Good morning, {{first_name}}! This week we're covering the AI IPO conundrum, PE distributions recovering, pricing power in diligence, and US growth resilience showcase. 

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DATA DIVE

Stat: Only 24% of U.S. technology IPOs in 2025 were profitable on trailing earnings, down from 44% in 2004. At the same time, the median tech IPO offer price to sales multiple reached 11.8x, versus 6.4x in 2004.

Context: AI is pushing that valuation gap even further. OpenAI generated $13.07 billion of revenue in 2025 against $34 billion of costs and expenses, producing a $20.92 billion operating loss, yet completed private financing at an $852 billion valuation in early 2026. Meanwhile, venture LP cash flows have been negative by roughly $197 billion since 2022, creating a powerful incentive to turn paper gains into actual distributions.

Strategic Takeaway: The next AI IPO cycle may be as much a liquidity event for private investors as a capital raising event for issuers. For PE and growth investors, the key question is no longer whether AI deserves premium valuations. It is whether public markets can absorb private market pricing before profitability catches up.

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TREND TO WATCH

Private equity distributions have been moving in the right direction, rising from $324B in 2023 to $435B in 2024 and $489B in 2025. The problem is that capital calls have kept pace. Contributions reached $487B in 2024 and $491B in 2025, leaving the industry essentially cash flow neutral last year.

That is a major change from 2021, when distributions of $715B exceeded contributions of $677B. Since then, every full year has produced negative net cash flow for investors.

The early 2026 picture offers little relief. Distributions stand at $211B versus $228B of contributions, keeping net cash flow slightly negative.

For GPs, the implication is straightforward. More exits alone will not solve the liquidity problem if fresh capital continues moving back into funds at roughly the same rate. For LPs, allocation pressure can persist even as headline exit activity improves.

The exit market may be reopening. The cash flow cycle has not turned yet. (More)

You may not have gotten into SpaceX early, but the space-investing story is far from over.

Record launches, falling costs, government contracts and new technologies are turning space into a commercial market. That growth is creating opportunities across satellites, defense, communications, data and in-space infrastructure.

This free report 7 Best Space Stocks to Own in 2026 reveals seven publicly traded companies positioned across this expanding economy. It explains how each business makes money, what could move its stock and which risks investors should understand.

SpaceX captured Wall Street’s attention. Now see which seven space stocks could benefit from what comes next.

See the 7 Stocks

Stat: Lufthansa’s internally developed pricing system delivered a 2.3% revenue uplift. After implementing PROS Request Specific Pricing, that uplift reached 5.2%, excluding additional gains from continuous pricing.

Context: The breakthrough was not simply a better algorithm. Lufthansa separated two problems that airlines traditionally solve together: valuing scarce seat capacity and estimating what an individual traveler is willing to pay. Capacity models still manage demand forecasts and bid prices, while AI focuses on shopping context, preferences and price sensitivity. The two systems reconnect only when Lufthansa makes the final offer decision.

Strategic Takeaway: The lesson for sponsors is architectural. AI may create more value when companies decompose complex commercial decisions rather than automate the entire process. Lufthansa applied machine learning precisely where prediction could improve monetization, then expanded the same logic into ancillary pricing. The result is AI tied directly to revenue, not just efficiency.

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DILIGENCE CORNER BY 150 DILIGENCE

Pricing power is one of the easiest assumptions to overstate in diligence.

A company may raise prices every year and still have very little control over what customers ultimately pay. In many business models, price is determined elsewhere: by input costs, dominant customers, commodity indexes, auctions, market clearing mechanisms, or platform rules. That distinction matters because the underwriting risk changes completely.

The key diligence question is not simply whether prices have increased. It is: what variable ultimately determines price per unit?

Map that mechanism explicitly. Is pricing negotiated? Indexed? Algorithmic? Driven by the marginal cost of supply? Then link EBITDA directly to the underlying price driver and test where profitability begins to deteriorate.

A business with real pricing power can protect margins through execution. A business with externally determined pricing is effectively underwriting someone else’s variable.

MACROVIEW

US growth is proving more resilient than the rate market expected. Second quarter GDP growth was revised from 1.5% to 2.2%, while underlying domestic private sector demand expanded at 4.6%. At the same time, inflation has stopped accelerating, with core PCE holding at 3.0% in August.

The problem is that bond markets are not translating softer inflation into cheaper capital.

The ten year Treasury yield has moved above 5.3%, with much of the increase coming from real yields rather than inflation expectations. For sponsors, that means acquisition financing, refinancing, and exit multiples can remain under pressure even if the Fed stays put.

Consumers offer another warning. Real disposable income was flat in August while real spending rose 0.6%, pushing the saving rate from 4.6% to 4.1%. Meanwhile, September payroll growth slowed to just 29,000 jobs.

For PE, the message is uncomfortable but useful. Economic growth remains strong enough to keep capital expensive, while household fundamentals are weakening beneath the surface. Underwriting should assume elevated financing costs and less room for consumers to absorb further pressure. (More)