop resilience for the large cap is of the AI trade in particular, I think of in video in particular, I think meta. But we have started to see this bifurcation in the MAG seven. For example, Tesla has not overperformed this year, and indeed is a key lagged so too is Apple. How are you seeing that being plaid out from an investor sentiment perspective?
An excellent point. We're not just bucketing the MAG seven. We're looking at broader tech here, and there is this bifurcation.
In large cap MAG seven.
Overall, Again, some aren't contributing are a really big driver of the.
Results for the S and P five hundred.
But if you look over into small caps, actually some of the biggest contributors for pretty notable gains and earnings for Q two are so be financials and healthcare. So what that sort of tells you is it's really not just a broad tech play for earnings resilience this quarter.
It's actually a little bit more company.
Specific, which is a bit of a departure from what we saw last year, where in the aggregate mag seven just blistering earnings growth and you're starting.
To see some of that falter a little bit deceleration.
In the aggregate in some company is just having a little bit of a tougher go of it.
In terms of a tougher go of it, just think Max last week in Netflix. I mean, they managed to post some really solid earnings, but they were punished largely because of just how well they've run up. Is there a risk that companies don't even underperform. They actually managed to beat but not well enough.
Sure, that's an inherent risk when you have companies that are valued so to such a premium extent that they have such high let's call it price to earnings ratios that you bake in a growth rate to those earnings, and if you can't meet those hurdles, there's often a
big punishment for failing to meet those results. There comes great expectations with great valuations, and so if you're showing signs that perhaps down the road we're not going to be able to meet some of those earnings growth expectations, there's a rerating that has to happen there, and it's an inherent risk investing with again, growth stocks or premium valuation equities.
And regulatory risk overhangs a lot of these big names.
I think of Alphabet in the line of fire when it comes to investigations as to whether it's a monopoly in certain areas of its business. You think about Tesla and the ongoing need for more regulation around robotaxis in the future. That affects way more too. How much do you have to factor in regulation right now?
Am I?
Regulatory risk is so important, especially when you have such a concentrated market as we have now. Right now, we have one stock in the S and P five hundred that's had an eight percent plus weight in a five hundred company index. We've seen this two other times in the sixties you had AT and T, and you had IBM. What happens is when you get to such a scale, you have a target on your back, and that can be a regulatory target, and that could also be a
competitive target. So these are things that you have to think through. When you're looking at a company that dominates an index, they have a target on their back and you have to sort of think through the implications of what that can have to future earnings, growth and future dominance of the company.
Thus far, in video stays higher, up about a quarter of percent. In fact, Apple getting a little bit of wind beneath its wings for this particular week. But might go back to what you said about small caps, so that we're a tech focus show here, but the fact that healthcare and the fact that financials outperform how much that's starting to be, the fact that.
AI will be beneficial and that will help.
Revenue growth and maybe profitability as well.
It's an excellent point because we've seen some of the initial beneficiaries of AI than those that are developing the technology and providing the hardware for that technology. But ultimately that's going to be something like the Internet that permeates through every company and there's got to be this thought process across the spectrum that AI is going to be a beneficiary for these companies and it's going to penetrate through throughout C suites, throughout the economy.
So is it a little early to perhaps.
Being able to see some of that penetration happen in real time for some of these companies perhaps, but some of these early movers could start to see some benefits onto their bottom line loop.
We're a global network as well, and we talk so much about the US winners, but I think about what TSMC is doing with its valuation hitting more than a trillion over in South Korea, when you're thinking about European bets, Mike, how much you're seeing investors want to get global with their tech exposure.
We're seeing quite a bit of that, especially around the dollar in particular, where we're looking at portfolios in some cases that you know, if they're very US focused. We're arguing, if you don't have a single investment in your portfolio
that's not dollar denominated, you're not properly invested. And so when we're going to look for these opportunities abroad, it's not just what are the company specific opportunities, but more on a macro basis, if we do find ourselves in a declining dollar environment, you're going to really wish you have non dollar denominated assets in your portfolio.
May some of that be AI plays, perhaps, but.
More broadly, it's just more important that you're looking abroad for a global opportunity set within your equity portfolio.
Michael Reynolds, vice president of investment Strategy at glenmade great to catch up with you.
Thank you.
Now coming up how Tesna SpaceX xai. They are struggling to deal with the fallout from musks feud with try that's next.
It's the Business Week front cover. This is bloom Beg Tech. You know Musk's feuds and wild bets.
