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| The Daily Pitch |
| VC, PE and M&A |
| Your edge on global private capital markets |
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| The double squeeze on venture seed investors |
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By Kyle Stanford, Director of US Venture Research
Ballooning seed rounds and companies staying private longer are squeezing seed venture investors' returns, according to our latest analyst note.
While secondaries have served as a pressure release valve in the last couple of years, they come with an economic tradeoff: Taking money off the table earlier limits the potential returns that LPs expect from VC.
On one end, bigger deals at this stage have reduced the size of seed investors' stakes. This is making it harder to both invest across a diversified portfolio and maintain significant ownership in top companies. To be sure, it's not for lack of investment opportunities: 2025 first-time financings are pacing ahead of 2023 and 2024 by 16% and 10%, respectively.
Meanwhile, venture-backed companies continue to remain private even longer. The median time between a startup's first VC financing to its eventual IPO has grown to 11.5 years in 2025, up from 7.4 years a decade ago. While the dearth of public listings during the recent market downturn is partly to blame, there's also a growing backlog of companies worth more than $1 billion—more than 800 of them in the US. |
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To add salt into the wound, VCs' stakes in companies that achieve exit valuations of at least $500 million have shrunk substantially over the past decade. On average, companies exiting in 2025 had sold only about 55% of their shares to outside investors, down from 68% in 2015.
As the broader VC market evolves, seed stage investments—and their checkwriters—are unlikely to remain as they are today. |
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| A message from Oracle NetSuite |
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| CFO's Playbook to Strategic Leadership |
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• Medline, a medical supply maker backed by Blackstone, The Carlyle Group and Hellman & Friedman, has filed to go public as the IPO market heats up. Find out more
• AI and stablecoins kept VC funding on track in the enterprise fintech industry during Q3, according to our latest Emerging Tech Research. Access the expert analysis
• Just out: Our Q3 valuations data for public companies in the AI sector. Get our analysts' report today
• Europe is headed for its worst year in a decade for VC fundraising, pushing its capital invested-to-raised ratio to new highs. A sluggish exit market and waning returns are affecting LP allocations. Read more |
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| What OpenAI's restructuring means for its relationship with Microsoft |
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| (Chip Somodevilla/Getty Images) |
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By Jacob Robbins, Technology Reporter
OpenAI's for-profit restructuring is complete, making broad changes to its relationship with Microsoft and shifting how the company will operate going forward.
While Microsoft still looms large over OpenAI, the new structure grants new freedoms to the ChatGPT maker, and clarifies who gets access to the technology when—and if—it develops artificial general intelligence (AGI).
Cap table change
Microsoft remains OpenAI's largest stakeholder, retaining a 27% stake in the newly formed OpenAI Group, which is valued at approximately $135 billion. OpenAI's nonprofit arm is the new parent entity's second-largest shareholder, with a 26% stake that's valued at $130 billion.
Microsoft previously held a 32.5% stake.
Post-AGI IP rights
Under the previous structure, Microsoft would have lost rights to OpenAI's technology when it reached AGI. Now, an independent expert panel will have to verify and confirm whether the company's technology has indeed reached that milestone. Microsoft now also retains rights to OpenAI's models and products through 2032, which includes "models post-AGI, with appropriate safety guardrails," per the official announcement.
The new structure also clarifies that Microsoft's rights to OpenAI's research, not commercial products, will last only until 2030 or when AGI is confirmed to have been reached, whichever comes first.
Microsoft no longer has IP rights over any consumer hardware device developed by OpenAI, which acquired former Apple design head Jony Ive's startup for $6.6 billion in May.
Revenue split
OpenAI has reportedly been sharing 20% of its revenue with Microsoft. The new agreement clarifies that this revenue sharing will remain in effect until an expert panel confirms OpenAI has developed AGI. Payments will now be made over a longer period, according to Microsoft.
Looser leash
OpenAI is now free to partner and develop products with other parties and no longer has to exclusively work with Microsoft's Azure cloud division.
This also means that OpenAI can finally sell access to its application programming interface to US government agencies and national security customers, regardless of the cloud provider, and can release some of its open-weight models.
But the looser leash goes both ways: Microsoft can now independently pursue AGI on its own or with other partners. |
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Smart reads that caught our eye.
• What if Europe had a joint stock exchange? As individual national marketplaces struggle to promote market growth in Europe, German Chancellor Friedrich Merz proposed creating a unified stock exchange. [Bloomberg]
• The private credit industry could be in danger. Despite private credit deal value rising exponentially in 2025, nontraditional loan structures are causing auditing frameworks to fail, leaving private credit potentially facing a long winter ahead. [The Wall Street Journal]
• How much did Elon Musk's foray into politics really impact Tesla? New research from Yale University suggests that Musk's brief tenure as the leader of DOGE and his other involvement in US politics cost Tesla over 1 million EV sales. [ | | | | | | | |
