Category: Markets

Every venture investor tells their portfolio companies that they’re more than just a check. They help with introductions, they help with recruiting, and they help with going public. Some have even been operators themselves and encountered the same problems as their startup founders. But how many full-time VCs can boast that they helped build the biggest tech companies in the world? 

There’s Marc Andreessen, of course, and Peter Thiel and Vinod Khosla. David Fischer, a partner at 01 Advisors, may not yet have the same name recognition, though he served as a vice president of sales at Google and then chief revenue officer at Facebook as both companies burst out of the stratosphere. And for founders hoping to scale their companies from zero to one in this era of hyper-speed, Fischer’s background may make him as valuable as the giants of Sand Hill Road. 

I met with Fischer this spring in 01A’s New York office, which is in the same Lower Manhattan building that houses Union Square Ventures and Inspired Capital. Even before Fischer joined the VC ranks during the pandemic, he took a circuitous route into tech. He worked briefly as a journalist before a stint at the Treasury Department for Larry Summers, which is where he met his future boss at Google and Facebook, Sheryl Sandberg. (Fischer’s father, the famed economist and central banker Stanley Fischer, recently passed away.) 

After attending Stanford Business School, Fischer entered Silicon Valley at a transformative time for the tech sector, joining Google in 2002 right after it launched AdWords and was beginning to bring in revenue. He spent eight years at the search giant before Facebook hired him to pull off the same feat. When Fischer started, Facebook had about 1,200 employees, $750 million in revenue, and had yet to wade into mobile. Its acquisition of Instagram and IPO were still two years away. “Ads were a little bit of an afterthought,” Fischer tells me. When he left in 2021, Facebook’s revenue had topped $100 billion. 

So, where do you go next? Fischer may not have been in the first 10 or 100 employees at either tech behemoth, but he had experienced the addictive period when a company goes from product-market fit to market domination—and in the case of Google and Facebook, world domination. “I always like to take what I’ve learned before and bring it to do something real and rewarding,” Fischer says. 

He began to channel that into investing, first as an angel and then connecting with two friends who had started their own firm. Fischer isn’t the only former operator at 01A—the firm was founded by former Twitter CEO Dick Costolo, as well as Fischer’s one-time counterpart at Twitter in the CRO role, Adam Bain. Fischer joined full-time for 01A’s third fund, a $395 million vehicle it launched in October 2023. 

At a time when many VC firms are either looking for early or late-stage investments, 01A takes a more down-the-middle approach, mostly writing Series B checks of about $15 million. It’s not quite the stage that Fischer joined Google and Facebook, or Costolo and Bain joined Twitter, but it’s still that same sweet spot where a company has a viable product but needs to figure out how to sell it. “That’s the time you actually need some counsel from some folks who ideally have done this before,” Fischer tells me. 01A helps with those key questions, from transitioning from founder-led sales to a real sales operation to building out the executive team to sizing up the competitive landscape. “Sometimes it’s just talking it through,” Fischer adds. “Being a founder is incredibly solitary.” 

01A funds a variety of verticals, though only one startup in the advertising and marketing tech space, which may seem surprising given the background of its partners—a San Francisco-based company called Haus, founded by a former Google employee, that helps companies quantify the effectiveness of their marketing. 01A led a $20 million investment into the company last year after Insight Partners backed an earlier round. 

The firm’s partners may have helped lead three of the fastest-growing companies in Silicon Valley history, but Fischer acknowledged that the rise of AI is creating a new ballgame. He’ll sit through a pitch now where the founder puts a chart on the screen showing that their annual recurring revenue is going from zero to $10 million faster than Apple, Google, and Meta. “That’s amazing,” Fischer says. “The only problem with it is, I’ve had four other people this month put the same chart up, and two of them are your competitors.” 

Still, he thinks that while revenue timeframes may be accelerated, that’s the same for everyone. In other words, there will still only be a few winners per category—the competition is just able to grow faster. Having a head start doesn’t mean much anymore. “Before we make an investment, we have to really have conviction that this is a company that can win,” Fischer says. 

ICYMI…I had the exclusive this morning on flexible labor platform WorkWhile’s $23 million Series B. Read the full story here. —Allie Garfinkle

Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com

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This story was originally featured on Fortune.com

• Stock futures were mixed on Sunday as investors weighed the impact of the escalating Israel-Iran conflict that shows no signs of any potential off-ramps ahead. Oil prices jumped after Israel attack key areas of Iran’s energy infrastructure over the weekend, while Tehran said closing off the Strait of Hormuz was under serious consideration. Fed policymakers will meet in the coming week.

U.S. stocks signaled some weakness on Sunday night as futures tumbled and oil prices jumped amid the escalating Israel-Iran conflict that shows no signs of any potential off-ramps ahead.

Stocks sold off sharply on Friday after Israel launched an air campaign that struck Iran’s top military leadership, nuclear facilities, and bases around the country.

