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<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

New Delhi: Markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords">Sebi</keyword> has proposed a minimum ticket size or <keyword id="21732014" type="General" weightage="20" keywordseo="investment-threshold" source="keywords">investment threshold</keyword> of Rs 1 crore for the RBI-regulated originators and unregulated entities engaged in securitisation activities. The proposal also introduced limitations on the number of investors in <keyword id="22496291" type="General" weightage="20" keywordseo="private-placements" source="keywords">private placements</keyword>, allowing <keyword id="23778966" type="General" weightage="20" keywordseo="securitized-debt-instruments" source="keywords">securitized debt instruments</keyword> (SDIs) issued privately to be offered to a maximum of 200 investors. If this limit is exceeded, the issuance must be classified as a public issue. Public offers should remain open for a minimum of three days and a maximum of 10 days, with advertisement requirements aligned with Sebi's regulations for non-convertible securities. Additionally, the regulator has suggested that all securitized debt instruments should be issued and transferred exclusively in demat form. SDIs are financial products created by pooling together various types of debt -- such as loans, mortgages, or receivables -- and then selling them as securities to investors. This process, known as securitisation, allows the originator (such as a bank) to convert illiquid assets into liquid ones, providing an alternative source of funding. Investors in these instruments receive returns based on the performance of the underlying debt pool, and the risk is spread across multiple assets, offering potentially attractive returns. The current framework is based on Sebi's 2008 regulations, with updates from the Reserve Bank of India's (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) 2021 directions on securitising standard assets. The Securities and Exchange Board of India (Sebi) is now considering updates to the regulatory framework for securitized debt instruments and sought public comments till November 16 on the proposals. Regarding risk management, Sebi has proposed that originators retain a minimum risk retention of 10 per cent of the securitised pool or 5 per cent for receivables with a maturity of up to 24 months. A minimum holding period requirement will also be specified by Sebi for underlying receivables to ensure that originators maintain an interest in the underlying assets, the regulator said in a consultation paper. The regulator further suggested including an optional clean-up call for originators, allowing them to repurchase up to 10 per cent of the original value of the assets. This call is optional and intended to help manage the pool's longevity without mandating additional commitments from the originator. Liquidity facilities, essential to handle timing mismatches in cash flows, should either be provided directly by the originator or through an appointed third party. The updated definition of "debt/receivables" limits permissible underlying assets to listed debt securities, accepted trade receivables, rental incomes, and equipment leases while disallowing single-asset securitisation. The proposal establishes minimum track record requirements for both originators and obligors. Originators should have a minimum of three years of operating experience, while trade receivables specifically require at least two cycles of successful, default-free payments.

Sebi proposes Rs 1 crore minimum investment, mandatory demat form for securitized debt instruments

