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<ul class="summary-list"><li>Independent luxury brands face pressure to sell or seek investment amid the market downturn.</li><li>Even the biggest and most successful independent brands with cult followings are under pressure.</li></ul>Sell up or get out.It's a decision some independent luxury brands are confronting amid an <a target="_blank" class="" href="https://www.businessinsider.com/lvmh-sales-drop-bad-indicator-luxury-market-kering-hermes-china-2024-10">industry-wide downturn</a>.With smaller budgets and fewer resources than counterparts owned by conglomerates like <a target="_blank" href="https://www.businessinsider.com/lvmh-luxury-louis-vuitton-struggles-china-slowdown-2024">LVMH</a>, indie brands are feeling the heat of an increasingly challenging retail landscape.Even the biggest and most successful independent brands with cult followings are under pressure.Mere weeks after the grand opening of its first boutique in Soho, New York City, drew large crowds, the French-born indie luxury label <a target="_blank" class="" href="https://www.businessinsider.com/luxury-fashion-in-style-according-to-jacquemus-2024-1">Jacquemus</a> announced it's seeking outside investment."I value my independence," French designer Simon Porte Jacquemus told French outlet Le Figaro in October. "I want to pass down this company to my children, but I have to break through the glass ceiling by finding the right partner, who would only have a minority."<div type="image" title="Gigi Hadid walks the Jacquemus runway." height="2000" width="1333" msid="115416179" hostid="261" sizebytes="107156"></div>Founded by the French designer in 2009, his eponymous label has experienced a meteoric period of growth. The Business of Fashion reports its sales hit 270 million euros ($290 million) in 2023. Jacqumeus did not immediately respond to requests for comment.But as 2025 nears, the luxury landscape is proving to be more difficult to navigate, even for LVMH and <a target="_blank" class="" href="https://www.businessinsider.com/things-arent-looking-great-gucci-kering-apac-slump-to-blame-2024-10">Kering</a>, both of which reported weaker-than-expected third-quarter earnings in October."If all of these brands that are giant brands with gigantic budgets behind them are suffering this economic climate and this luxury downturn," Blanca Zugaza Escribano, a fashion and luxury consultant at Metyis, told Business Insider, "Imagine smaller brands that have way smaller resources."<h2 id="c138f4ef-aa24-4cfb-8439-dbf25775bf1a">Seize the moment or risk failure</h2>Escribano said there's been an uptick of independent brands seeking investors as a survival strategy.Earlier this year, a series of independent brands, including Vampire's Wife, a luxury British retailer beloved by Kate Middleton, Dion Lee, an Australian luxury brand that Taylor Swift has worn, and NYC-founded Mara Hoffman, found themselves on the chopping block.A combination of the slowing luxury market and the closure or decline of third-party retailers that these brands heavily rely on, took its toll.Others managed to survive by selling out, including Roksanda, the eponymous label of Serbian designer Roksanda Ilinčić, which was bought by The Brand Group in May.For independent brands, Escribano said, the thought process is "either we make it today or we're not here tomorrow."<div type="image" title="Kate Middleton departs a special reception hosted by the Gov. General of Belize in celebration of Her Majesty The Queen's Platinum Jubilee in March, 2022 in Cahal Pech, Belize." height="1838" width="1280" msid="115416180" hostid="261" sizebytes="272002"></div>"It's just a very, very competitive category," Milton Pedraza, CEO of the Luxury Institute, said, adding that independent brands often don't have the resources to scale their business by themselves."The margins are very low, and it takes a long time to achieve critical mass to have success," he said. "It's almost like a salmon swimming upstream in a very turbulent river."Successful marketing tactics, like Jacquemus's buzzy food-inspired beauty campaigns or its mini <a target="_blank" href="https://www.businessinsider.com/jacquemus-tiny-handbag-le-chiquiti-review-2020-1">Chiquito bags,</a> which the internet couldn't get enough of in 2019, can fuel brand momentum, but it takes more to make it last and compete against heavyweights.In his interview with Le Figaro, Jaquemus offered an example, saying its store in Paris' Avenue Montaigne saw a drop in visitors over the summer as some shoppers avoided the city during the Olympics Games, although he said they weathered it."In reality, we are doing quite well considering we're the smallest house on the avenue," he said.Nevertheless, being the smallest on the avenue means a drop in shoppers can hurt more if you don't have the resources in place."You have to feed this monster of growth to scale to achieve this critical mass," Pedraza said.It's no surprise that Jacquemus is seeking an investor as "they need fast money to capitalize on this momentum," Escribano added.But finding an investor post-COVID-19 is no walk in the park either, as many feel as though they "got burned" by brands "that were just asking for money and burning through it, not really achieving sales, not achieving results, and not having great products," Pedraza said."The consumers and the investors have so many choices out there that they can afford to be very picky," he added.<h2 id="98e6d44e-cb1f-47ae-a13c-19724d62dcc6">Safety in numbers</h2>Jaquemus may be relatively small, but its decision to seek an investor has some foreshadowing with bigger stand-alone brands.In the summer of 2023, Kering acquired a 30% stake in Valentino, a historically independent brand.Rumors have been squashed of a Moncler acquistion of <a target="_blank" class="" href="https://www.businessinsider.com/burberry-turnaround-plan-new-ceo-revenues-plummet-luxury-slowdown-2024-11">Burberry</a>, the beleaguered stand-alone British brand.Burberry, which reported a 22% sales decline in the six months ending in September, faces an uphill battle to regain a competitive position in the luxury market.Nonetheless, Pedraza believes that consolidation between brands and independent brands seeking outside investment will likely persist as they confront industry-wide issues, including the rise of artificial intelligence."It's going to be harder for new brands to penetrate into the life of the consumer, to get the attention, to get the eyeballs, to get the awareness," he said.<div type="image" title="Designer Simon Porte Jacquemus attends the opening of the Jacquemus' Boutique as part of Paris Fashion Week at 27 avenue Montaigne on September 26, 2022 in Paris, France." height="853" width="1280" msid="115416178" hostid="261" sizebytes="44988"></div>But going the safety-in-numbers route and doing so by being acquired by a conglomerate is a decision with consequences.Brands have historically feared certain acquisitions, Escribano said, as it can fundamentally impact brand identity and creativity.For Jacquemus to sell out, it could still lose what Escribano said its magic, which in her view, is its head designer's ability to do "whatever he wants without having to explain his decisions or his creative choices to a board of investors which, at the end of the day, is going to limit so much of his creativity because he's going to have to think purely about business."