Well, they're having an impact on the billionaires businesses, including.
Tessa SpaceX XAI.
And that is the focus on the Bloomberg Big take, and it's bloom Begg's Max Chafkin and our own End Ludlow that co author and Max joins us right now.
It's a great story.
It's the lead of the Business Week cover as well, and you go into the case studies of just how what has been a very public spat has fallen out into some key well future crises for these companies.
Yeah.
Absolutely, So you do have this feud with Donald Trump, which is a big deal.
I mean, I think you look at like, why.
Has Tesla's stark fallen over the past six months or so.
A big reason of that is.
It's kind of like it hit a high just after the election, and we've had kind of a reverse Trump train. But once you back away from the Trump of it all, you start to see three key companies, SpaceX, Tesla X, all of which are attempting these huge, kind of monumental things with huge amounts of risk. I think it's a thing that Elon Musk has never tried to do before.
Really, we've never seen.
This in his career, as much as he's a guy who makes big bets. We have Tesla attempting to do a really like a hard pivot away from car manufacturing to robotaxis, a competitive field where they're not necessarily in the lead. We have Starship, this giant rocket which has yet to fly yet, we've had three successive explosions during test flights. And then we have x which looks very promising XAI, but I think is clearly a little bit behind some of its competitors, Open AI and anthropic and
is losing huge sums of money. And you take all those three things, and then you take a poor relationship with the guy who is in power in the United States. And that is a dangerous recipe.
Say, and it's a dangerous recipe that investors now stead down the barrel of his earnings come up this week on Wednesday, he's already declaring he's sleeping at the office largely to fix is it Tesla?
And at the moment is X How do we know where he's spending his time?
Well, that is the thing.
And as Ed and I talk about in this story, I think if you talk to different people at different companies, they'll say different things. I think Tesla employees, a lot of them feel that Tesla's is Elon Musk's main priority. XAI employees kind of would say the same thing. I think SpaceX is in a slightly different position because you do have sort of a strong executive more or less in charge. That's Gwen shot Well, the president and COO. But there is that tension and we saw that come up.
You know, in the last couple of weeks, we've seen investors suggest that maybe Tesla needs to give Elon Musk even more equity to sort of persuade him to spend more time at Tesla.
Which is a strange thing when you're.
Talking about a stock that's gone down, when you're talking about all of the challenges this company faces in terms of the core business, the car business, which has not been performing well over the last year.
Or so, And you really articulate how much just general sentiment towards Musk as what had been the most adored entrepreneur has completely depleted, but he still has such a big base of retail supporters.
Is that fading in this current moment? How much does that have to be an anxiety?
I mean, you look at Tesla stock and it's still not doing that poorly considering all of these kind of challenges that I've brought up. So the stock is still very very expensive compared to other car companies. It hasn't you know, done especially badly over the last month or so. So there is this base of support, But I think you hit the nail on the head, Caroline. The big change here for Elon Musk is he went from being a very popular, admired guy.
To being unpopular when you.
Look at his approval rantings, they are poor, and you know it's possible. You don't necessarily need to be popular to succeed in business. But it doesn't hurt, especially when you've made your own personal brand so important to your companies, says Yon musk Has.
And when your biggest found from an analyst perspective, and we know, give a short shrift to Wall Street.
But when Dan I says, pay the guy more, and he says, shut up.
Dan Ulmberg's MaTx Chaffkin, it's great piece.
I urge you to go read it in his time.
Now for Talking tech and first up app design software maker Figma and some of its investors are looking to raise one million dollars in its USIPO and what could be one.
Of the biggest listings of the year.
It can value the company up to thirteen point six billion dollars based on filings. The move comes after the plans sale to Adobe and remember fell through in twenty twenty three.
Plus Uber well, it's doing a group of lawyers and medical.
Providers in LA alleging they made fraudulent insurance claims that cost the company.
Millions and legal fees.
Now Uber accused the defendants of directing passengers to pre selected medical providers who submitted inflated bills to treat negligible or non existing injuries from minor collisions between twenty nineteen and twenty twenty four, and the Crypto Exchange back by Peter Teel That's Bullish, has filed for an IPO too.
The offering is being led by JP Morgan Jefferson.