The risky allure of WiFi Money: private jets, sports cars, and ruined investors

<ul class="summary-list"><li>OpenAI announced in October that it raised $6.6 billion at a blockbuster $157 billion valuation.</li><li>Among its new backers was a well-known investor: SoftBank.</li></ul>Before investing $500 million in OpenAI, SoftBank passed up an opportunity to do so last year at a fraction of the cost.But the chief financial officer for SoftBank's Vision Funds, the world's largest technology investor, says it wasn't the right time."We could have done it in 2023 at a much lower valuation, $30 billion," Navneet Govil said in an interview with Business Insider.OpenAI shook the tech world last month when it raised $6.6 billion at a <a target="_blank" class="" href="https://www.businessinsider.com/openai-investors-latest-funding-round-2024-10">valuation of $157 billion</a> in a round that included Microsoft, Tiger Global, and SoftBank's $500 million investment.However, Govil said SoftBank sees itself as "growth equity investors with a focus on mid-to-late stage companies." Last year, the <a target="_blank" class="" href="https://www.businessinsider.com/openai-one-step-closer-becoming-profit-company-report-2024-11">largely not-for-profit version of OpenAI</a> was still figuring out potential revenue streams — but that's now changed.Since <a target="_blank" class="" href="https://www.businessinsider.com/everything-you-need-to-know-about-chat-gpt-2023-1">launching ChatGPT</a> in November 2022, OpenAI has grown rapidly as its large language model-powered app has spurred global interest in generative AI."When you look at where OpenAI is today, it's more mature, has a stronger revenue base, and a clear focus of converting to a for-profit entity," Govil said.According to Govil, OpenAI's revenue is on track to be $3.7 billion this year, a figure first reported by The New York Times, and up from roughly $20 million two years ago.Monthly active users of ChatGPT have also continued to tick up. The Vision Fund CFO claims user numbers are now at 350 million, higher than tallies at rival companies. <a target="_blank" href="https://www.businessinsider.com/apple-holds-power-openai-deal-chatgpt-iphones-tim-cook-2024-6">The company also partnered with Apple</a> earlier this year to bring ChatGPT to the iPhone maker's devices.OpenAI's valuation is now surpassed only by a tiny handful of privately held <a target="_blank" class="" href="https://www.businessinsider.com/spacex-workers-stuck-overnight-barge-with-toxic-spaceship-new-book-2024-10">companies like SpaceX</a> and TikTok's parent company, ByteDance — another company backed by SoftBank.SoftBank has led huge investments into everything from Uber to controversial companies like WeWork. After nursing heavy losses on high-stakes tech bets placed through its Vision Funds, the Japanese conglomerate swung back to a <a target="_blank" class="" href="https://www.businessinsider.com/softbank-results-profit-masayoshi-son-ai-bets-ipo-vision-fund-2024-11">$7.7 billion profit</a> in earnings posted on Tuesday.<div type="image" title="Masayoshi Son" height="1667" width="2500" msid="115255385" hostid="261" sizebytes="568038"></div>Investors typically aim to back companies as early as they can to maximize returns.But SoftBank's <a target="_blank" href="https://www.businessinsider.com/masayoshi-son-softbank-gambling-man-lionel-barber-technology-2024-9">founder, Masayoshi Son,</a> has been a longtime AI obsessive. He dreams of "artificial superintelligence," met OpenAI boss Sam Altman last year, and is a <a target="_blank" href="https://www.businessinsider.com/softbank-chatgpt-billionaire-ceo-masayoshi-son-sam-altman-2023-6">habitual user of ChatGPT.</a>While Son now has a slice of one of the world's fastest-growing AI companies, OpenAI — and its backers — are facing the exorbitant capital expenditure that comes with developing LLMs.OpenAI must undertake increasingly expensive training runs to build smarter AI models that might one day achieve human-level intelligence. Dario Amodei, CEO of OpenAI rival Anthropic, has <a target="_blank" class="" href="https://www.businessinsider.com/anthropic-ceo-cost-10-billion-train-ai-years-language-model-2024-4">projected future AI training runs of $100 billion.</a>Govil said that the "capex is going to be significant" but sees OpenAI's partnership with Microsoft and the access that grants them to the Azure cloud platform — key for hosting and training AI models — as key to managing costs.He also sees opportunities for OpenAI to continue monetizing its offerings, be it increasing the number of paying subscribers to ChatGPT, <a target="_blank" href="https://openai.com/index/introducing-gpts/">ramping up the GPT Store</a> it unveiled last year, or increasing the adoption of OpenAI's API and developer platform.However, there are other challenges for OpenAI and the wider AI market.A <a target="_blank" href="https://www.businessinsider.com/openai-orion-model-scaling-law-silicon-valley-chatgpt-2024-11">recent report suggested</a> that OpenAI's upcoming flagship AI model is struggling to make a significant performance leap over an existing model.Management issues also surround OpenAI: several top-level executives have departed the company following a failed attempt to oust CEO Altman last year.Still, SoftBank sees OpenAI making progress. And it has scope to invest in other AI firms, Govil said, despite a report last month that said OpenAI asked new investors not to bet on rival companies."Our view is if it's a disruptive company and the addressable market is large, there's room for more than one player," he added.