Why founders of some small luxury brands are eyeing exits        

<ul class="summary-list"><li>While many tech VCs are optimistic about Trump's second term, some healthcare investors feel stuck.</li><li>They're torn between the promise of long-awaited exits and potential threats to healthcare access.</li></ul>Some healthcare-focused VCs are torn about what Donald Trump's presidential win could mean for their portfolios.Six healthcare investors expressed mixed feelings about Trump's win — largely rooted in a tension they feel between the potential for big deals to come back and policies that fear could restrict healthcare access to many patients.Trump could make sweeping changes to healthcare policy in his return to the presidency. He's said he'll let Robert F. Kennedy Jr. "go wild" on health initiatives in the new administration, which could see the former presidential candidate making good on his desires to <a target="_blank" href="https://x.com/RobertKennedyJr/status/1852812012478398923">ban fluoride from public water systems</a>, "<a target="_blank" href="https://x.com/RobertKennedyJr/status/1852872924170010840">get toxins out of our food</a>," and <a target="_blank" href="https://www.forbes.com/sites/conormurray/2024/11/06/heres-what-an-rfk-jr-health-role-in-a-trump-administration-could-look-like-vaccine-skepticism-fluoride-ban/">inject vaccine skepticism into federal decisionmaking</a>, among other initiatives.While Trump is unlikely to <a target="_blank" href="https://www.cnn.com/2024/10/31/politics/aca-trump-repeal-affordable-care-act/index.html">try again</a> to repeal the Affordable Care Act, he may seek to boost Medicare Advantage plans, cut Medicaid spending, and <a target="_blank" href="https://spectrumnews1.com/wi/madison/news/2024/11/07/trump-rfk-fda-cdc-vaccines-fluoride">reorganize federal agencies,</a> from the Food and Drug Administration to the Centers for Disease Control and Prevention, according to an interview Kennedy Jr. gave from Trump's Florida estate shortly after the election.After a <a target="_blank" class="" href="https://www.businessinsider.com/more-healthcare-ipos-coming-what-startups-should-know-barclays-banker-2024-10">three-year IPO desert</a> for digital health startups, healthcare investors are desperate for the exit opportunities that a second Trump presidency could usher in. But some of Trump's proposed health policy moves are making investors nervous about their potential impacts on startups building in care areas like women's health and Medicaid, as well as on doctors and patients.Compared to Trump's first term, "I think you're going to see a more systemic overhaul of the infrastructure that administers our healthcare system, and that could happen relatively quickly," said Michael Greeley, cofounder and managing partner of Flare Capital Partners. "It's the unknown of those moves that makes it really hard to make a long-term investment decision."<div type="image" title="RFK Jr. speaks at a Trump rally as Trump watches." height="683" width="1024" msid="115114971" hostid="261" sizebytes="60192"></div><h2 id="cadda1d2-41e5-4dcc-8fbd-97541af9ac1a">Healthcare exits on the horizon</h2>In the three years since 2021's healthcare funding boom — during which <a target="_blank" class="" href="https://rockhealth.com/insights/2021-year-end-digital-health-funding-seismic-shifts-beneath-the-surface/#:~:text=And%20while%20some%20of%20the,peak%20of%20eight%20in%202020.">21</a> healthcare startups went public — <a target="_blank" href="https://www.businessinsider.com/exclusive-omada-health-confidentially-filed-s1-ipo-public-2024-10">only four</a> digital health startups have gone public in total, with mixed success.A number of healthtech startups have been waiting on the sidelines for their chance to IPO — and Trump's election should boost their odds, healthcare investors told BI.The lower corporate taxes and deregulation a second Trump term could promise are already amplifying public market optimism. A number of tech and finance giants, from Tesla to JP Morgan Chase, saw their stocks soar Wednesday morning. By midday Friday, the S&amp;P 500 index had risen 3.6% from Tuesday's close.Some startups, including physical therapy startup <a target="_blank" href="https://www.businessinsider.com/hinge-health-s-1-morgan-stanley-ipo-2024-9">Hinge Health </a>and diabetes startup <a target="_blank" href="https://www.businessinsider.com/exclusive-omada-health-confidentially-filed-s1-ipo-public-2024-10">Omada Health, have already signaled their intentions to IPO when the digital health markets reopen.</a>Several other late-stage startups are moving towards the exits, too. <a target="_blank" href="https://www.businessinsider.com/mavens-cfo-out-as-womens-health-startup-gets-fresh-funding-2024-10">Maven replaced its chief financial officer</a> in October with an executive with public market experience, BI reported. Sword Health has said it's planning to IPO <a target="_blank" href="https://www.axios.com/pro/health-tech-deals/2024/06/04/sword-healths-road-to-ipo">as soon as the second half of 2025</a>.<div type="image" title="Sean Duffy Omada" height="1880" width="2507" msid="115114964" hostid="261" sizebytes="278880"></div>The healthcare M&amp;A market looks ripe for more activity. Big deals could be on the horizon, including the proposed mega-merger of health insurance rivals Cigna and Humana. Bloomberg reported in October that the insurers had <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-10-18/cigna-resumes-merger-discussions-with-humana-after-talks-ended-last-year">resumed talks of combining</a> after previously shelving the deal last December.The Cigna-Humana merger was expected to face significant antitrust scrutiny from the Federal Trade Commission, <a target="_blank" class="" href="https://www.businessinsider.com/openness-in-ai-is-necessary-ftc-lina-khan-2024-7">led by Lina Khan</a> since 2021. She could be removed as the FTC's head early in Trump's second term — and with relaxed M&amp;A regulations, "anything is possible," said What If Ventures founder Stephen Hays.Investors said they also expect to see <a target="_blank" href="https://www.businessinsider.com/big-deals-coming-healthcare-startups-take-privates-private-equity-2024">increased private equity involvement in healthcare</a> through more investments and acquisitions. Healthcare VC has been calling for consolidation in overcrowded areas of healthcare <a target="_blank" href="https://www.businessinsider.com/13-mental-health-startups-ipo-acquisition-merge-buyout-2024-5">like behavioral health</a> for years. Additional interest rate cuts could help facilitate PE-backed mergers, or even rollups of multiple solutions, in the many fragmented areas of digital health and healthcare services, said a Boston-based healthcare investor.<div type="image" title="Cigna insurance" height="2672" width="3563" msid="115114973" hostid="261" sizebytes="1378900"></div><h2 id="8fd35f3b-b1b9-4ac8-ab08-0143afe9541f">Reverberations in women's health and Medicaid</h2>While healthcare investors remain optimistic about what a second Trump term could mean for late-stage startups, VCs said his win could have consequences for key areas of the industry.Reproductive rights remained a top concern throughout the election cycle. Founders of women's health companies and their investors previously expressed concerns to Business Insider about <a target="_blank" href="https://www.businessinsider.com/womens-health-startups-risk-trump-wins-election-2024-10">what a second Trump term could mean for their businesses</a>.While Trump has said he wouldn't sign off on a national abortion ban, experts have <a target="_blank" href="https://www.cnbc.com/2024/11/07/how-trumps-victory-could-change-abortion-rights-in-america.html">raised worries</a> that the president-elect could impose more restrictions on birth control access and abortion pills delivered by mail. Demand for abortion pills, emergency contraception, and related treatments <a target="_blank" href="https://www.theguardian.com/us-news/2024/nov/07/abortion-pills-hormones-trump">exploded on Wednesday</a> as patients rushed to stockpile the drugs in fear of potential restrictions.In the wake of the election, women's health investors are dismayed but hopeful that the sector will largely remain untouched by federal policy changes and that VCs will be able to use their capital to push care forward even in the face of policy threats."In our conversations with others, there is a shared resoluteness to continue to pledge investment and develop innovation in historically underfunded categories (e.g. contraception &amp; abortion access, menstruation &amp; hormonal health, maternal health &amp; fertility, menopause &amp; aging)," said Carli Sapir, the founding partner of Amboy Street Ventures, in an email to Business Insider. "Every dollar and ounce of effort toward these areas now speaks volumes for future impact."<div type="image" title="an abortion rights protest sign reading &quot;stars, stripes and reproductive rights&quot;" height="683" width="911" msid="115114963" hostid="261" sizebytes="45906"></div>Medicaid could also be targeted in Trump's second term. Experts think Trump could <a target="_blank" href="https://www.nbcnews.com/health/health-news/millions-risk-losing-health-insurance-trumps-victory-rcna179146">cut Medicaid funding</a> and enable states to refuse to expand their Medicaid coverage. Those changes could impact dozens of <a target="_blank" href="https://rockhealth.com/insights/unwinding-the-opportunity-medicaids-digital-health-moment/">startups innovating in Medicaid</a>, as well as the millions of patients covered under Medicaid plans, said Jordan Nof, a cofounder and managing partner at Tusk Venture Partners.And if the House of Representatives goes red along with the Senate, experts expect the subsidies that help people pay for health insurance under the Affordable Care Act <a target="_blank" href="https://www.nbcnews.com/health/health-news/millions-risk-losing-health-insurance-trumps-victory-rcna179146">to disappear after they expire at the end of 2025</a>. Without those subsidies, tens of millions of people will see their premiums significantly increase, potentially making coverage prohibitively expensive for many.If fewer patients can afford to be insured, the healthcare system is certain to see <a target="_blank" href="https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/#:~:text=Because%20people%20without%20health%20coverage,declines%20in%20their%20overall%20health.">rising spend</a> associated with increased hospitalizations from otherwise avoidable health problems — a consequence with far-reaching implications across healthcare and the companies building in the sector.<h2 id="f1af4c00-342b-4f1b-b392-ccfc3d9c72fa">A boon for healthcare AI and Medicare Advantage</h2>Trump's victory could have a positive impact on several big areas of healthcare investment.For one, Trump is expected to restrict the government's involvement in AI regulation. That means AI companies, <a target="_blank" href="https://www.businessinsider.com/22-most-promising-healthcare-ai-startups-2024-8">including healthcare AI companies, will keep soaring</a> with fewer guardrails.Without federal AI safety efforts, the healthcare industry will likely move to self-regulate new technologies, especially in more contentious areas like clinical decision support, Flare Capital Partners' Greeley said. Some of those efforts are already underway, including by groups like the <a target="_blank" href="https://www.politico.com/newsletters/future-pulse/2024/10/18/ai-self-regulation-comes-into-view-00184268">Coalition for Health AI</a>, which includes top academic medical centers like Mayo Clinic and Johns Hopkins Speaker alongside tech companies like Microsoft.Still, "there'll be temptations around the margins to more rapidly deploy technologies that aren't yet determined to be safe," Greeley said.<div type="image" title="Dr. Shiv Rao, CEO of Abridge" height="2268" width="3024" msid="115114962" hostid="261" sizebytes="233874"></div>Medicare Advantage plans are also expected to be boosted by a returning Trump administration that's likely to move to further incentivize commercial health insurance. That could be good for the few <a target="_blank" href="https://www.businessinsider.com/alignment-healthcare-devoted-health-startups-medicare-advantage-membership-market-2024-2">young insurers clamoring for market share in Medicare Advantage</a>, like Devoted Health and Alignment Healthcare, and the many startups working to <a target="_blank" href="https://www.businessinsider.com/exclusive-ai-cohere-health-raises-50-million-series-b-extension-2024-1">improve payment processes</a> between insurers and providers. (An increased share of Medicare Advantage plans in the Medicare market might not be good for patients, however, since Medicare Advantage plans <a target="_blank" href="https://jamanetwork.com/journals/jama-health-forum/fullarticle/2815743">deny claims more frequently</a> than traditional Medicare.)And while Robert F. Kennedy Jr's potential appointment to a key health role in the Trump administration <a target="_blank" href="https://www.pbs.org/newshour/show/health-officials-concerned-about-rfk-jr-s-influence-in-trump-administration">worries some healthcare experts</a>, his focus on "food as medicine" could yield some interesting federal projects and perhaps add momentum to the <a target="_blank" href="https://rockhealth.com/insights/an-apple-a-day-but-keep-the-doctor-in-play-a-primer-on-food-as-medicine-trends-solutions-and-business-models/">nutrition startups gaining traction</a>, said Chrissy Farr, a managing director at Manatt, Phelps and Phillips, and a general partner at Scrub Capital."He's been given carte blanche, apparently, to take this on. Coupled with GLP-1s, I could see America really doing something interesting around food in the next couple of years," Farr said.