Citigroup is the latest company in the growing crypto market pursuing a public listing this year. Look, there's another company set to access crypto by public markets, the Ether Machine. The firm is a combination of dynamics and the Ether reserve, creating an Ether treasury with over four hundred thousand Ether tokens. Who in more is Andrew Keyes Ether Machine chairman co founder Andrew There are a fair few companies doing this digital asset treasury play.
Why are you the one to go with?
So?
We are not a buy and hold treasury. We are an institutional vehicle that is generating risk adjusted returns actively managing ether. Okay, Ether is a productive asset onlike bitcoin, and in doing and having Ether on our balance sheet, we have to stake it and use it to participate in the decentralized financial economy where we're able to actively generate yield.
Okay, you'll also know not the only one that's looking to bring yield.
I think what bit mine and others are doing out there. So how do you.
Distinguish yourselves as the experience with which to allocate the experience with which to drive yield. I know that you're age old in the ETH space and a co founder of Consensus, but well, the CEO of Consensus and the guy co founded eth is backing another one.
Yeah, so we have amassed the avengers of Ethereum. Our technology team is unparalleled in experience and the creation of proprietary technology to generate this yield. And basically we're able to outperform the exchange traded funds that don't have yield and the ETPs that are only able to participate fifty
percent capacity in staking. And we are able to steak which is the only thing that the ETFs would be able to do, restake, which is using Ethereum's proof of steak mechanism to secure other middlewars and then use ether as a pristine collateral in the DeFi economy to further generate additional yield.
What's interesting is this is almost about a little bit of pr for the Ethereum ecosystem. More broadly, you talk about it catalyzing the ecosystem, and you've got some big institutional strategic players who come on board with this particular initial announcement. I think in Pantera thinking crack and how long do they hold? How long do they stay with you after this back is completed and you continue to trade.
So all of our capital partners, we believe our long term money. We had no fast money in this vehicle. And these are other people that believe that Ethereum is essentially the next generation of the Internet. With Bitcoin, you have one asset that is moving on that ledger, the
bit coin. With Etherium, you can have and tokenize infinite assets such as stable coins, real world assets like parcels of lands, stocks, bonds, derivatives, and with those tokenized assets you can deploy them into what are called smart contracts, so arbitrarily complex legal agreements. And we believe that Ethereum is in the earliest innings of the next generation.
Of the Internet.
It's interesting that if has so lagged Bitcoin as an institutional play though, and we just think in the recent years we have has seen it just not perform in the way that bitcoin has as an institutional asset. But now you get the Genius Act potentially going to give more regulatory calater clarity.
Now you get the bet on DeFi. How do you.
Think though it can perform against Solana or other rival protocols.
Briefly, so, Etherium is the largest beneficiary of these regulatory tailwinds because Ethereum is where these assets reside. Ninety percent of stable coins and high quality liquid assets reside on Ethereum, whereas only ten percent are displayed between the other blockchains. And furthermore, we believe that Ethereum is poised to have essentially what we call a gravitational pull, where more of these assets are going to be settled on top of Etheria.
Andrew Keys, ether Machine, chairman of it, thanks for joining today. Meanwhile, talk about Polymarket, crypto betting platform that was kicked off shore by federal regulators.
It's just stuck a deal to return to the United States markets.
Just weeks after prosecutors shut down a probe of the company. How is it doing it? So to say it will buy a little known derivatives exchange called QCX, which will allow polymarket to legally re.
Enter the country.
Welcome back to Bloomberg Tech and let's get a check on these markets. So I'm going to take you to Verizon because shares are higher. After the company posted second quarter of revenue the beat analyst expectations WEPC four and a half percent. The mobile phone company also raised the profit outlook and excited whiles price increases as well as US taps with the price and CEO Hans Westburg spoke with Blomberg Alia.
Take listen.
Now, if you look at the quarter and actually the last four quarters, our strategy is working. We have a lot of vectors of growth all the way from our broadband fixed wires access, our step ups, prepaid is growing, and then we have our adjacent services with perks and all of that, so all of them are actually contributing. And then the last i would say three four quarters were also been very good and discipline our cost levels,
so we get the leverage. Our ABITA was twelve point eight billion dollars of growth of four so we'll raised the guidance both for ABTA EPs and free cash flow, all of them sort of coming from the generation of financials, but it's based on the customer offerings where built over the last year, and there is really resonating with the market either on broadband or wireless, and for all customers.
We're serving all customers the United States, all the way from the governmental or federal customers to large enterprise SMBs and consumers. So that's what you see right now, resonating with the financials. But ultimately it's about having the right offerings for our customers.