One of OpenAI's biggest new investors explains why it made its $500 million bet

<ul class="summary-list"><li>The University of California, Berkeley, is the top producer of alumni starting tech companies.</li><li>Founded by Jeremy Fiance, The House Fund targets Berkeley-affiliated startups like Databricks.</li></ul>In the last year, tech investors have plowed tens of millions of dollars into Perplexity, the developer of a search engine built from scratch with artificial intelligence. The two-year-old startup <a target="_blank" class="" href="https://www.businessinsider.com/perplexity-raising-new-funding-generative-ai-2024">takes in cash like oxygen,</a> having raised <a target="_blank" class="" href="https://www.businessinsider.com/ai-startups-rapid-funding-rounds-2024-9">back-to-back funding rounds</a> just months apart, and is <a target="_blank" class="" href="https://www.wsj.com/tech/ai/ai-startup-perplexity-in-funding-talks-to-more-than-double-valuation-to-8-billion-54d36787">said to be in talks</a> to raise a fourth round that would value the startup at $8 billion.Landing a spot on Perplexity's cap table is fiercely competitive, making it all the more noteworthy that The House Fund, a bespoke venture capital firm born from the University of California, Berkeley's ecosystem, secured a place.In 2016, tech investor Jeremy Fiance set up a venture capital firm at his alma mater to invest in startups with ties to top-tier public schools. From an office across from the College of Computing, Data Science, and Society, investors at The House Fund scour their networks for students, faculty, and alumni working to build the next Perplexity, whose CEO Aravind Srinivas is a Berkeley alum, or Databricks, one of the <a target="_blank" class="" href="https://www.businessinsider.com/databricks-acquires-startup-lilac-ai-to-beef-up-its-llm-offerings-2024-3">world's most important data science firms</a> with a private valuation of $43 billion, started by a group of seven Berkeley researchers. The House Fund has backed both."There are only so many companies that matter every year, full stop, in venture," said Zachary Hargreaves, a managing partner at The House Fund. Each year, more firms are "birthed out of Berkeley."<div type="image" title="Two men looking relaxed smile for a photo against a black backdrop." height="2250" width="3000" msid="114433088" hostid="261" sizebytes="116306"></div>In early 2020, Hargreaves <a target="_blank" class="" href="https://www.businessinsider.com/30-rising-venture-capitalist-investors-silicon-valley-tech-2018-4">left Founders Fund</a>, where he worked closely with startups like SpaceX and Stemcentrx, to run his own playbook as an advisor and angel investor. During this period, an old classmate from Berkeley, Fiance, started asking his advice about which companies in the portfolio he should reinvest in."I was learning more and more about what The House Fund is from the outside in," Hargreaves said. "It feels very small but then from the inside out, it's actually very big in terms of the opportunity set."In the two years since Hargreaves went full-time, The House Fund has deployed over $125 million into companies. His move from Founders Fund to The House Fund hasn't been previously reported.Investors pay much attention to Stanford and the Massachusetts Institute of Technology for their conveyor belts of entrepreneurial talent. Neither have spawned quite as many startup founders in the last decade at Berkeley. According to <a target="_blank" class="" href="https://pitchbook.com/news/articles/pitchbook-university-rankings">PitchBook data</a>, Berkeley has the highest tally of alumni entrepreneurs who have raised venture capital of any public or private school worldwide.Hargreaves predicts that the group will grow as the use of artificial intelligence makes it cheaper and faster for students and alumni to spin up new businesses. "You can actually be three kids in a garage and launch pretty fierce products," he said.With Hargreaves on board, Fiance hopes to invest later in companies it previously backed. His hiring gives the firm the resources and knowledge to help founders shape their businesses into the next generation of Berkeley-born unicorns, as well as diligence them for potential follow-on financing. The House Fund said it can write checks up to $10 million.The House Fund has raised over $330 million from backers, including the Berkeley Endowment Management Company, UC Investments (the office that manages the working capital, retirement savings, and endowment funds for the University of California system), and Ahoy Capital, a boutique fund manager.Hargreaves put the firm's value add this way: "If we are on your cap table, we are a shortcut to anything Berkeley."

These tech investors are trawling UC Berkeley to fund the next Perplexity or Databricks