Healthcare investors are torn on Trump's second term

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Welcome back to our Sunday edition, a roundup of some of our top stories. Studying computer science was supposed to be the ticket to job security. Not anymore, according to a professor at <a target="_blank" href="https://www.businessinsider.com/tech-degrees-job-berkeley-professor-ai-ubi-2024-10">UC Berkeley</a>.On the agenda today:<ul><li>Consulting firms are facing a reckoning as <a target="_blank" href="https://www.businessinsider.com/consulting-firms-mckinsey-bcg-accenture-workers-leaving-2024-9">workers head for the exits</a>.</li><li>4:30 a.m. wakeups are part of <a target="_blank" href="https://www.businessinsider.com/apollo-ceo-marc-rowan-management-tactics-430-am-wakeup-call-2024-10">Apollo's new management strategy</a>.</li><li>Retirees are selling their businesses. It's a $10 trillion <a target="_blank" href="https://www.businessinsider.com/boomers-selling-small-businesses-investment-opportunity-millennials-gen-z-retirement-2024-10">opportunity for millennials</a>.</li><li>Introducing our list of <a target="_blank" href="https://www.businessinsider.com/top-wall-street-executives-rising-stars-investing-trading-2024">Wall Street's rising stars</a>.</li></ul>But first: Making sense of a huge month for hiring.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today-sunday-edition">sign up here</a>. Download Insider's app <a target="_blank" href="https://www.insider.com/app">here.</a><h3 id="58506b3b-b008-4ead-9e90-71439c9e98dd">This week's dispatch</h3><h2 id="2a7b4701-4b9e-48dd-b7c6-5bd656268197">Hot jobs report</h2><div type="image" title="A line of people waiting for an interview" height="1500" width="2000" msid="113986358" hostid="261" sizebytes="312640"></div>The US economy added way more jobs in September than expected.The <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">jobs report</a> on Friday showed 254,000 jobs added, way ahead of the 147,000 expected, while unemployment dropped to 4.1%. Jobs growth in July and August was also revised upwards."Any way you slice it, September's employment report was much stronger than expectations," said one investor in response to the report.Here's what it all means:Rates: The strong job numbers likely mean a longer wait for lower rates. Investors responded by immediately lowering their expectations for another <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-fed-rate-cut-outlook-november-labor-market-2024-10">jumbo rate cut</a> from the Fed in November. Many now predict the Fed will wait until December to cut rates.Stocks: A low-inflation, low-unemployment environment is the ideal scenario for stocks. The Dow closed at another <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-today-strong-jobs-report-soothes-fears-economic-slowdown-2024-10">record high</a> on Friday, and some see a "<a target="_blank" href="https://www.businessinsider.com/economy-hitting-roaring-20s-stride-fed-rate-cuts-gdp-growth-2024-9">Roaring '20s economy</a>" emerging.Election: The strong hiring numbers represent a boost for <a target="_blank" href="https://www.businessinsider.com/blockbuster-jobs-report-kamala-harris-election-trump-inflation-economy-2024-10">Kamala Harris' presidential campaign</a>. Former President Donald Trump has repeatedly attacked President Joe Biden and VP Harris over their handling of the economy, but polls suggest the Harris campaign may be winning over more <a target="_blank" href="https://www.businessinsider.com/kamala-harris-economy-inflation-polling-donald-trump-joe-biden-2024-8">Americans on her handling of the economy</a>.Vibes: Don't bet on these numbers changing the mood much. Yes, <a target="_blank" href="https://www.businessinsider.com/inflation-august-consumer-price-index-federal-reserve-rate-cuts-2024-9">inflation</a> looks to be under control, but prices in the grocery aisle are much higher than they were four years ago. Yes, unemployment has dropped, but many still feel like getting a new job is <a target="_blank" href="https://www.businessinsider.com/finding-job-awful-right-now-drop-in-openings-tough-search-2024-9">harder than ever</a>.<h2 id="8de1f093-db58-438e-a296-ab09ff92ad5c">Consultants head for the exits</h2>For decades, ambitious students have aggressively pursued careers in consulting. But young workers are starting to reconsider amid a tough stretch for the industry.Layoffs and delayed start dates at firms like Deloitte and Accenture have pushed some consultants — including those who've been at it a while — to reconsider a gig once synonymous with generous expense accounts and stability.<a target="_blank" href="https://www.businessinsider.com/consulting-firms-mckinsey-bcg-accenture-workers-leaving-2024-9">How consulting lost its cool</a>.<div type="image" title="Marc Rowan between other speakers on a panel." height="2464" width="3500" msid="113986360" hostid="261" sizebytes="290056"></div><h2 id="8d221ec2-a40e-4d73-80e7-638d6c30f428">Playing to win</h2>Apollo Management aims to double its assets in five years, but getting there won't be easy."We have woken the team up at 4:30 a.m. in the morning for meetings to prove to them that we need to do a wake-up call and something different," Apollo Management CEO Marc Rowan told investors. These tactics are part of a new strategy to teach employees to "play to win" amid changing market conditions, Rowan said."<a target="_blank" href="https://www.businessinsider.com/apollo-ceo-marc-rowan-management-tactics-430-am-wakeup-call-2024-10">We have to adapt, and we have to change</a>."<div type="image" title="Stock graph with younger woman and older woman on opposite ends of the upward arrow" height="1500" width="2000" msid="113986367" hostid="261" sizebytes="476442"></div><h2 id="69bad2e5-a5bf-4ba9-b958-e3eff00ffc5b">The great boomer fire sale</h2>Scrappy, entrepreneurial millennials have a new path to retirement: Scooping up boomers' businesses.As they enter their prime wealth-building years, many millennials are anxious about how they'll save for retirement. Retiring boomers looking to sell off their companies present millennials with a $10 trillion opportunity.<a target="_blank" href="https://www.businessinsider.com/boomers-selling-small-businesses-investment-opportunity-millennials-gen-z-retirement-2024-10">How millennials are cashing in on boomer wealth</a>.<div type="image" title="Photo collage of popular luxury items for Wall Streeters" height="1500" width="2000" msid="113986364" hostid="261" sizebytes="262060"></div><h2 id="dc96d953-8312-4bf5-8432-dfb9ba5779e5">Wall Street's finest</h2>Every year, Business Insider taps its contacts to put together a list of who to watch on Wall Street. The nominees, each 35 or younger, are shaping the future of finance.This year's list includes 25 rising stars from firms like JPMorgan, Bridgewater, and Apollo. We asked each of them to share their successes, challenges, and best career advice.<a target="_blank" href="https://www.businessinsider.com/top-wall-street-executives-rising-stars-investing-trading-2024">See who made the cut</a>.This week's quote:"Removing layers, operating with fewer managers and flattening the organization are all in focus to move faster."— A Morgan Stanley note estimating <a target="_blank" href="https://www.businessinsider.com/amazon-could-cut-managers-save-3-billion-analysts-2024-10">Amazon could save $3 billion by laying off 14,000 managers</a>.More of this week's top reads:<ul><li>Microsoft won't follow an Amazon-style RTO policy — <a target="_blank" href="https://www.businessinsider.com/microsoft-wont-follow-amazon-rto-unless-productivity-drops-exec-2024-9">unless productivity slows</a>.</li><li>Nvidia's next target: <a target="_blank" href="https://www.businessinsider.com/jensen-huang-nvidia-robots-huamanoid-self-driving-cars-2024-9">the burgeoning robotics market</a>.</li><li>Leaked document shows Amazon rolled out <a target="_blank" href="https://www.businessinsider.com/amazon-cedric-safer-ai-chatbot-employees-2024-9">a ChatGPT replacement for employees</a>.</li><li>Google's ad business could be <a target="_blank" href="https://www.businessinsider.com/google-adtech-should-be-spun-off-b-corp-arete-analysts-2024-9">saved by a $150 billion spinoff</a>.</li><li>Credit card companies are <a target="_blank" href="https://www.businessinsider.com/high-credit-card-interest-rates-americans-debt-bills-fees-spending-2024-10">ripping you off like never before</a>.</li><li>The investors behind <a target="_blank" href="https://www.businessinsider.com/openai-investors-latest-funding-round-2024-10">OpenAI's historic $6.6 billion funding round</a>.</li><li>Google Search is about to see <a target="_blank" href="https://www.businessinsider.com/google-search-lens-ai-gemini-overviews-new-features-2024-10">'a pretty dramatic shift.'</a></li><li>OpenAI's rivals are on the prowl after an <a target="_blank" href="https://www.businessinsider.com/openai-rivals-anthropic-perplexity-on-prowl-after-wave-exec-departures-2024-10">exodus of high-level executives</a>.The Insider Today team: <a target="_blank" href="https://www.businessinsider.com/author/dan-defrancesco">Dan DeFrancesco</a>, deputy editor and anchor, in New York. <a target="_blank" class="" href="https://www.businessinsider.com/author/jordan-parker-erb">Jordan Parker Erb</a>, editor, in New York. Grace Lett, editor, in Chicago. <a target="_blank" class="" href="https://www.businessinsider.com/author/amanda-yen">Amanda Yen</a>, fellow, in New York.</li></ul>