All about earnings. This week, that was Verizon CEO Hans Fezberg.
Now let's talk about how private equity firm Blackstone has just pulled out of a group of investors seeking to take a minority stake in TikTok's US based business.
And this is all according to a source who.
Says the firm has ceded its potential state to other investors in the consortium, which includes Oracle and recent Horowitz.
And General Atlantic are coming up.
Excel partner Ben Fletcher joins us to talk about one of Europe's latest uniforms.
It says bring back tech.
Interest in AI coding tools remains high among users and mention capital alike ACEL has led a recent two orred million dollar Series A route into Swedish vibe coding startup Lovable and startup has become Europe's latest unicorn with evaluation of one point eight billion. For more, let's bring an Excel partner Ben Fletcher, So, Ben, what stood out for Lovable? Why back it with such a significant sized Series A for European standards?
Yeah, I think it's a couple of things. First off, thanks for having me on. It's really great to be here and to chat a little bit more about Lovable. But when we spent time with Anton and Fabia and the two co founders, it was really really impressive to see that they were a really, really technical crew. So they had worked in research, they had worked in applied AI research, but they were building a tool that was
applicable to the masses. So only one percent of the world's population can code, and then the ninety nine percent don't have that ability to code or to be able to create things for the web. And so when they looked at their experience of building applied AI systems, they were to be able to take that and put it to a platform that they built called Lovable that allows them to offer to their users the ability to chat or text based prompt to be able to create.
Fully fledged applications.
So that's a front end with a back end and a fully working application.
This is pretty incredible. If you talk with users, they say.
It's magic, and so all those things got us really excited to invest in Lovable.
I mean, attraction has been phenomenal. I'm interested as to who attraction then really ends up being with, because often it's the non technical founder who just wants to sort of put together initial idea of what the website where they looks like and then they actually get a developer involved. How long until that developer is no longer needed.
The nice thing is is it's been non technical folks.
It's been semi technical.
Folks and technical folks that are using Lovable about the technical folks that are using it on the weekends, making it easier for them to get applications up and running. And then you see semi technical folks, maybe the product manager or the person that has had experience in the past but wants to build something or they want to be able to spin up a prototype and then pass it on to their technical or their developer team.
And then as folks that have.
Never had any experience, or don't understand frameworks, or don't understand different coding languages and their ability to actually get something spun up and to be able to build a fully functioning application.
So all those folks are now are using it.
We see this as a way to give the power to the masses to be able to create. So now if you have an idea, you can now build and you can have full software to be able to have a working prototype or also a working application.
And I don't want to be sensationists, but I'm interested therefore, push us forward ten years, twenty years. Developers still a role one needs engineering, Still something that someone's going into for engineering, I.
Would say absolutely.
I would say absolutely, Like you think about the engineers that are building a lot, and it's always been how do we abstract more and more things over time? And so it started with cloud and with hosting with AWS, and now you have it with applications. You always need maintenance, You'll always need the ability to what are the right systems, how do you make sure that everything works together?
And it will go more into.
The critical thinking and the critical aspects around engineering.
Oh, go ahead, Well, no, I'm interested in talent writ large a little bit at this moment, Ben, and you'll see why within my question that you're saying how you've batted them because of just the sheer, agility and expertise that Anton and team bring. Now I'm thinking of another coding application company like a Windsurf for example, which also helps developers right code. And the fact that that very elite part of the team basically got siphoned off to
Google this licensing deal. Qull it what you will, whether it's an aquaha or not. Then how are you thinking about structuring these deals going forward to protect all talent and your own bet on lovable.
Well, the nice thing is that where we sit and where we partner, we're constantly partnering with entrepreneurs and our idea is to make sure that we can align our interest with them to build the biggest companies as possible and companies that are really going to matter. Now you're talking more around you know, M and A and acquihirres and deals that are being structured from an enterprise perspective.
For us, it's always about one how do we make sure that we can align our incentives with partners, so with the companies that we're going to partner with and then how do we make sure that we can support them and we can support them to the best outcome and what they ultimately want.
If they want to go and they want to work at these larger companies, that's that's great.
We want to make sure that we can support them and make sure that they have the ability to do that. We'll also make sure that we protect URLPS and our investors and make sure that we can return capital to them. And so very similarly with Scale AI and with Meta,
Alex had an incredible opportunity. And the amazing thing is that we still own as investors fifty percent of the entity going forward, and so we saw it as an awesome opportunity where a great company like Scale AI gets to go and reshape AI in the future as well as there's a lot of value that will continue to being created and accrued over time to the investors and to URLPS.