<ul class="summary-list"><li>SoftBank-backed glassmaker <keyword id="21250775" type="General" weightage="20" keywordseo="View" source="keywords" meta.keywordsubtype="org" meta.entityname="View" meta.hostid="261" meta.entityid="View">View</keyword> filed for <keyword id="19903649" type="General" weightage="20" keywordseo="bankruptcy" source="keywords">bankruptcy</keyword> in April, 3 years after its SPAC.</li><li><keyword id="23006643" type="General" weightage="100" keywordseo="CEO-Rao-Mulpuri" source="keywords">CEO Rao Mulpuri</keyword> has stepped down from View which was taken private by two <keyword id="19900618" type="General" weightage="20" keywordseo="investors" source="keywords">investors</keyword>.</li></ul>Five months after glassmaker View <a target="_blank" href="https://www.businessinsider.com/softbank-backed-view-files-bankruptcy-spac-struggles-2024-4">filed for bankruptcy</a>, CEO Rao Mulpuri has stepped down. Under his tenure, View raised $1.1 billion from <keyword id="19944037" type="General" weightage="20" keywordseo="SoftBank" source="keywords" meta.keywordsubtype="org" meta.entityname="SoftBank" meta.hostid="261" meta.entityid="SoftBank">SoftBank</keyword> in 2018 and went public in 2021. It struggled as a public company and <a target="_blank" href="https://www.businessinsider.com/view-inc-rao-mulpuri-spac-smart-glass-2022-6">ran low on cash</a> several times before declaring bankruptcy in April. Mulpuri announced his departure on Thursday night in a memo to employees which he also posted on <a target="_blank" href="https://www.linkedin.com/feed/update/urn:li:activity:7235077660702294016/">LinkedIn</a>. "After 15 incredible years, I have decided it's time to leave View Inc. What a ride it has been! A journey of a lifetime, filled with many ups and downs, but never a dull moment," he wrote. View makes eco-friendly windows that darken when it's sunny, reducing energy costs for air conditioning. The Milpitas, California-based firm filed for Chapter 11 bankruptcy to reorganize without liquidating all its assets. Two of View's longtime investors Cantor Fitzgerald and real estate firm RXR have taken the company private. Cantor sponsored the special purpose acquisition company that merged with View to take it public, raising $815 million. On August 22, the financial-services firm agreed to a $12 million settlement to end a lawsuit by SPAC investors who alleged they were misled. Cantor did not reply to a request for comment in time for publication. According to a separate memo sent to employees Friday morning, two board members will run View as co-CEOs: Joshua Spellman, chief of staff at Cantor, and Andrew Min, a senior vice president at RXR. Mulpuri has led View since 2008, replacing one of the firm's cofounders. Previously he led Japanese semiconductor manufacturer Novellus Systems. He is known for his magic touch with investors, managing to raise cash for View multiple times when funds ran low, including from the now-bankrupt financier Greensill Capital. "He's always been able to pull a rabbit out of a hat when it comes to procuring more money for the company," one banker familiar with View previously told Business Insider. In 2022, BI spoke with 29 former and current <a target="_blank" href="https://www.businessinsider.com/softbank-view-inc-rao-mulpuri-spac-investigation-2022-6?r=VIEWinc-teaser&amp;utm_medium=referral&amp;utm_source=yahoo.com">View employees</a>. They described a culture of micromanagement and said they were afraid of being fired. Mulpuri obsessively monitored tweets and LinkedIn posts about View and asked people to write positive reviews of the company on Glassdoor, multiple former employees said. Two former employees in the corporate office said View staff called him "Chairman Rao," an inside joke rhyming his name with the Chinese communist leader Mao Zedong. "If you didn't agree with the company's potential or the rosy picture, or how we were going to revolutionize and change the world, you were kept on the outside," one of the employees said. Mulpuri did not comment in time for publication. In his note, he hinted that he will return to the startup industry. He would be "back in the saddle" building things "sooner than later," he wrote. "Stay tuned..." Correction: August 30, 2024 — An earlier version of this story misdescribed one of View's investors. Cantor Fitzgerald is a financial-services firm, not a law firm.

View CEO Rao Mulpuri, who saw the glassmaker go from investor darling to declaring bankruptcy, has resigned

<keyword id="7457881" type="General" weightage="100" keywordseo="private-credit" source="Orion">Private credit</keyword> deployments are likely to surpass the $10 billion mark in 2024, a report by a consultancy firm EY said on Wednesday. The January-June period saw private credit transactions of over $6 billion in 96 deals, and the last two-and-a-half years have seen over $20 billion being deployed in the emerging alternative serving the credit needs of Indian companies. Major deals were witnessed across real estate, infrastructure, and healthcare sectors in the first half of the year, the report by EY said. Domestic funds are gaining traction and market share in the private credit space leveraging local expertise and the influence of lower-cost domestic money, it said. The first half of the year saw <keyword id="23077048" type="General" weightage="20" keywordseo="reliance-logistics" source="keywords">Reliance Logistics</keyword> and Warehousing, Vedanta Semiconductors, and Matrix <keyword id="19933821" type="General" weightage="20" keywordseo="pharma" source="keywords">Pharma</keyword> collectively raising approximately $1.3 billion, while real estate sector continued to be a focal point with borrowers such as <keyword id="20197996" type="General" weightage="20" keywordseo="prestige-group" source="keywords">Prestige Group</keyword>, <keyword id="21275229" type="General" weightage="20" keywordseo="puravankara-group" source="keywords">Puravankara Group</keyword>, Kalpataru Group, and Shapoorji Group being active. The firm's partner Bharat Gupta said private credit investments are at an all-time high, driven largely by growth-oriented strategies. "The outlook remains promising, though thorough due diligence and effective deal oversight are crucial to maximizing returns and managing potential risks," Gupta added. With the maturing of the system, there is a subtle shift towards performing credit deals in <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword> with funds increasingly engaging in sub-18% <keyword id="22335519" type="General" weightage="20" keywordseo="internal-rate-of-return" source="keywords">Internal Rate of Return</keyword> (IRR) transactions, the report said. In the high-yield segment, mergers and acquisitions/buyout deals, and bridge-to-initial public offering transactions have gained traction within private credit funding, it said. High-net-worth investors and family offices are increasingly participating in private credit as a key asset class, boosting the popularity of domestic funds, it added.