Insider Today: Consultants hit the exits

The deluge of funds in sectoral, or <keyword id="20296225" type="General" weightage="20" keywordseo="Thematic-Funds" source="keywords">thematic funds</keyword> continued unabashed in September, with investors pouring in Rs 13,254.63 crore via 183 schemes into this category, as <keyword id="20090036" type="General" weightage="20" keywordseo="AMFI" source="keywords" meta.keywordsubtype="org" meta.entityname="AMFI" meta.hostid="261" meta.entityid="AMFI">AMFI</keyword> data showed. In August too, investors had put in Rs 18,117.18 crore via 179 schemes here. The trend has been going strong since July, 2024, which saw <keyword id="20444306" type="General" weightage="100" keywordseo="Sectoral-Funds" source="keywords">sectoral funds</keyword> garner Rs 18,386.35 crores via 174 schemes. In August, 5 new thematic funds were launched on the momentum, which raised Rs 10,202 crore. Last month saw the launch of 4 new sectoral schemes, which garnered around Rs 8,000 crore. However, inflows into <keyword id="21366551" type="General" weightage="20" keywordseo="Equity-Schemes" source="keywords">equity schemes</keyword> fell by 10% in September to Rs 34,419 crore, as compared to Rs 38,239 crore in August 2024. Between April and June 2024, equity <keyword id="19929240" type="General" weightage="20" keywordseo="Mutual-Funds" source="keywords">mutual funds</keyword> had seen a total inflow of Rs 94,222.27 crore, out of which inflows in sectoral funds (Rs 46,731.17 crore) alone were a whopping 50%. While the quantum of inflow in equities, and sectoral funds certainly seems to have tapered down a bit, it continues to remain significantly strong, indicating heavy <keyword id="20354507" type="General" weightage="20" keywordseo="Investor-Interest" source="keywords">investor interest</keyword> in this largely risky segment. Over the last year, AMCs have been pumping out more and more NFOs in this space in a bid to get a bigger chunk of investor's money, and also regulations restrict them from launching new schemes under other categories. However, with the ongoing geopolitical concerns in Middle East, and rising prices of crude oil, the equity markets are set for volatile, uncertain times ahead. However. thematic funds have had a good run so far this year, with YTD (yield to date) of 28.69%, and returns worth 44.71% over the past year. Says Deepak Ramaraju, Senior Fund Manager, Shriram AMC, "On the prima facie, it looks like investors are concerned about the valuation, increasing geo-political uncertainty and moderation in earnings and hence, we have seen redemption from funds. But we will have to wait for how the global events play out – like the Chinese stimulus, the Fed Decision and the RBI’s MPC policy stance in the months to come". As such, you should think twice and carefully assess the risks involved before dipping your hands in the gush of sectoral funds right now. While they may be all the rage, identifying the right sector or theme at the right time is a job best done by professionals. <h2>Don't ignore the risks involved</h2>Siddharth Alok, AVP Investments, Multi Ark Wealth-Epsilon Money explains that sectoral funds come with high risk, since they are more vulnerable to sector-specific downturns. This might not suit the risk palate of many investors. "All markets have cycles, where some sectors naturally outperform while some underperform in the short to medium term. For instance, industrial and consumer discretionary sectors may perform well in a growing economy, while defensive sectors like utilities or healthcare may perform better during downturns". "To make the most of your investments in sectoral funds, it is essential to time your entry and exit in these sectors, which is a difficult job for a regular investor", he continued. In order to maximise your returns in thematic funds, either investors i.e. you should understand the dynamics of the underlying sector or theme, or you should have qualified and experienced advisors who can help you take the right decision with regards to such investments. As a matter of fact, you should approach any new funds only after comparing them with similar existing offerings and ensuring their aptness in your portfolio. As an astute investor, you should understand that such funds offer a very high-risk high return investment proposition and may not fit in the portfolio of every investor. Investing in every <keyword id="20498936" type="General" weightage="20" keywordseo="NFO" source="keywords">NFO</keyword> (New Fund Offering) without assessing the sector's viability and future growth, merely on the back of its current hype is unadvisable.

The newest fad in mutual fund multiverse: Sectoral Funds. Here's why you should not over-invest in them

Builders have too many new homes on their hands.Thanks to a construction boom years in the making, homebuilders are sitting on more newly completed homes than at any point since 2009, when the market was reeling from the global financial crisis. Despite the hefty ready-to-sell supply, a sizable chunk of those homes may never be sold to regular buyers. That strange reality says a lot about the hurdles for would-be homeowners right now.Both builders and buyers find themselves in a tricky position. Prices have <a target="_blank" href="https://www.businessinsider.com/personal-finance/mortgages/home-prices-drop">continued their climb</a> in most of the country. Mortgage rates dropped steadily over the summer, but that <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/mortgages/how-does-fed-impact-mortgage-rates">turned out to be a head fake</a> — in the span of a month, the typical rate for a 30-year loan increased by almost a full percentage point, and could rise further. Throwing down for a starter home is about 45% more expensive than renting, a far wider gap than the historical average of about 15%, according to monthly expense data tracked by John Burns Research and Consulting. Builders, meanwhile, are luring buyers with some perks but are barely budging on prices. That's partly because these companies have another place to turn: the rental market.Given the strong demand for rentals and a tough sales market, some builders are choosing to convert for-sale homes into rentals or offload inventory to investors who specialize in single-family-home rentals. Opportunistic investors — mostly small and midsize players, who own the vast majority of single-family rentals in the country — are happy to oblige.Four walls and a backyard are still the bedrock of the American dream. For those who can't afford to buy a house (or don't want to right now), the only option is to rent. That simple fact gives builders some breathing room, but it also means that a glut of new homes may not deliver the price cuts buyers have been anxiously awaiting.A <a target="_blank" href="https://www.businessinsider.com/housing-market-outlook-forecast-mortgage-rates-homebuilding-inventory-prices-2024-2023-12">golden run for homebuilders</a> is drawing to a close. When rising mortgage rates <a target="_blank" href="https://www.businessinsider.com/housing-market-mortgage-rates-outlook-home-prices-affordability-wealth-gap-2024-3">trapped many would-be sellers</a> in their homes two years ago, builders turned out to be the big winners — if you wanted to buy a home, your <a target="_blank" href="https://www.businessinsider.com/house-construction-building-boom-last-hope-new-homebuyers-housing-market-2023-7">best bet was probably new construction</a>. One economist told me last year that builders were "the only game in town" in some areas. Builders not only offered a welcome alternative to the <a target="_blank" href="https://www.businessinsider.com/housing-market-ice-age-higher-home-prices-fewer-sales-inventory-2023-5">frozen resale market</a> but could cut deals to make their homes even more appealing to the average buyer: <a target="_blank" class="" href="https://www.businessinsider.com/homebuilders-turn-to-mortgage-rate-buydowns-as-affordability-sours-2022-12">Mortgage-rate buydowns</a>, in which the builder pays the lender up front in exchange for lowering the buyer's loan rate, can save a new homeowner hundreds of dollars each month.Now, even with the freebies, builders are selling homes at a slower-than-expected pace as buyers grapple with worsening affordability, sharp swings in mortgage rates, and general uncertainty — people would rather sit on the fence than leap into a market with so many unknowns. With slower sales across the board, the number of homes on the market has climbed. There were 108,000 finished homes for sale at the end of September, some 48% more than at the same point a year ago. There were 258,000 homes under construction but not yet sold, another sizable figure — at the same point in 2019, there were about 194,000. Builders surveyed by John Burns Research and Consulting said they had an average of about 2.5 unsold homes in each of their communities in October, representing a 47% increase from a year ago. In October 2021, they reported only 0.4 unsold homes per community. Some of this increase is by design. Companies are building more homes "on spec," or before they have a buyer, to shorten timelines and compete directly with the resale market. But there's no question that builders have hit a snag.The answer might seem obvious: Cut prices! But builders will "try a lot of other things first," says Keith Hughes, an executive at the housing research firm Zonda. "And we're not seeing drastic price drops virtually anywhere." Buyers may not be flooding the market, but there are fewer homes out there, too. The number of available homes for sale at the end of October, according to <a target="_blank" href="http://Realtor.com">Realtor.com</a>, was about 21% lower than in the same month in 2019. Builders looking to move their product lean heavily on incentives — Lennar, one of the largest homebuilders in the country, said that the average sales incentives per home amounted to $48,100 from June through August, compared with $36,400 a year earlier. Builders are also completing smaller floor plans to match the needs of cost-conscious consumers.Builders have another fallback: the rental market. Over the past decade, homebuilders have forged relationships with companies that <a target="_blank" class="" href="https://www.businessinsider.com/single-family-rental-investor-conference-buying-more-homes-2021-12">purchase thousands of single-family homes</a> and manage them as rentals — if a builder were looking to move a portfolio of homes, they might find a willing buyer in a company like Pretium, which owns nearly 100,000 homes, or Invitation Homes, which manages a portfolio of more than 85,000 homes. Builders have also started <a target="_blank" class="" href="https://www.businessinsider.com/wall-street-single-family-rental-build-to-rent-houses-finance-2021-7">developing entire communities of single-family homes</a> to be rented out rather than sold, a strategy known as build-for-rent. The idea is to meet the demand of renters who want their piece of the American dream — a home with a yard in a safe neighborhood with good schools — but either can't make a purchase or don't want to. Builders can sell to a guaranteed buyer willing to purchase in bulk or hold on to the homes and enjoy the steady returns of rental income. Given these advantages, the build-to-rent pipeline has become robust. D.R. Horton, the nation's biggest homebuilder, recently said it had about $800 million worth of single-family-rental property on its balance sheet, consisting of 3,140 homes and about 1,900 lots on which it can build more. Invitation Homes, one of the largest owners of single-family rentals, recently said it expected to purchase nearly 2,500 homes in the next couple of years from builders in places like Tampa, Florida; the Carolinas; and Houston.Owners of single-family rentals have been around forever, but large, sophisticated SFR companies <a target="_blank" class="" href="https://www.businessinsider.com/single-family-rental-companies-institutional-backers-homes-wall-street-2020-12">arrived after the financial crisis in 2008</a>, when investors began raising billions of dollars to pick up homes on the cheap. Now these companies represent a "new category of buyers that would really help a builder during a downturn unload some inventory," John Burns, of John Burns Research and Consulting, said in a recent podcast with Don Mullen, the CEO of Pretium. "And you're playing that out right now, you're already doing that."But big companies actually <a target="_blank" class="" href="https://www.businessinsider.com/average-americans-beating-wall-street-new-homes-real-estate-homebuying-2023-11">own a small fraction of all single-family rental homes</a>, and they've been much more selective with their purchases as higher interest rates have made it tougher to get strong returns on their investments. The <a target="_blank" class="" href="https://www.businessinsider.com/mom-and-pop-landlords-homeownership-rent-wall-street-corporate-investors-2024-7">most active buyers right now are small and midsize investors</a> who own anywhere from a handful of homes to several hundred. With builders sitting on more homes, these investors are sniffing around for deals."I think investors are more or less saying to themselves, we're providing a solution here for builders, and that solution is inventory management and getting out of inventory that otherwise they're having trouble selling," says Adam Stern, the founder and CEO of Strata SFR, a real-estate brokerage focused on single-family rentals and build-to-rent homes. "We're that exit option."Data from <a target="_blank" href="https://www.forecasa.com/">Forecasa</a>, a real-estate analytics firm, indicates investors purchased 3% to 5% of homes sold by builders in the past three months. That may not sound like much, but a year ago that number was closer to 1%. Some builders have recently been shuttling about 10% of their inventory to investors. Even then, these numbers may be undercounts, since some amateur rental owners may not be buying through the kinds of legal entities that tip off analysts to investor purchases."It may seem like a small percentage, but if you think about just the sheer volume of properties that are being moved, it's a fairly large number, especially because it's growing," says Sean Morgan, the CEO of Forecasa.Investors have mostly focused on Sun Belt markets like Nashville and Dallas in the lower half of the US, where new construction is most plentiful. Builders may offer a slight discount, but they get something valuable in return: homes off their balance sheets. Builders often take on loans of 12 to 24 months to construct homes — before time is up, they have to either find a buyer or get a new loan. Local and regional builders are more likely to feel the squeeze than a national company like D.R. Horton, which can afford to keep homes on its books longer. When builders are staring down that ticking clock, "investors are natural buyers," says Alex Offutt, the CEO of Business Purpose Capital, a capital provider for long-term investor loans. Builders don't even have to sell, though. Another route is to get a new long-term loan based on the rental income the properties will generate, then find tenants for the homes and wait to sell when the market is more favorable. Both Offutt and Ray Sturm, a managing partner of Tower1, which offers financing for residential lenders, tell me they've been having more conversations with builders and their lenders who are seeking out this option."They know if they work on a rental campaign, they've got an exit," Sturm says. "It's early, but it's bigger than I thought."This isn't the ideal scenario for most builders, especially since many aren't well versed in the minutiae of managing rental properties. But it could become another valuable off-ramp if they have trouble unloading homes.Most homebuilders are a long way from hitting the panic button. There's still a <a target="_blank" class="" href="https://www.businessinsider.com/us-housing-affordability-home-shortage-market-construction-population-cities-zillow-2024-6">national housing shortage</a>, even if there's a short-term oversupply in some places, and builders are <a target="_blank" class="" href="https://www.businessinsider.com/housing-market-ice-age-homebuyers-mortgage-rates-spring-real-estate-2024-10">looking ahead to the spring buying season</a> as the true tell of where things are headed. Their embrace of the rental market says more about the obstacles for buyers than for builders. Prices and borrowing rates haven't provided relief for those looking to make a purchase. People who already own homes are reluctant to sell and move up, which means they're not freeing up the starter homes that first-time buyers crave. Would-be buyers have nowhere else to turn but the rental market — Redfin estimates that the number of renter households is growing three times as fast as homeowner households.The housing market "is in limbo," says Selma Hepp, the chief economist at the real-estate data firm CoreLogic. "It's sitting on the sidelines. It's waiting."<a target="_blank" rel="" href="https://www.businessinsider.com/author/james-rodriguez">James Rodriguez</a> is a senior reporter on Business Insider's Discourse team.