Well.
Certainly Cognition thought that about Windsorf, so all can win in certain situations. Ben Fletcher, Axcel Partner, it's great to have some time with you. Thank you very much, Indean. Now let's talk about larger trends in venture investing two and Pitchbook to release its funding data for the first half of twenty twenty five. Senior Venture Capital Research Anasov at Pitchbook, Emily Sung joins us.
Now and Emily Look.
One of the focuses has been an exit how much of these aquahys bringing numbers in terms for you on what is happening in Pitchmook data.
Emina activity has been really interesting because a lot of startups are really leading this trend. Because of the FTC leadership hasn't really changed much in the EMMA landscape. This has really led a lot of large startups to be the forefront of acquires. But I think what's really interesting and what the biggest topic in Q two was was IPOs. IPOs did come back modestly, but I would say it's more of a reset rather than a rebound.
Okay, so we're now thinking, well, Figma is the one to watch. They're already on their road show Eminy, So is that going to be yet another one that helps push open the door or really we're going to have a tricular effect when it comes to IPOs.
Currently, there hasn't been a really rush towards new filings, mainly because of the August one and tariff deadline that hasn't addressed a lot of key policy questions that still need to be answered. For a FIGMA specifically, what's interesting is that it's an order company, it's about thirteen years old, and it also has a really.
Large crypto balance.
And a trend we've been seeing recently with the new Trump administration is sectors that are focused on key policy parties like crypto, AI, national security, defense and fintech has really propelled recent exit activity.
We're just hearing about Bullish looking to IPO as well. So another one that adds to that crypto vibe eminy.
What about just more.
Generally liquidity needs so it takes people to the market is because often it's your employees, your the VCS that are.
Back to you.
They want this moment.
Are you seeing liquidity needs though, be satiated in the secondary market a lot more?
The secondary market is really interesting. It has been growing rapidly. I publish a quarterly report on I pitchbook and the market currently is about sixty billion dollars and that's significant, and that's the annual value as of Q one, But sixty billion, for context, is about two percent of primary Unicorn valuations and about a quarter's worth of primary VC exit value, So it's notable, but it's also not big
enough to be the new IPO for example. And with the secondary market, it's important to realize that the concentration is super high in the top twenty to fifty unicorns, So unless you're an investor in one of these top startups, you're not necessarily benefiting much from the secondary's market right now. But there is a lot of growth in the space. The number of funds that have invested in VC secondaries, the total fund value has doubled since twenty twenty two,
which really shows investor interest in the secondary space. And I do for you continuing to grow.
I mean, you talk about that concentration when it's looking at those that are able to tap the secondary market, what about concentration and those that can ultimately come for an IPO as well. I mean, there's no surprise that Figma is probably going to be leaning in on its AI advantages. Is it still all about gen ai and that trend.
Ai is really dominating VC right now. It's captured about two thirds of the deal value in twenty twenty five, but only about a third of the deal count, which really shows the concentration in AI, and I think AI will continue to be a really big theme. Of course, foundational models have captured a lot of VC dollars in interest, but what's also really interesting is that AI is fundamentally changing how businesses are operating and their fundamental models throughout
a variety of sectors. So it is really transformative and that's why I Venture is funneling a lot of dollars into the space.
And lastly, were talking very much.
I know you focus on the US in terms of the data, but what does.
It look like globally.
It's still the US the nexus when it comes to at least coming and tapping the IPO market and more companies coming internationally to tap that market.
The US is currently still dominating the IPO market and in general, across the world, deal making exit activity has remained muted. Venture really doesn't like volatility, and there has been a lot of volatility recently, and until some key questions are answered like the third for instance, the tariffs, trade wars, geopolitical tensions, there probably won't be muted deal making exit activity until those questions are answered.
Emmani Sung, we thank you so much.
Inventure capital research anaist over at pitchbook great to get the breakdown. Chicago, it is host to the Global Quantum Forum, happening this week, is where top industry leaders are set to discuss the future of the sometimes hoped technology. Let's join Jeremy O'Brien over in Chicago. It's High Quantum co founder and CEO Sside Quantum. It's currently building out the
Quantum Computer campus in Chicago. And Jeremy, before I ask exactly what you're going to be doing in the force of quantum, but first, why was Chicago the place to be spending I think at least a billion is what you're committing in capital.