Private credit deals to touch $10 billion in 2024, says EY report

<ul class="summary-list"><li>D1's Dan Sundheim and SurgoCap's Mala Gaonkar spoke about investing in AI a Chicago conference.</li><li>Sundheim said it won't be private companies leading this tech change for once.</li></ul>The best way to invest in the world's hottest trend is not through seed rounds or even fully-fledged private companies, said D1 Capital Partners founder Dan Sundheim, despite<a target="_blank" href="https://techcrunch.com/2024/10/20/investments-in-generative-ai-startups-topped-3-9b-in-q3-2024/#:~:text=In%20Q3%202024%2C%20VCs%20invested,based%20companies%20across%20127%20deals."> billions flooding into artificial intelligence start-ups</a> last quarter alone.Sundheim, whose portfolio has billions invested in both public and private companies, believes the best way to tap into the <a target="_blank" href="https://www.businessinsider.com/ai-startups-rapid-funding-rounds-2024-9">AI frenzy</a> is through public companies. Speaking at Tuesday's Invest for Kids conference in Chicago, he said that AI, unlike other big technological advances, will be felt across sectors so all companies have an interest in putting money toward it.Large public corporations have the most resources to implement AI across their businesses, according to a recap of his comments viewed by Business Insider. In other words, scale is more of an advantage in the AI field than nimbleness.He said companies putting capital and talent behind AI projects are doing so without expecting a short-term return on their investment. The infrastructure required by these projects, he said, means companies are looking at the ROI a decade from now, not a quarter.Sundheim was speaking on a panel with Mala Gaonkar, the former Lone Pine executive who launched SurgoCap Partners at the start of 2023. From her vantage point, AI will impact industries on different timelines, so over the next three to five years, it's crucial to know which areas will feel immediate benefits and which sectors will take time.Gaonkar said medtech— such as diagnostic imaging — should benefit from AI advances earlier than other sectors.Sundheim also said that because of AI infrastructure needs, there will be investment opportunities in companies that supply the equipment to upgrade the electrical grid.Both firms have had strong years investing in public markets.Gaonkar's fund is up more than 25% this year, <a target="_blank" href="https://www.businessinsider.com/lone-pine-spinouts-struggle-except-mala-gaonkar-surgocap-tiger-cubs-2024-10">BI previously reported</a>, as assets have swelled to more than $3 billion. Sundheim's D1, which according to regulatory filings manages roughly $26 billion, is up more than 34% in its public book though its venture investments have been marked down 2.6% so far in 2024, according to <a target="_blank" href="https://www.institutionalinvestor.com/article/2dw7rnwdclm7wl4q9tr7k/hedge-funds/d1-capitals-dan-sundheim-makes-changes-after-two-consecutive-knockdowns">a recent report from Institutional Investor</a>.The two funds are a part of Julian Roberston's Tiger Management's broader <a target="_blank" href="https://www.businessinsider.com/billionaire-julian-robertsons-tiger-network-spans-hundreds-of-funds-2019-11">Tiger Cub network</a>, which is known for its focus on growth stocks, particularly in the tech sector. Sundheim, who was the CIO at Viking Global before launching D1 in 2018, joined funds like Tiger Global and Coatue in 2020 and 2021 in their aggressive funding of private companies. PitchBook notes that the firm has made 228 investments in private companies since six years ago.While the private portfolio has been a drag on Sundheim's overall returns the last three years — and he's now looking to public giants for AI exposure — he still said Tuesday that the most exciting company in the world is a private one: Elon Musk's SpaceX.D1 has a stake worth roughly $2.5 billion in the company, according to the II report.The two firms declined to comment.

Tiger Grandcubs on AI: How investors Dan Sundheim and Mala Gaonkar are thinking about the space

