00:00 Speaker A
Kyle, thank you so much. Tell me a little bit more about AI and what we're seeing with AI. What will the IPO landscape look like heading into 2026?
00:15 kyle
Indeed, it is. I mean, I think it's going to be very difficult to go into that because I think there's a lot going on with AI, but what we've really seen from investors is that they're not really trying to touch on anything other than AI. 40% of transactions this year in 2025 were AI transactions. Well, 65% of the invested capital was invested in AI companies. Clearly, open AI and humanity are really driving these numbers up. But the market has moved from like your SAS Well-based investment theory to AI, right? So AI will no longer be this singular sector again. It will be in life sciences, fintech and enterprise SAS. Now it's everywhere. I think the more that expands, the more companies that aren't leveraging AI as a fundamental business story are going to have a really hard time raising capital, right? And you talked about, you know, the growth of public markets powered by AI. As you know, GDP growth is starting to accelerate through the third quarter thanks to AI. So I think 2026 will be a very fast investment environment for AI companies and VCs, and a very robust market for venture capital overall.
01:31 Speaker A
Kyle, when I look at some of your research, you mention the quality gap in the market. So, for example, what are the characteristics of winners who are raising large rounds and preparing for an exit versus those who may be delayed or struggling?
01:50 kyle
Isn't that true? ARR You've probably heard a lot about ARR these days. Well, there are some AI companies that are probably two to three years old that are driving significant growth in ARR numbers. So what used to be raising a Series A with an ARR number of 1 million is now going to be much higher. Therefore, the KPIs these companies are trying to achieve and the benchmarks they need to meet before receiving investment are very high. right? We're seeing very strong investment up to Series A. Once you get to Series B, you see this kind of cliff start to form and companies start to accelerate growth there, raise very large rounds, get market growth capital, and struggling companies struggle to raise money. So the benchmark was higher in 2022, but it's even higher now thanks to AI, and it's kind of supercharged.
02:51 Speaker A
And one sector that has seen a lot of IPOs this year is cryptocurrencies and the broader fintech space. For example, Circle's IPO happened right around the time the Genius Act was passed. So, are these IPO windows consistent with policies and regulations? If so, which sectors and companies will benefit from those policies and regulations being introduced in 2026?
03:19 kyle
Well, I think it's not just cryptocurrencies. Many IPOs have been held in 2025, and it is expected that the same level will be maintained in 2026 according to this management policy. There are cryptocurrencies, AI, defense companies, and space companies going public. Well, everything follows the path laid out by the Trump administration, right? Obviously, cryptocurrencies were a great investment in 2017, 2018, and even 2020. Now we have regulations that are starting to come and help strengthen that floor. When it comes to cryptocurrencies, I think we're starting to see companies like Circle go public. You know, I think AI is going to be where we're going to be looking next year. Also, defense technology companies and companies like Allspace and SpaceX are clearly talking about IPOs in 2026, and we believe these companies will follow the Trump administration's policies and receive the tailwinds that those policies will bring. Isn't it life science that is going to be a headwind? We have seen life sciences enter a very challenging period in 2025. I think everything from early-stage funding to potential price caps will impact future expectations and future revenue expectations. So the life sciences industry has had a very difficult year this year and will probably have a similar year next year.
04:47 Speaker A
And what about hard-to-reach IPOs, or mega-unicorns, that can reach hundreds of billions of dollars? So which companies do you think have potential next year that are high on that list?
05:05 kyle
I mean, it's hard to say, right? Obviously, there's SpaceX, which has announced that it's ready for an IPO. Well, Stripe and Databricks have been a little less positive about their IPO plans. Well, those are probably all possibilities, but I think it's going to be SpaceX, you know, we should obviously, you know, expect that. However, I think it is possible that none of these companies will go public. So SpaceX may have seemingly unlimited funds to raise in the private market, just with databricks, space, and, uh, Stripe. So whether you need $2 billion or $3 billion for growth or $10 billion to provide liquidity for early investors or employees. I think that's still there in the civilian market. Therefore, there is no significant incentive for these companies to list on this market.
06:05 Speaker A
If SpaceX goes public, it will get a lot of attention. There's a lot of interest in that. Thank you so much, Kyle, and have a great holiday.
