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| The Daily Pitch |
| PE, VC and M&A |
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| StepStone is opening up its deal-level benchmarks to PitchBook customers through a partnership announced today. For GPs, LPs and service providers, it's a new resource across buyout, venture, growth equity and infrastructure funds. Read more |
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| Unicorns notched record funding in Q1—a few companies got most of it |
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By Harrison Rolfes and Franco Granda, PitchBook Analysts
Unicorn deal and exit value reached record heights in Q1 2026, surpassing every quarter in 2021. But the headline number obscures a structural shift—the deal values were heavily concentrated in four companies and one exit, according to our debut Unicorn Tracker report.
This bifurcation means that investors experienced two separate realities in Q1. For VCs and LPs in one of those companies, the quarter was transformational. For everyone else in the unicorn universe, the fundraising environment hasn't materially changed. |
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OpenAI, Anthropic, xAI and Waymo represented a staggering 76.8% of the $245.6 billion raised in the quarter. Setting those aside, the remaining 223 deals averaged $256 million each, which in any prior year would have been a strong quarter on its own.
The concentration also introduces a new kind of fragility. Any single deal slipping or repricing can swing the entire market narrative from "record-breaking" to "disappointing" overnight. This wasn't the case in 2021, when activity was broad-based. It's the defining feature of 2026. SpaceX's acquisition of xAI for $250 billion accounted for 72.8% of the quarter's $343.1 billion in exit value. Excluding the three biggest exits, the remainder generated $93.1 billion, a strong quarter that exceeds full-year 2024 on its own. Q1 was a story of strategic mega-deals at the top, not a reopening of exit channels across the market.
That's not all: More than half of the 1,680 active unicorns haven't raised a round in over two years. Their valuations, many set during the 2020-2021 boom, are sitting in the $8.6 trillion aggregate at face value, never tested by a new transaction. Until those companies either raise at new valuations or exit, the market is carrying a significant pool of unpriced risk. Any broad repricing event would hit those stale valuations first.
Looking at Q1 data, our analysts uncover the reality that top valuations don't necessarily mean top business quality. And depending on how the upcoming IPOs of SpaceX, OpenAI and Anthropic perform, we may begin to see how broad the recovery truly is. Our Unicorn Tracker will be watching, every quarter. |
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| Put your brand in front of private market decision makers |
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• Energy deals have become vulnerable to longer approval periods and disruption, putting LPs in a precarious spot. Take The Carlyle Group's pending oil and gas deal with Lukoil, for example. Here's the story
• European financial services M&A is being defined by fewer, bigger bets—just four deals accounted for two-thirds of Q1's $47.6 billion in regional activity, a sign that scale is winning over caution. Learn more
• Despite private credit lenders insisting portfolios remain healthy, BDC data tells a different story: Almost 10% of roughly 4,700 held companies showed signs of credit stress by the end of 2025. Read more |
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| Leonard Green's Sokoloff discourages holding on to companies too long |
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| PE managers and LPs, including Jonathan Sokoloff, second from right, and Paul Taubman, far right, at the Milken Institute conference Monday. (Heather West/PitchBook News) |
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By Rod James and Heather West, PitchBook News
A managing partner at Leonard Green & Partners has warned against letting the perfect be the enemy of the good when exiting investments, amid a historically weak run of cash returns to investors in PE funds.
Speaking onstage Monday at the Milken Institute Global Conference in Los Angeles, Jonathan Sokoloff, who has been with the $85 billion buyout shop since 1990, said some companies have to be sold for less than their owners believe they are worth if investors are to achieve their return objectives.
Most LPs are compensated based on the IRR of investments, a metric that accounts for the time an asset is held and not just the total money multiple generated by its sale.
"If you wait for the dream price and don't get it, and you hold and hold, your IRR goes down and down and down," Sokoloff said. "We're in the business of buying and selling, and you just have to sell at some point."
The upshot of holding on for too long is "a much wider dispersion of returns" among PE funds and even good assets producing weak IRRs, he said.
The profit share taken by fund managers, or carried interest, also kicks in after a fund achieves a certain IRR. This hurdle rate is 8% for the majority of PE funds, according to an analysis of terms published by law firm Goodwin in late 2023.
A persistently weak market for the sale and listing of privately owned businesses has led to years-long liquidity constraints for many institutional investors.
According to data from Goldman Sachs Asset Management's External Investing Group, the distribution rate from private funds as a proportion of all assets has hovered around 9-13% since 2021, compared with a long-term average of 20-25%.
Corporations, generally considered the gold standard of buyers, view the average PE-backed asset as overvalued and are only willing to transact on the highest-quality businesses, said Paul Taubman, CEO of investment bank PJT Partners
There were 370 exits of middle-market companies to strategic buyers in 2025, totaling $42.2 billion in deal value, representing year-over-year declines of 28.8% in deal count and nearly 34% in deal value. Public investors have given lukewarm reactions to many PE-backed IPOs, despite record highs in the equity market. |
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Smart reads that caught our eye.
• The first unionization effort at a big AI lab has been launched by Google DeepMind workers in the UK. Following Google's controversial deal with the US Department of Defense last week, about 1,000 workers in DeepMind's London office are calling for representation. [Fortune]
• We can squeeze more out of one drop of oil now than we could in the '90s, which is the main factor helping the global economy be resilient while facing another energy crisis. [The Wall Street Journal]
• Elon Musk wanted to change OpenAI's business model so he could raise $80 billion for a civilization on Mars, OpenAI president Greg Brockman testified during the ongoing trial between Musk and the company. [Reuters] |
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