<ul class="summary-list"><li><a target="_blank" class="" href="https://www.businessinsider.com/tesla-ceo-elon-musk">Elon Musk's</a> private planes made eight flights to Pennsylvania this past week, flight logs show.</li><li>Musk has been actively endorsing Donald Trump, holding rallies in key Pennsylvania cities.</li></ul>Flight logs viewed by Business Insider show how the world's richest man is going all-in to elect former president Donald Trump.<a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-private-jet-flights-hidden-again-faa-2024-7">Elon Musk's private planes</a> took eight flights to and from Pennsylvania over the past week as the billionaire rallied voters.Earlier this month, The <a target="_blank" class="" href="https://www.nytimes.com/2024/10/11/us/politics/elon-musk-donald-trump-pennsylvania.html">New York Times</a> reported that Musk was considering door-knocking in battleground states like Pennsylvania. And Musk's flight records show the billionaire's plane has been traversing the state, according to data from the flight-tracking website <a target="_blank" class="" href="https://jetspy.com/">JetSpy.</a>Musk appeared with Trump at a <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-donald-trump-rally-butler-pennsylvania-assassination-attempt-2024-10">rally in Butler</a>, Pennsylvania, on October 5. He later held a <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-tesla-trump-rally-childcare-costs-family-kids-wealth-2024-10">series of solo rallies</a> in honor of Trump in Philadelphia and Pittsburgh from October 15 to October 20.At the Pittsburgh rally on Sunday, Musk told attendees he'd rather be spending his time working at SpaceX rather than involved in politics, "but the stakes are so high, I've had no choice but to take a stand.""This election, I think, is going to decide the fate of America, and along with the fate of America, the fate of Western civilization," Musk said.JetSpy data shows Musk's two private jets spent nearly 14 hours in the air, repeatedly flying to and from airports in Philadelphia, State College, Harrisburg, and Pittsburgh from October 15 to October 20. JetSpy estimates the flights burned about $40,000 worth of fuel, emitting about 65 metric tons of carbon.<div type="image" title="Elon Musk's white-livery private G650 jet in Harrisburg on Oct. 19 at night." height="3712" width="4949" msid="114438777" hostid="261" sizebytes="195192"></div>On his busiest flying day, October 16, Musk's two jets took four flights.His primary plane flew from Philadelphia to Savannah, Georgia, then to State College, Pennsylvania, and back to Philadelphia. His other jet flew from Philadelphia to Hawthorne, California, the site of SpaceX's former headquarters, after flying from Austin to Philadelphia the day before.Musk, Tesla, and SpaceX did not respond to a request for comment.<h2 id="126ef044-cac7-456e-a42c-9b39fc7b2f74">Musk's aggressive backing of Trump</h2>Musk has increasingly turned his attention toward the presidential election over the past year, throwing his money in addition to his influence behind Trump's campaign. The billionaire has invested nearly <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-trump-america-super-pac-2024-10">$75 million of his own money</a> into a pro-Trump super PAC called "America PAC," per a document filed with the Federal Election Commission.And on Sunday, Musk announced he would <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-rewards-petition-supporters-1m-check-trump-pac-2024-10">give $1 million handouts</a> to some people in swing states who signed his petition supporting free speech and the right to bear arms.Musk's Trump endorsement is a major time commitment for a man involved with running six different companies. In the weeks leading up to Musk's Pennsylvania rallies, <a target="_blank" class="" href="https://www.businessinsider.com/spacex-starship-fifth-flight-test-how-to-watch-2024-10">SpaceX launched its fifth Starship test</a> flight, successfully catching the spacecraft's Super Heavy booster for the first time. And Tesla hosted its highly anticipated <a target="_blank" class="" href="https://www.businessinsider.com/insider-today-elon-musk-robotaxi-tesla-wall-street-flop">Robotaxi Day, which underwhelmed investors</a>.While Musk has been campaigning for Trump, Tesla has been preparing for its third-quarter earnings call on Wednesday. Musk will likely face questions from investors during the call regarding the recent <a target="_blank" class="" href="https://www.businessinsider.com/tesla-robotaxi-release-date-elon-musk-stock-price-2024-9">Robotaxi</a> event. Tesla's stock fell 9% the day after the event and is down 12% year-to-date.Some Tesla employees aren't happy about Musk's endorsement of Trump. The workers chose to speak anonymously for fear of professional reprisal, but their identities are known to Business Insider."I think there's a feeling his focus is not with Tesla right now," one Tesla engineer from California told BI.Another Trump presidency could give Musk more power and influence. Trump has promised Musk a role as the head of a new "government efficiency commission," the <a target="_blank" class="" href="https://www.nytimes.com/2024/10/20/us/politics/elon-musk-federal-agencies-contracts.html">NYT</a> reported on Sunday.An employee based in Texas said Musk's politics have spurred little discussion internally. "People here are too busy and care too much about doing their jobs well to spend much time thinking about controversial topics," the Texas employee said. Others said they don't understand why Musk's political activities are the subject of media attention at all. "No one asks Mary Barra who she's voting for," a current Tesla employee in Nevada told BI, referencing General Motors' CEO.

Flight logs show Elon Musk's private jets are busy hitting swing states as he campaigns for Trump