How investors are about to profit from a tidal wave of new homes

<ul class="summary-list"><li>Agemo has exited stealth with $4 million to build AI that turns text prompts into software.</li><li>Founders Aymeric Zhuo and Osman Ramadan want to tackle the problem of LLMs plateauing.</li></ul>When Aymeric Zhuo and Osman Ramadan met while working at a startup in 2022, they realized they had something in common: they both see themselves as underdogs. Now, the pair are taking on incumbent AI companies that have raised hundreds of millions of dollars with their new venture, Agemo, which has just exited from stealth.Agemo, which raised a $4 million seed round earlier this year, has built a platform that aims to allow non-developers to autonomously develop software from text prompts.Its funding was led by Firstminute Capital, backers of <a target="_blank" class="" href="https://www.businessinsider.com/mistrals-ceo-said-obsession-with-agi-about-creating-god-2024-4">Mistral</a> and <a target="_blank" class="" href="https://www.businessinsider.com/wayve-ceo-testing-driverless-cars-us-expansion-ai-robotics-2024-11">Wayve</a>, and Fly Ventures, along with capital from DeepMind executive Mehdi Ghissassi and Datadog CEO Olivier Pomel.The founders met while working at Shift Lab, a startup, and realized they had an instantaneous synergy."When we look at AI researchers, they're good at researching but not building solutions. We're both very technical but in a complementary way," Zhuo told Business Insider.Zhuo, the startup's CEO, and Ramadan, the CTO, started working together on Agemo while still at Shift Lab. The pair say they even turned down an opportunity to work at OpenAI in 2023 in favor of building their upstart.A key problem that the duo wanted to solve was programming <a target="_blank" class="" href="https://www.businessinsider.com/vcs-are-hedging-their-bets-backing-competing-llms-2024-10">large language models</a> to orchestrate software. Essentially, this required them to train their AI models to reason like a team of engineers.Agemo finds itself up against the likes of <a target="_blank" class="" href="https://techcrunch.com/2024/06/20/poolside-raising-400m-at-a-2b-valuation-for-supercharged-coding-copilot/">Poolside,</a> which raised $500 million in October, and Magic.ai, which raised $320 million in August. But the pair are no strangers to adversity.Ramadan grew up in Sudan during a time of civil unrest. As a teenager, he pored over his brother's computer science textbooks and taught himself how to code, eventually securing a place at Cambridge University to study engineering. After graduating, he completed a nearly four-year stint at Microsoft as a research software engineer.Zhuo was the first in his family to graduate from high school and made his way to France's most prestigious engineering school — École Polytechnique — before securing roles at Microsoft and TikTok.<h2 id="cbde9535-0544-4cd5-b7df-c4885be76dc9">Agemo is tapping into AI reasoning</h2>Zhuo told BI that one key issue in the AI ecosystem is that large language models are <a target="_blank" class="" href="https://www.businessinsider.com/openai-orion-model-scaling-law-silicon-valley-chatgpt-2024-11">"hitting a plateau in incremental improvements."</a>This means that companies might be pouring a lot of money and resources into training these AI models but with proportionally less to show for it in terms of output.To combat this problem, Agemo is building AI systems that can "reason" in software. It requires AI to make inferences from a dataset and generalize it to a set of problems.Typically, an LLM would solve a problem by combing through its training data instead of learning the addition skill, Zhuo told BI."The implications are that our system can solve problems it had not been trained on before, whereas existing LLMs such as GPT-4 can't," Zhuo added.<div type="image" title="The startup's tool CodeWords, which is in beta, allows users to code." height="1498" width="2844" msid="115216956" hostid="261" sizebytes="137960"></div>For example, instead of ChatGPT providing users with steps on how to integrate a machine with Snowflake, the Agemo founders say its AI system can generate the tool to do it, based on a user's high-level intent. <h2 id="01f6f493-7c3d-4cce-9383-aa4a511369d4">Europe's answer to Poolside and Magic.ai</h2>To differentiate it from competitors such as <a target="_blank" class="" href="https://techcrunch.com/2024/06/20/poolside-raising-400m-at-a-2b-valuation-for-supercharged-coding-copilot/">Poolside</a> and Magic.ai, the startup says it has developed a neurosymbolic AI system for software reasoning. Neurosymbolic AI is a technique that combines neural networks and rules-based symbolic AI to address the weaknesses in each approach. While current incumbents in the space deploy AI to help developers build code, Agemo wants to build a platform that actually understands software."As far as we understand, Magic, Poolside, and Cognition are building this for developers," he said. "But we've spoken to enough developers to know they don't need another dev tool."Ramadan added that their startup differentiates itself by going beyond just providing a model — instead, creating a "system" that gives users the model and the environment."A nice analogy is that Poolside is designing a robot to drive a car. You plug it into your computer and it does what a human would be doing," Ramadan explained. "This isn't efficient because the LLM needs to be as good as a human.""We want to improve the environment so the LLMs can work better. So we're building an autonomous car — you'll never trust a good enough robot to drive you," he added.The startup is based in London, which it sees as a hotbed for <a target="_blank" class="" href="https://www.businessinsider.com/google-noam-shazeer-deal-ai-talent-hiring-star-quarterbacks-i2024-9">AI talent</a>. "Silicon Valley productionizes a lot of research. But there is a lot of talent <a target="_blank" class="" href="https://www.businessinsider.com/left-silicon-valley-berlin-founder-tech-startup-2024-11">in Europe</a> that's hungry for ambitious projects, but they don't have the opportunity to do so," Zhuo noted. "We want to push on research and product development — and a lot of it's happening in London, even with ChatGPT and Llama."<h2 id="58afa930-f8de-4107-90d6-852c1da3e4fa">A nimble fundraise</h2>Agemo's $4 million funding is a drop in the ocean compared to the huge sums raised by other AI firms. "I'm confident that if we were in the Bay Area, we could have raised more money," Zhuo said. "But we've been very capital-efficient in how we've been deploying that money."He pointed to existing juggernauts such as OpenAI and Meta <a target="_blank" class="" href="https://sherwood.news/tech/openai-1-million-enterprise-users-operating-costs/">burning through cash</a> while training huge models. Instead, Zhuo insisted that raising a modest sum from European investors has enabled Agemo to build a sustainable business. The next step is to go to market — eventually in the US. The team is gearing up to release a platform called CodeWords, and focus on building their software incrementally so that it can be enterprise-ready."From a numbers perspective, from the amount raised, we're underdogs," Zhuo said. "We've been underdogs all our lives. We have good credentials — but ultimately, a benefit is that there isn't as much risk with us as with someone raising $500 million and releasing a product."

