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From Illiquidity Premiums to India’s Space Boom
The illiquidity premium and the default rates in private credit, Canada’s late stage venture capital problem, and India’s $1.1B space tech unicorn.
Good morning, ! This week we're covering the illiquidity premium and the default rates in private credit, Canada’s late stage venture capital problem, and India’s $1.1B space tech unicorn.
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MICROSURVEY
How do you see the financing landscape evolving over the next 2–3 years? |
PRIVATE CREDIT CORNER
The Illiquidity Premium Comes With Default Risk Now
The latest data shows private credit default rates are now approaching levels seen in the broader speculative grade market, with defaults in credit rated portfolios rising toward 8% on a trailing basis. At the same time, the sector has ballooned to roughly $1.5T to $2.0T globally, according to the FSB, while banks still maintain an estimated $220B to $500B of exposure through credit lines and financing relationships.
That matters because the real risk is no longer isolated borrower stress. It is interconnected leverage. Many private credit borrowers already carry higher leverage and weaker credit quality than comparable public issuers, while valuation opacity and payment in kind structures continue masking deterioration beneath the surface.
The irony is hard to miss. Private credit was built to avoid public market volatility. Now regulators are warning that the combination of concentrated sector exposure, opaque marks, and layered financing structures could amplify the next downturn instead of cushioning it.
Bottom line: private credit is evolving from a niche yield product into systemically relevant infrastructure. That changes the underwriting game entirely. (More)
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REGIONAL FOCUS
Canada’s Growth Capital Gap
Canada’s venture market has a late stage problem. In Q1 2026, growth stage VC investment fell to just one deal worth about $1 million, while total VC activity reached $936 million across 104 deals, the lowest quarterly deal count since 2017.
That vacuum is pushing some companies toward public markets earlier than planned. Xanadu raised $302 million through its Nasdaq and TSX IPO because waiting for private capital became a competitive risk, not a preference.
The PE side looks healthier on paper, with $3.82 billion invested across 138 deals, but the geography is lopsided. Quebec accounted for 65% of deals and 93% of capital, driven largely by pension fund activity. Ontario produced just 15 deals worth $52 million.
For sponsors, the signal is clear. Canada has promising companies, but scale capital remains uneven. The opportunity sits with investors willing to underwrite growth before foreign capital or public markets set the terms. (More)
DEAL OF THE WEEK
India’s Space Race Just Became Investable
Skyroot Aerospace just became India’s first $1.1B space tech unicorn after raising $60M from GIC, Sherpalo Ventures, and BlackRock. For private markets, the headline is not the valuation. It is the cap table.
When sovereign wealth, institutional asset managers, and one of Silicon Valley’s earliest Google backers all converge on a rocket company in Hyderabad, the signal travels far beyond aerospace. This is global capital underwriting India’s transition from outsourced engineering hub to strategic deep tech power.
Skyroot already launched India’s first privately developed rocket in 2022 and is preparing the debut of Vikram 1, the country’s first privately built orbital launch vehicle. The timing matters. India opened ISRO infrastructure to private companies only five years ago. Now institutional capital is moving in before the ecosystem fully matures.
For growth investors, the playbook resembles early commercial space investing in the US: infrastructure first, monetization later. Launch capability remains one of the rarest industrial assets on earth. Few countries control it. Even fewer private companies do.
The broader takeaway: deep tech is no longer a Silicon Valley monopoly. Institutional capital is increasingly hunting frontier infrastructure wherever engineering talent, government alignment, and geopolitical relevance intersect. (More)
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