<ul class="summary-list"><li>The creator and marketing company Triller is finally trading on the Nasdaq under the ticker ILLR.</li><li>The company went public via a reverse merger with a Hong Kong-based company called AGBA.</li></ul>The creator services, entertainment, and marketing company Triller — which once positioned itself as a rival to <a target="_blank" class="" href="https://www.businessinsider.com/how-tiktok-is-changing-music-industry">TikTok</a> — made its stock market debut on the Nasdaq Wednesday.The company went public via a reverse merger with AGBA Group Holding Limited, a Hong Kong-based wealth management and healthcare firm. A reverse merger occurs when a private company goes public by acquiring a publicly listed company.Triller's stock was down about 20% in its first hour of trading.It's been a tough few years for other creator startups that have made public market debuts, as companies like <a target="_blank" class="" href="https://www.businessinsider.com/faze-clan-decline-says-more-about-influencer-startups-than-esports-2023-10">FaZe Clan</a> and Clubhouse Media Group have struggled to show the type of growth that keeps investors happy. The creator economy has largely <a target="_blank" class="" href="https://www.businessinsider.com/the-creator-economy-is-having-an-identity-crisis-2024-1">failed to live up to lofty valuations set by VCs</a>, though <a target="_blank" class="" href="https://www.businessinsider.com/acquisition-spree-in-influencer-marketing-is-bolstering-the-creator-economy-2024-9">influencer marketing</a> remains a bright spot in the category.Triller's journey to a public listing has been a winding one. It explored going public via a special purpose acquisition company (SPAC) in late 2020, <a target="_blank" class="" href="https://www.reuters.com/article/uk-triller-m-a-exclusive-idUSKBN26W0V3/?">Reuters</a> reported. That didn't come to fruition, and in December 2021, the company announced plans to complete a <a target="_blank" rel="noopener noreferrer nofollow" href="https://www.businessinsider.com/triller-plans-public-reverse-merger-key-takeaways-revenue-losses-users-2022-3">reverse merger</a> with a company called Seachange International. It shut down that effort in June 2022 to instead do a <a target="_blank" rel="noopener noreferrer nofollow" href="https://www.businessinsider.com/triller-ends-reverse-merger-new-plan-to-go-public-2022-6">direct listing</a>. That also didn't last, as Triller switched again to a reverse merger with AGBA in April and withdrew its direct filing with the SEC in May.Now that investors can buy Triller stock, listed as ILLR, what is the company's pitch?Triller's business today includes a <a target="_blank" class="" href="https://www.businessinsider.com/investor-deck-shows-triller-pitch-aims-to-go-public-2023-5">mix</a> of creator, marketing, and entertainment services. It owns its <a target="_blank" class="" href="https://www.businessinsider.com/triller-gives-up-on-making-money-from-its-namesake-app-2023-8">namesake TikTok-style video app</a>, as well as a fan engagement tool called Fangage, an influencer-marketing platform called Julius, a combat-sports streamer called TrillerTV (formerly dubbed FITE), and a text-marketing tool Cliqz, among other products.AGBA's investor materials around Triller talk about how its different products interact to serve marketers and creators. Creators on Fangage can connect to services like Julius or the Triller app, for example.In filings, AGBA also highlights Triller's work in the buzzy area of AI. The company described Triller's business in an August filing as "a global, artificial intelligence powered technology platform that serves a broad constituency of creators and brands around the world."It's not the first time that Triller's tapped into a trendy topic in tech to connect with investors. In October 2022, as <a target="_blank" rel="" href="https://www.businessinsider.com/facebook-new-name-meta-rebrand-metaverse-zuckerberg-apps-2021-10">Big Tech</a> and startups alike were captivated by the idea of digital worlds called "metaverses," Triller <a target="_blank" rel="noopener nofollow" href="https://www.prnewswire.com/news-releases/triller-introduces-the-metaverz-your-all-access-pass-to-global-entertainment-301651110.html">announced</a> it was launching its own version called the Metaverz. AGBA said in its August filing that the Metaverz could offer augmented reality and virtual experiences, including virtual merchandise stores, for creators and brands.<h2 id="97d853f9-c0dc-41c2-a32b-f81609fd067b">Who are Triller's customers?</h2>Creators, brands, and consumers are the main cohorts that AGBA touts as central to Triller's business in its recent filings. In its description of those stakeholders, the company has discussed both customers that Triller worked with directly and others that it "tracked" but did not have direct relationships with.For example, in an August preliminary proxy statement, the company said Triller's creator accounts grew from somewhere around 2.37 million at the start of Q1 2021 to around 2.47 million in the first quarter of this year. But that tally includes creators the company doesn't directly work with but rather tracks to help "brands identify creators that may be appropriate for their marketing activities."The company had a similar approach for tallying brand partners, examining both brands that it worked with directly and brands that it tracked but were not actively using its products. The number of direct brands it worked with declined from around 250 in Q1 2021 to around 200 in Q1 2024, per a chart in AGBA's August filing.AGBA's tally of consumer accounts for Triller, which includes people who use its products like its Triller app and its combat streamer TrillerTV, also counted accounts that were not directly tied to its owned-and-operated products.AGBA said that as of March 2024, Triller had about 337 million consumer accounts, including inactive accounts, across platforms like the Triller app, TrillerTV, and its combat business BKFC. It separately counted an additional 109 million consumer accounts tied to properties it didn't own but established on behalf of brands and creator partners, including a "Triller brand customer's social media account on Facebook, Instagram, YouTube, or other platforms."Triller's approach to reporting on its user base has come under scrutiny in the past. In 2020 and 2021, former employees and other people with knowledge of Triller's reporting told media outlets like <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/some-former-triller-employees-wary-of-monthly-active-user-count-2020-9">Business Insider</a> and <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.billboard.com/pro/triller-inflating-public-user-figures/">Billboard</a> that its public monthly active user numbers were inflated compared to internal data and what it shared with rights holders. Former Triller CEO Mike Lu told BI in October 2021 that the former employees were "disseminating inaccurate information." Lu told Billboard in February 2021 that Triller would no longer share monthly active users or daily active users as they didn't accurately represent its business and that it had "never inflated any user numbers."<h2 id="091877de-6fa2-45d6-8bd7-e25fc6976d54">What do Triller's financials look like?</h2>Here's a rundown of what Triller's financials were as of early 2024, per AGBA's filing.<ul><li>As of March 31, 2024, Triller had cash and cash equivalents of $800,000, a working capital deficit of $270.7 million, and an accumulated deficit of $1.6 billion, AGBA wrote in its filing.</li><li>In the first three months of 2024, the company earned about $9.9 million in revenue and saw a net loss of $43 million, compared to about $9.2 million in revenue and a roughly $29 million net loss over the same period in 2023.</li><li>The company earned $45.5 million in revenue in 2023, a 4.5% decline from 2022. Its comprehensive loss in 2023 was around $299 million, up from around <a target="_blank" class="" href="https://www.businessinsider.com/triller-heads-nyse-public-tightening-losses-tweaking-pitch-key-takeaways-2023-8">$196 million</a> in 2022. The company previously told BI that some earlier losses were tied to acquisition costs.AGBA wrote in its August filing that Triller has incurred losses each year since its inception and may not become profitable in the future. It said the company has financial obligations which have come due in the past six months and are coming due over the next twelve months and it may not be able to meet its cash obligations as those amounts come due.Triller has been embroiled in legal disputes with music platforms that it previously licensed songs from, contract claims from former employees and business partners, and a dispute over rent payments to the company it leased office space from. AGBA wrote that Triller "may not be able to generate sufficient cash flow to meet its current and any future debt service and other obligations, including amounts owed pursuant to new and ongoing litigation matters."A spokesperson for AGBA did not provide comment by time of publication. Triller did not reply to Business Insider's request for comment.</li></ul>