London startup Agemo has exited stealth. Now, it's building AI reasoning for software to take on Poolside and Magic.ai.

<ul class="summary-list"><li>Michael Burry published a first-quarter portfolio update on Wednesday.</li><li>The Scion Asset Management chief pared down his stock positions from 25 to 16 but boosted several bets.</li></ul>Michael Burry ramped up his bets on a raft of stocks while slashing his number of holdings last quarter.The investor of "The Big Short" fame pared down his portfolio from 25 positions to 16 in the three months ending in March, he revealed in a <a target="_blank" href="https://www.sec.gov/Archives/edgar/data/1649339/000090514824001390/xslForm13F_X02/informationtable.xml">quarterly portfolio update</a> on Wednesday. The total value of his holdings rose from about $95 million to about $103 million.Eleven holdings survived the period, and the Scion Asset Management boss added to all of them. For example, he boosted his stake in Alibaba from 75,000 shares to 125,000, his JD.com bet from 200,000 to 360,000, and his Star Bulk Carriers wager from 250,000 to 400,000.Burry also added five new holdings to his collection: Baidu, BP, First Solar, Sprott Physical Gold Trust, and Cigna. He also disposed of a bunch of stocks including Amazon, Alphabet, MGM Resorts, Toast, and Warner Bros. Discovery.The Scion chief is best known for his monster wager against the mid-2000s housing bubble, which was immortalized in the book and movie "The Big Short."He also drew attention for <a target="_blank" rel="" href="https://markets.businessinsider.com/news/stocks/big-short-investor-michael-burry-scion-gamestop-stock-price-frenzy-2021-2-1030050393?utm_medium=ingest&amp;utm_source=markets">investing in GameStop</a> more than a year before it became a meme stock in early 2021. The frenzy around the video games retailer reignited this week after one of its biggest proponents, investor Keith "Roaring Kitty" Gill, returned to social media after a yearslong hiatus.Burry's latest portfolio update didn't feature any put options. The investor has previously held the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-nvidia-stock-portfolio-microchips-etf-scion-2023-11">bearish options</a> on the S&amp;P 500 and Nasdaq indexes, Apple stock, a microchip ETF containing Nvidia, Elon Musk's Tesla, and Cathie Wood's flagship Ark fund.The value investor is well known for his <a target="_blank" rel="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-stock-rally-dot-com-bubble-crash-2023-2?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">grave warnings</a> and <a target="_blank" rel="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-meme-stocks-bed-bath-beyond-death-2023-2?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">grim predictions</a> about market crashes and economic catastrophes. For instance, he <a target="_blank" rel="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-twitter-return-biggest-market-bubble-ever-2021-6?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">sounded the alarm</a> on the "greatest speculative bubble of all time in all things" in the summer of 2021, and <a target="_blank" rel="" href="https://markets.businessinsider.com/currencies/news/big-short-michael-burry-warns-meme-stocks-crypto-crash-coming-2021-6-1030534935?utm_medium=ingest&amp;utm_source=markets">cautioned that buyers of meme stocks</a> and cryptocurrencies would be caught in the "mother of all crashes."

'Big Short' investor Michael Burry exits Amazon and Alphabet — but boosts Alibaba and bets on Baidu

<ul class="summary-list"><li>Michael Burry bolstered his bets on three Chinese tech companies last quarter.</li><li>The "Big Short" investor raised his stakes in Alibaba, Baidu, and JD.com but also hedged the wagers.</li></ul>Michael Burry doubled down on three of China's biggest technology companies last quarter, boosting his stakes while carefully hedging his bets.The investor of "The Big Short" fame bolstered his Alibaba position by 29% to 200,000 shares worth around $21 million at the end of September, a quarterly portfolio filing revealed on Thursday. He also purchased bearish put options on almost 169,000 of the e-commerce giant's shares with a nominal value of about $18 million.The Scion Asset Management boss doubled his JD.com stake to 500,000 shares worth $20 million at quarter end, and purchased put options on the same number of shares.Similarly, he raised his Baidu position by two-thirds to 125,000 shares, worth a little over $13 million on September 30, and bought put options on around 83,000 shares of the company.The combined nominal value of the three put positions was $43.6 million. That's equal to just over half the value of the rest of the stock portfolio, which grew 64% <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/michael-burry-big-short-stock-investments-bets-chinese-equities-stimulus-2024-9">in the period</a> to just over $86 million despite Scion trimming its number of non-option positions from 10 to eight.Chinese stocks <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9">soared</a> in late September after the government pledged to revitalize economic growth with a sweeping stimulus package, but have slumped since then as details remain sparse.Burry didn't take positions in any new stocks last quarter, but he added to his wagers on Molina Healthcare, Shift4 Payments, and Olaplex. He also exited BioAlta and Hudson Pacific Properties, more than halved his stake in TheRealReal, and cut his position in American Coastal Insurance by 60%.The value investor shot to fame after making a <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-scion-housing-market-bubble-gamestop-stock-2021-9">massive bet</a> against the mid-2000s housing bubble, which was immortalized in the book and movie "The Big Short."He's also notable for <a target="_blank" rel="" href="https://markets.businessinsider.com/news/stocks/big-short-investor-michael-burry-scion-gamestop-stock-price-frenzy-2021-2-1030050393?utm_medium=ingest&amp;utm_source=markets">investing in GameStop</a> and penning letters to its directors more than a year before it became a meme stock in early 2021.Burry has <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-nvidia-stock-portfolio-microchips-etf-scion-2023-11">previously bought</a> bearish put options on the S&amp;P 500, Nasdaq, Apple, Tesla, Cathie Wood's flagship Ark fund, and a microchip ETF containing Nvidia.The value investor hasn't been shy about issuing dire warnings and dour predictions about market crashes and economic calamities. He <a target="_blank" rel="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-twitter-return-biggest-market-bubble-ever-2021-6?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">rang the alarm</a> on the "greatest speculative bubble of all time in all things" in the summer of 2021, and <a target="_blank" rel="" href="https://markets.businessinsider.com/currencies/news/big-short-michael-burry-warns-meme-stocks-crypto-crash-coming-2021-6-1030534935?utm_medium=ingest&amp;utm_source=markets">warned buyers of meme stocks</a> and cryptocurrencies they would suffer the "mother of all crashes."

'Big Short' investor Michael Burry boosts Alibaba, Baidu, and JD.com bets as he doubles down on China

<ul class="summary-list"><li>OpenAI CFO Sarah Friar emailed investors the day after three top execs suddenly left, <a target="_blank" class="" href="https://www.cnbc.com/2024/09/26/openais-cfo-says-funding-round-should-close-by-next-week-in-letter.html">per CNBC.</a></li><li>Friar sought to soothe investor worries, saying the firm is still "laser-focused" on AI that can bring them returns.</li></ul>OpenAI's chief financial officer, Sarah Friar, is trying to assure investors that the company is still in good hands despite the sudden exit of three top executives, according to an email reported by CNBC.<a target="_blank" class="" href="https://www.cnbc.com/2024/09/26/openais-cfo-says-funding-round-should-close-by-next-week-in-letter.html">The outlet's Kate Rooney</a> cited an email from Friar to OpenAI investors on Thursday night, a day after the firm saw the departure of its chief technology officer, <a target="_blank" class="" href="https://www.businessinsider.com/mira-murati-openai-cto-leaving-executive-memo-staff-2024-9">Mira Murati</a>.Two other leaders, VP of Research for Post Training Barret Zoph and Chief Research Officer Bob McGrew, are also <a target="_blank" class="" href="https://www.businessinsider.com/sam-altman-openai-note-more-staff-exits-barret-bob-2024-9">leaving.</a>Friar's email spoke of their exits directly, saying that even after the switch-up, OpenAI still fields a "talented leadership bench.""While leadership changes are never easy, I want to ensure you have the full context," she wrote, per CNBC.She also told them that the promise of their returns was still airtight."Collectively, we remain laser-focused on bringing AI to everyone and building sustainable revenue models that fuel our operations and deliver value to our investors and employees," she wrote.Friar herself is a <a target="_blank" class="" href="https://www.businessinsider.com/sam-altman-new-colleagues-openai-sarah-friar-kevin-weil-2024-6">relatively new hire</a>, joining the firm in June after helming Nextdoor.OpenAI has been trying to raise a <a target="_blank" class="" href="https://www.businessinsider.com/openai-fundraising-150-billion-valuation-new-funding-round-altman-thrive-2024-9">valuation of more than $150 billion</a><a target="_blank" href="https://www.businessinsider.com/openai-fundraising-150-billion-valuation-new-funding-round-altman-thrive-2024-9">.</a> Friar wrote in her email that its current funding round of $6.5 billion looks ready to close by next week amid oversubscribed demand.<a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-08-28/openai-nears-funding-round-at-more-than-100-billion-valuation">Bloomberg reported</a> in August that Friar, in a separate memo, told employees that the funds raised would be used for computing power and operating costs.The startup is also reported to have plans to nix its nonprofit board control and <a target="_blank" class="" href="https://www.businessinsider.com/open-ai-sam-altman-equity-stake-valuation-private-nonprofit-9">restructure into a for-profit benefit corporation.</a>Word of such monumental change, coupled with the influx of investors' funds, has <a target="_blank" class="" href="https://www.businessinsider.com/ai-industry-reaction-openai-executives-resignation-sam-altman-2024-9">raised concerns</a> about how closely OpenAI is now <a target="_blank" class="" href="https://www.businessinsider.com/sam-altman-openai-mission-drift-for-profit-nonprofit-structure-investment-2024-9">sticking to its original vision</a> of building artificial generational intelligence — hyped as humanity's next giant step in tech — for the benefit of everyone.When Business Insider <a target="_blank" class="" href="https://www.businessinsider.com/openai-implosion-investors-vcs-2024-9">spoke to several seasoned investors</a> in the wake of the OpenAI departures, some observed that the company seemed to be continually beset with messy internal change. Perhaps the most infamous of these episodes was when its board <a target="_blank" class="" href="https://www.businessinsider.com/what-sam-altman-did-so-bad-he-got-fired-openai-2023-12">ousted CEO Sam Altman</a> in November, only for him to <a target="_blank" class="" href="https://www.businessinsider.com/sam-altman-return-openai-ceo-2023-11">return days later</a>.Still, others told BI that given OpenAI's potential to fundamentally change how people use tech, the recent turbulence may not matter in the long run.Murati, McGrew, and Zoph left OpenAI just a month after other <a target="_blank" class="" href="https://www.businessinsider.com/openai-leadership-changes-brockman-deng-schulman-anthropic-departures-2024-8">top leaders</a> stepped away from the company in August.OpenAI did not immediately respond to a request for comment from Business Insider sent outside regular office hours.