Yeah, so Chicago, we figured it was the best place in the world to do what we're doing here, which is building the country's first utility scale quantum computer. And that's really about an understanding that that folk here have of just how big and hard it is to build a system of that scale.
Let's talk about, therefore, the application, because I maybe loosely say that quantum is often hyped. The hype is around when it can be purposeful. When it is going to be really truly useful, we have breakthrough after breakthrough, Jeremy, how are you going to be offering something really useful for commercial purpose?
Yeah, you're right there. There has been a ah, a lot of hype and a lot of talk of breakthroughs, and fundamentally, I I my my view is that breakthroughs UH precipitate a decade or more of of hard work, you know, r real hard technological development. It's not breakthrough and then suddenly you have a new technology. And that's
certainly true UH with quantum computing. And so our breakthrough UH was a decade ago UH when we were university professors and we figured out a path whereby we could leverage the uh, the semiconductor industry and the trillions of dollars that have gone into that and adjacent industries to build uh the real thing, UH, which is a million cubic scale UH fault tolerant, utility scale quantum computer. And so that's what we're d that's what we're doing right here in Chicago.
Your professor over at Stamford at Bristol Universities as well, Jeremy, and I'm thinking about how tonics has become the area of real focus for you.
How does that differentiate you from what others are doing.
Yeah, so you're absolutely right. It's the silicon photonics platform, uh that we spent uh twenty years figuring out what's the platform that enables us to leverage that semiconductor industry because it's been my conviction since I don't know, the mid mid to late nineties that unless we figure that out,
it's not gonna happen in my lifetime. And uh, when we figured that out, uh, we established uh Psychonum, and we spent you know, many years and uh much blood, sweat and tears grinding away at the really hard uh semiconductor engineering problems to to make that work. And now we're at this point where we're we're poised to you know, to break ground and build that facility here.
Can you hate to say put yourself against the competition, but when you've got IBU.
Am out there saying here in Upstate.
You're not New York, we're going to be getting there by twenty twenty nine, a real use case quantum computer. Jeremy, you've got the race on with well companies we've helped advise before. When I'm thinking about Microsoft up to AWS and Google, where are you in comparison to that race, as we like to put it.
Yeah, firstly, I'm not sure that it's a race when it comes to hard technologies. It's in some sense it's a filter, right. But you know, I can't speak for all the other different folks that are out there are pursuing this, but I can say that, you know, our approach has been very different from the beginning, which is to really focus on the scale that's required for really
valuable commercial applications. And it's been the case for twenty five plus years that that's a million cubic scale system, and so we have uh had nothing to do with doing small UH demonstrations proofs of principle of quantum computing. And that's been a a very deliberate approach because it's a bit my You know, if you if you're trying to get to the top of the Sears Tower here in UH in Chicago, UH, then you know, ladders are a good way to to try and get to the
to the top. But if you wanna get to the moon, UH, ladders are not really the way to get you there. And so we've taken a pretty antithetical approach, I would say, from from the beginning, which is to really focus on scale. And so when you're talking about a million qubet scale system, as I said, it's been you know clear to me
uh for a very long time, right. The only way to be able to do that is to leverage the you know trillion dollars uh and you know better part of a century that went into the semiconductor industry and leveraged.
So that's what and a billion that you're going to be investing in that project. And you take us to the Sears Tower, I go back to Chicago.
What has the workings been like with the governor?
Why have you managed to think that that is going to be where the talent pool is basically for you going forward?
Yeah, I think from the governor to the aldermen and the entire ecosystem, we've really enjoyed great partnerships here and it's been driven by, as I said earlier, the understanding of just how big, complex and hard this project is. To build a utility scale on a computer that's a that's a very big, hard project. And I'll give you just one example of that. Early in our interactions with the city and the state, a big delegation came to us in Silicon Valley led by the Deputy Governor and
the head of Commed. The power utility came to that very first meeting, and I think that's a big different intiator for us as an organization and for the ecosystem here is to understand that, yeah, we need to get you know, we need to get power to the side, et cetera, et cetera. So that's that's a really big part of our decision.
Well, Jeremy, have a great time at the Chicago Quantum event. You are, of course Jeremy O'Brien of Side Quantum. Now that does it for this edition of bluemg Tech, quick check in on the NASLAK which is at a record high once again, Nasak one hundred and two.
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