Triller is finally a public company after years of false starts. Here's its pitch to investors.

<ul class="summary-list"><li>Private equity-owned companies are issuing a lot of debt to take advantage of low borrowing costs. </li><li>Private equity companies are using proceeds to pay themselves and their investors, <a href="https://www.ft.com/content/956c1f0a-bb53-4982-9c07-b839f3446c2c" target="_blank" rel="noopener">the FT reported.</a></li></ul>Private equity companies, faced with a weak market for initial public offerings and lower borrowing costs, are loading their portfolio companies with more debt to pay themselves and their investors. <a href="https://www.ft.com/content/956c1f0a-bb53-4982-9c07-b839f3446c2c" target="_blank" rel="noopener">The Financial Times reported</a> on Monday that private equity firms are tapping the debt market at a blistering pace in order to fund dividend payments so far this year. Citing data from PitchBook, the report says that companies issued $8.1 billion of high-yield loans to fund payments to investors last month, six times the amount sold in December. Most of that amount was sold by companies that are owned by private equity. The moves are powered by a drop in borrowing costs in recent months, pushing PE firms to hit the debt market to satisfy the demands of their investors and return some cash to shareholders. The strong pace of so-called dividend recapitalizations has occurred amid sluggish demand for new IPOs, which are often used as a strategy for PE firms to exit their investments and pay back investors. The FT cited debt deals from companies owned by firms including Blackstone, KKR, and Warburg Pincus that were used to fund dividend payments to the PE companies and refinance higher-cost debt. Previously, a <a href="https://markets.businessinsider.com/news/stocks/kkr-kravis-private-equity-inflation-rates-recession-economy-israel-ukraine-2024-1?_gl=1*ty0yi8*_ga*ODAxNTgzMjcxLjE3MDU5NTE2MDY.*_ga_E21CV80ZCZ*MTcwNzE0NjE5MC43NS4xLjE3MDcxNTgzMzQuMzUuMC4w">challenging economic outlook</a> and high interest rates made such moves difficult. Now, with more favorable borrowing costs as debt markets begin to price in rate cuts from the Federal Reserve and as investors see the economy on solid footing, more companies are tapping the debt market to issue loans and bonds.Total high-yield loan issuance was $65 billion in January, the highest amount since September. Meanwhile, investment grade bond issuance hit $180 billion last month, a record total for January, the FT said.

Companies are issuing tons of debt to pay their private equity owners and their investors

<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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