OpenAI's CFO is trying to get the company's investors to keep calm and carry on

<ul class="summary-list"><li>This is an excerpt from the Insider Today newsletter.</li></ul>OpenAI is viewed as one of the most important startups in Silicon Valley. It now has a price tag to match.The high-profile startup announced the closing of a $6.6 billion funding round that valued it at $157 billion. It marks the largest VC round of all time and makes OpenAI one of the most valuable startups in the world, alongside Elon Musk's SpaceX and ByteDance, TikTok's parent company.So, who invested?Josh Kushner's Thrive Capital is leading the round. Repeat investors include Cathy Wood's Ark Venture Fund, Chase Coleman's Tiger Global, and OG OpenAI backer Microsoft. New faces include chip giant Nvidia and Masayoshi Son's SoftBank. Here's a <a target="_blank" href="https://www.businessinsider.com/openai-investors-latest-funding-round-2024-10">complete rundown of the backers</a>.The big news comes amid wider turmoil at the startup. Last week, Chief Technology Officer Mira Murati became the latest executive to depart the firm. That was coupled with news of OpenAI's plans to become a for-profit corporation.(OpenAI exec Kevin Weil told Business Insider's Rob Price the startup <a target="_blank" href="https://www.businessinsider.com/openai-kevin-weil-mira-murati-great-bench-cto-abrupt-departure-2024-10">still has a "great bench</a>," so there's that.)In the meantime, OpenAI's rivals like Anthropic and Perplexity <a target="_blank" href="https://www.businessinsider.com/openai-rivals-anthropic-perplexity-on-prowl-after-wave-exec-departures-2024-10">are pitching themselves as being about mission over profits</a>. And more exits could be coming since OpenAI is reportedly working on allowing its employees <a target="_blank" href="https://www.businessinsider.com/openai-chatgpt-stock-sale-artificial-intelligence-fundraising-valuation-sam-altman-2024-10">to sell their shares in the company</a>.<div type="image" title="Photo illustration of Sam Altman" height="2250" width="3000" msid="113912126" hostid="261" sizebytes="213128"></div>It's important to remember OpenAI's eye-popping valuation is just that … a valuation.Silicon Valley has a long list of high-flying startups that raised money on massive valuations that have proved difficult to maintain.Take the fintech Stripe, which was valued at almost $100 billion at its height in 2021 only to see its valuation get cut down amid a downturn in the industry. Even as it claws its way back, one of its backers has reportedly offered to buy its own investors' shares in the startup <a target="_blank" href="https://www.axios.com/2024/07/15/sequoia-capital-stripe">who want liquidity</a>.Which gets us back to $157 billion OpenAI. At that size, and with the current regulatory environment around AI and Big Tech, an acquisition is almost certainly out of the question. That leaves the public markets, another daunting task.If OpenAI were to IPO tomorrow at that value, it would be the second-largest American IPO by initial valuation, trailing only Alibaba, which went public in September 2014 at a $169.4 billion price tag."I hope and expect that the next step for OpenAI would be to go public," Altimeter Capital's Brad Gerstner, who is an OpenAI investor, <a target="_blank" href="https://www.geekwire.com/2024/openai-investor-says-the-next-step-for-the-chatgpt-maker-should-be-to-go-public/">said at a conference Wednesday</a>.But even if the IPO market can shake its current drought, questions remain if <a target="_blank" href="https://www.businessinsider.com/ai-impact-overblown-investment-tech-stocks-billions-daron-acemoglu-mit-2024-10">AI is just a bubble waiting to pop</a>. At the very least, turning a profit from the tech, which is costly to build and maintain, is proving difficult for just about everyone. OpenAI will reportedly lose as much <a target="_blank" href="https://www.businessinsider.com/openai-implosion-investors-vcs-2024-9">as $5 billion this year</a>.On the other hand, if OpenAI can maintain its position as the go-to AI app, and the wider industry is as transformational as some believe it is, getting in at a $157 billion valuation might be a bargain.The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, senior editor, in London. Jordan Parker Erb, editor, in New York. Milan Sehmbi, fellow, in London. Amanda Yen, fellow, in New York.

OpenAI's latest funding round could be a bargain or a bust for investors     

<ul><li>Investors are ramping up outflows from Cathie Wood's ARK funds after a three-year decline.</li><li>The suite of ARK ETFs has seen net outflows of $2.2 billion so far this year, triple the outflows in 2023.</li><li>A string of bad bets and missed opportunities have led to a 72% decline in ARK's flagship fund.</li></ul>Investors in Cathie Wood's ARK ETFs are starting to increase the pace of outflows after a string of bad bets and a painful three-year decline.The family of ARK ETFs has seen a net outflow of $2.2 billion this year, which is about triple the $760 million in outflows seen in all of 2023.The ARK ETFs' combined assets under management stand at $11.1 billion, down 81% from its peak AUM of $59 billion in 2021.The sharp decline in assets under management coincides with a painful three-year period for Wood's disruptive innovation investment strategy. The flagship ARK Innovation ETF is down 72% from its February 2021 peak, and some of its top bets are still floundering.ARK has long counted <a href="https://markets.businessinsider.com/stocks/tsla-stock">Tesla</a> among its top holdings, but the carmaker's more than 40% stock decline year-to-date has weighed heavily on the performance of the ARK Innovation ETF, which is down 16% year-to-date despite a positive return for the broader stock market.This dynamic — the sharp decline in ARK funds while the broader stock market hits record highs — was highlighted by Morningstar earlier this year. The investment firm highlighted that the <a href="https://markets.businessinsider.com/news/funds/cathie-wood-ark-invest-wealth-destroyed-tech-stocks-morningstar-arkk-2024-2">ARK ETFs have destroyed $14 billion in wealth over the past decade</a> as investors piled into the fund right near its peak."These funds managed to lose value for shareholders even during a generally bullish market," Morningstar analyst Amy Arnott said. Another source of pain for ARK investors is the fact that the funds have missed out on the hottest artificial intelligence trade in the market, with <a href="https://www.businessinsider.com/cathie-wood-says-nvidia-has-become-check-the-box-stock-2024-2">Wood selling most of her funds' Nvidia holdings</a> right before the stock started to surge in late 2022.Other top holdings of the ARK funds include <a href="https://markets.businessinsider.com/stocks/roku-stock">Roku</a> and <a href="https://markets.businessinsider.com/stocks/u-stock">Unity Software</a>, which are both down more than 30% year-to-date, and <a href="https://markets.businessinsider.com/stocks/zm-stock">Zoom Video</a>, which is down 16% year-to-date.Despite the sharp underperformance, Wood has largely defended her portfolio, recently arguing that Tesla could <a href="https://markets.businessinsider.com/news/stocks/exclusive-cathie-wood-breaks-down-2-000-tesla-price-target-with-benzinga-1032606181">trade to $2,000 per share in the next five years.</a>

Investors are ramping up their exits from Cathie Wood's ARK after an epic 72% decline in her flagship fund

In a move reflecting shifting dynamics in the tech industry, both <keyword id="19895622" type="General" weightage="20" keywordseo="Microsoft" source="keywords" meta.keywordsubtype="org" meta.entityname="Microsoft" meta.hostid="261" meta.entityid="Microsoft">Microsoft</keyword> and <keyword id="19894961" type="General" weightage="20" keywordseo="Apple" source="keywords" meta.keywordsubtype="org" meta.entityname="Apple" meta.hostid="261" meta.entityid="Apple">Apple</keyword> have decided to relinquish their observer seats on the board of <keyword id="19918823" type="General" weightage="20" keywordseo="OpenAI" source="keywords" meta.keywordsubtype="org" meta.entityname="OpenAI" meta.hostid="261" meta.entityid="OpenAI">OpenAI</keyword>, reported UK-based 'The Financial Times'. The move comes amidst reports of increased regulatory scrutiny over the involvement of tech giants in <keyword id="20328842" type="General" weightage="20" keywordseo="AI-startups" source="keywords">AI startups</keyword>. Microsoft, which had invested significantly in OpenAI, including a substantial USD 13 billion investment in its generative AI <keyword id="19901571" type="General" weightage="20" keywordseo="technology" source="keywords">technology</keyword>, ChatGPT, has announced its immediate withdrawal from its observer role on OpenAI's board. <div type="Article" hostid="261" msid="111637913" title="Samsung Galaxy Z Fold 6, Galaxy Z Flip 6, Galaxy Ring and more launched" mstype="2" mssubtype="0"></div> The decision was communicated via a letter to OpenAI, citing the company's satisfaction with the progress made by the newly formed board. Similarly, Apple, which was expected to take up a similar observer role as part of an agreement to integrate ChatGPT into its devices, has opted not to do so. Although Apple declined to comment on the matter, sources familiar with the situation indicate that the tech giant will not be taking an observer position on OpenAI's board. In response to these developments, OpenAI has announced a revised strategy for engaging with its strategic partners and investors. According to the FT report, the organization plans to hold regular meetings with partners like Microsoft and Apple, along with investors such as Thrive Capital and Khosla Ventures. This shift, as explained by an OpenAI spokesperson, aims to foster a more inclusive and collaborative approach to governance and strategic decision-making. The board of OpenAI recently saw the addition of Phil Schiller, Apple's former marketing chief, as an observer, which was reported just days before these withdrawals. However, Schiller will no longer be observing OpenAI's operations, highlighting the fluidity and perhaps underlying tensions within the organization's boardroom dynamics. Analysts speculate that the decision by Microsoft and Apple to step back from their observer roles could be linked to strategic considerations or internal dynamics within OpenAI. While some suggest possible concerns over antitrust scrutiny or strategic disagreements, the exact motivations behind these decisions remain unclear. SEE ALSO:<a href="https://www.businessinsider.in/business/auto/news/xiaomi-su7-with-up-to-800-km-range-showcased-in-india-but-you-cant-buy-it/slidelist/111609513.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/news/xiaomi-su7-with-up-to-800-km-range-showcased-in-india-but-you-cant-buy-it/slidelist/111609513.cms" target="_blank">Xiaomi SU7 with up to 800 km range showcased in India but you can’t buy it</a><a href="https://www.businessinsider.in/tech/mobile/news/redmi-13-5g-with-120hz-display-launched-in-india-starting-at-13999/articleshow/111604488.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/redmi-13-5g-with-120hz-display-launched-in-india-starting-at-13999/articleshow/111604488.cms" target="_blank">Redmi 13 5G with 120Hz display launched in India starting at ₹13,999</a><a href="https://www.businessinsider.in/tech/mobile/news/samsung-galaxy-unpacked-how-to-watch-expected-launches-and-everything-you-need-to-know/articleshow/111626712.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/samsung-galaxy-unpacked-how-to-watch-expected-launches-and-everything-you-need-to-know/articleshow/111626712.cms" target="_blank">Samsung Galaxy Unpacked – How to watch, expected launches and everything you need to know</a>

Microsoft and Apple exit observer roles on OpenAI board

<ul class="summary-list"><li>Adtech startups face leadership changes as investors demand growth and profitability.</li><li>Private-equity firms are looking for adtech startups to achieve scale.</li></ul>Close observers of the adtech industry will have noticed there's been a heap of change in the upper ranks of the sector's startups in recent months — especially those <a target="_blank" class="" href="https://www.businessinsider.com/private-equity-firms-investing-in-advertising-and-marketing-companies-2024-3">financed by private equity</a>.<a target="_blank" class="" href="https://www.xr.global/press-releases/xr-announces-strategic-leadership-changes-to-accelerate-growth">Louisa Wong stepped down</a> as chief executive of Gamut Capital-owned XR Xtreme Reach in August. She was replaced in the interim by Chandler Bigelow, the company's chief financial officer. Doug Knopper, an investor in the company, was appointed executive chairman, while adtech veteran Jo Kinsella was promoted to global president and chief operating officer.In July, <a target="_blank" class="" href="https://www.adexchanger.com/online-advertising/triplelift-ceo-dave-clark-abruptly-exits-after-setting-the-ssp-on-a-new-trajectory/">Dave Clark left his role as chief executive of Triplelift</a>. His responsibilities were split among an "office of the CEO," led by Eric Roza, a managing director at its lead investor, Vista Equity.At the turn of the year, <a target="_blank" class="" href="https://www.axios.com/pro/media-deals/2024/01/04/videoamp-ceo-out-layoffs">VideoAmp CEO Ross McCray exited</a>, passing the reins to board member and investor Peter Liguori, now executive chairman. <a target="_blank" href="https://www.axios.com/2024/10/01/videoamp-media-measrement-nielsen-sale">Axios reported this month, citing multiple sources, that the company is now pursuing a sale</a>, with its investor Vista Credit Partners reportedly leading some of those discussions.Each of the changes comes with its own company-specific nuance, but experts said there are broader industry trends that link them. Those experts — bankers, adtech executives, and consultants — told Business Insider that the revolving door is likely to continue over the next six months as investors press adtech companies for growth.It marks the next stage of evolution for the adtech industry. With the digital ad market largely dominated by tech giants Google, Amazon, and Meta, independent adtech companies are forced to find new ways to compete over the remaining scraps. The small and medium-sized startups still duking it out are now entering their operator era."Automation, AI, and the optimization of corporate structures will mean that only the lean, mean companies are going to end up gaining market share and be in a position to win," said Chris Karl, chief business development officer at the M&amp;A advisory firm JEGI Clarity.<h2 id="fd8233e1-0d16-4bc2-8b40-8db1559a0af4">Adtech valuations have come back down to earth, but PE investors still want scale</h2>Private-equity firms such as Vista, GTCR, and Blackstone have been increasingly <a target="_blank" href="https://www.businessinsider.com/private-equity-firms-investing-in-advertising-and-marketing-companies-2024-3">active investors in the adtech space</a>, leading a flurry of deals between 2021 and 2022.There were 784 PE or PE-sponsored transactions in the media and marketing space in 2021, up 96% from the prior year, according to the advisory firm Ciesco. That number rose to 874 in 2022 and lowered slightly to 786 in 2023, per Ciesco.Now, a few years have passed, and leadership changes are to be expected, given historic PE investment cycles, said Mark Wright, a veteran tech investor and executive, who now leads the M&amp;A strategic advisory practice at Prohaska Consulting. Founding teams make way for more experienced operators who can take the company to the next level, he said."Although there are exceptions to the rule, there are very few founding teams that are marvelous at groundbreaking innovation that can successfully make the transition to managing and operating at scale," Wright said.Public and private valuations of adtech companies have dropped dramatically since 2021, the height of the zero-interest-rate period when there was a rise in digital ad spending and a slew of adtech IPOs. Tougher macroeconomic conditions in the years since put a strain on consumer spending and marketing budgets, cooling the markets and M&amp;A activity."Some of the changes you're seeing are indicative of a two-year cycle post-COVID where things are back to normal, or the new normal," Karl of JEGI Clarity said. "Where company performance could be tied to events that were out of their control a couple of years ago, that excuse no longer suffices. Investors want growth."Meeting growth expectations has been a challenge for some companies. JEGI Clarity, which, alongside CIL Management Consultants, conducted a survey of 25 marketing services agency leaders this summer, heard from multiple CEOs who said 2022 and 2023 were some of the most difficult operating environments of their careers.Those surveyed said they were more optimistic about 2024 now that rates have stabilized and clients are less risk-averse with their marketing budgets. Almost three-quarters (70%) of respondents in the study said that their margins had remained stable or increased this year.<h2 id="7a33b071-67d8-4249-828a-d18e4d17a037">CTV is adtech's bright spot – but it's complicated</h2>Despite a rising global advertising market that is expected to surpass $1 trillion in spending next year, not all adtech vendors are positioned to reap the rewards.Take the connected TV space. It's one of the fastest-growing ad channels in the US, with spending expected to grow 13.3% and cross $30 billion in 2025, according to Emarketer. The change in viewing patterns and forecast ad spend attracted investor interest in adtech companies that had a strong position in CTV.<div type="image" title="Emarketer US TV CTV ad spend chart" height="1466" width="1410" msid="114016955" hostid="261" sizebytes="114730"></div>However, much of the recent growth in CTV advertising is being driven by platforms like YouTube and Amazon Prime Video — so-called walled gardens that don't integrate third-party adtech vendors such as buying platforms and exchanges.CTV is also a lower-margin channel for adtech vendors than traditional online display, where up to half of every dollar spent on ads gets gobbled up by vendors like demand-side platforms, ad exchanges, ad servers, measurement vendors, and data brokers."In network TV, those supply chain costs are in the 15% level — you have to take 50% and squeeze it down to 15%," Prohaska's Wright said. "It's going to put a real emphasis on operating at scale and put a pressure on margins."As TV viewing grew fragmented, several adtech companies that took on investment in recent years positioned themselves as rivals to ratings giant Nielsen. These firms are jockeying to become the go-to companies for tracking audiences or to become the universal <a target="_blank" href="https://www.adexchanger.com/adexplainer/adexplainer-tv-measurement-vs-tv-currency/">currency</a> used to buy TV and video ads.But Nielsen still hasn't been unseated. And Walmart's acquisition of TV manufacturer Vizio — from which many adtech vendors license viewing data derived from its tens of millions of TV sets — could signal further trouble ahead if the grocery giant doesn't renew those contracts when they expire.With the Walmart-Vizio deal front of mind, adtech companies and investors are likely to turn their attention to retail media, where ads are placed on e-commerce sites. Retail media is also growing at a clip, with almost every retailer and app owner now also operating an ad business.The increasing complexity for advertisers offers opportunities for adtech companies to innovate. Though, while around $1 in every $7 US ad dollars is expected to go to the space this year, according to Emarketer, retail media is largely dominated by Amazon.There's also some executive shuffling happening in the retail media ranks: Megan Clarken, who leads the publicly traded adtech company <a target="_blank" href="https://digiday.com/media-buying/criteo-seeks-new-chief-executive-after-megan-clarken-announces-pending-exit/">Criteo</a>, said she plans to step down within the next year once her successor is found.Many industry observers expect more adtech management upheaval ahead, as well as a further consolidation of the sector once the intense fourth-quarter holiday period is over."You will see more heavy-handed PE involvement primarily because the M&amp;A market hasn't been great and people sat on the sidelines," said Domenic Venuto, COO of investment bank Progress Partners and soon-to-be chief of product and data at media agency Horizon Media."The market can only sustain so many of these companies that have grown to be quite sizable but are now hitting their upper limits," he said.

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