Over the weekend, both sides continued their bombardments with key areas of Iran’s energy infrastructure increasingly targeted. That includes oil refineries, fuel depots, and a massive natural gas field.

Futures for the Dow Jones Industrial Average fell 31 points, or 0.1%. S&P 500 futures were flat, and Nasdaq futures also edged up 0.1%.

U.S. oil prices jumped 2% to $74.50 per barrel, and Brent crude also shot up 2% to $75.77. That’s after oil soared 7% on Friday as markets reacted to the early stages of the Israel-Iran conflict.

An Iranian lawmaker said over the weekend that closure of the Strait of Hormuz, a critical chokepoint in the global energy trade, was under serious consideration. The equivalent of 21% of global petroleum liquids consumption, or about 21 million barrels per day, flows through the strait.

In a note on Saturday, George Saravelos, head of FX research at Deutsche Bank, estimated that the worst-case scenario of a complete disruption to Iranian oil supplies and a closure of the Strait of Hormuz could send oil price above $120 per barrel.

The yield on the 10-year Treasury slipped 1.7 basis points to 4.407%. The dollar fell 0.12% against the euro and 0.26% against the yen. Gold rose 0.47% to $3,468.10 per ounce.

Surging oil prices reignited inflation fears, just as consumer price data was showing more signs that President Donald Trump’s tariffs were having minimal impact so far.

That put upward pressure on the 10-year yield on Friday as hopes for rate cuts from the Federal Reserve later this year dimmed.

Inflation, tariffs, and the volatile geopolitical landscape will be top of mind when Fed policymakers are due to meet this Tuesday and Wednesday.

While they aren’t expected to adjust rates, they will release a fresh set of forecasts for future rates and economic indicators. Chairman Jerome Powell will also hold a press briefing on Wednesday afternoon.

This story was originally featured on Fortune.com

• The secondary market for private equity stakes is booming as buyers are eager to snap up assets being shed by investors. There’s reason to believe Harvard, Yale, and other elite institutions might be getting a good deal, even as they sell their holdings at a discount to current valuations. 

Some of the country’s most elite institutions are offloading parts of their private equity portfolios. As funds take longer to return money to investors, Harvard and Yale are selling at a discount with endowments looking for more liquidity and flexibility amid economic turbulence.

But both sides of such deals can make surprising gains. 

This portfolio maintenance doesn’t appear linked to President Donald Trump’s attack on university finances, including a possible tax hike on endowments. Industry skeptics think these sales, however, highlight growing concerns that returns in the opaque world of private equity aren’t always all they’re cracked up to be.

“With elite universities’ private equity investments on the auction block, the big reveal is coming,” Nir Kaissar, founder of asset management firm Unison Advisors, wrote in a Bloomberg opinion column on Thursday.

University endowments typically make for ideal investors in alternative assets—with virtually infinite investment horizons, they can ride out wild gyrations in the public markets by locking up billions of dollars over several years. 

On its face, that move has been a no-brainer. As Kaissar noted, Bloomberg’s weighted index of U.S. PE funds returned 9.4% year over year from 2007 to 2024. The index’s annualized standard deviation, a common measure of volatility, was just 7.2%.

The S&P 500 gained 10.5% in that span with a standard deviation of 16.8%, a much worse return on a risk-adjusted basis.

These numbers, however, may not reflect the underlying picture. Unlike stocks trading on public exchanges, the prices of private assets don’t change based on the whims of investors day-to-day.

Instead, valuations of most private companies, real estate properties, and other assets PE firms hold are typically based on subjective assumptions that don’t fluctuate like public equity markets do, Tim McGlinn, an investment veteran and former adjunct finance professor at Seton Hall, told Fortune.

“There’s nothing intrinsically wrong with that,” said McGlinn, who blogs about the alternatives industry at TheAltView.net. 

But when investors or prospective investors believe the holdings can actually be sold at those prices, “that’s when things become problematic.”

Ultimately, private equity firms make money for investors by exiting their investments, when they attempt to turn notional valuations on paper into cash. Therefore, there must be some correlation between the performance of public and private assets, said Jason Reed, a finance professor at the University of Notre Dame.

“If the market’s doing really well broadly, well then you’re going to have lots of opportunities for businesses to buy your company, other private equity companies to buy your company, to take them public and IPO them,” he told Fortune. “But if the economy is not doing great, businesses are struggling, then you’re not going to have as many opportunities overall to sell.”

Harvard and Yale sell PE stakes

Billionaire hedge fund owner Bill Ackman, a Harvard alumnus, has claimed his alma mater’s $53 billion endowment, almost 40% of which is allocated to private equity, is significantly overstated.

“I believe that a substantial part of the reason why many private assets remain private despite the stock market near all-time highs is that the public market will value private assets at lower values than they are being carried at privately,” Ackman, the CEO of Pershing Square Capital, wrote in a social media post last month.

The Harvard Management Company, which oversees the university’s endowment, declined to comment. It recently agreed to sell roughly $1 billion of its PE stakes, following a similar move in the summer of 2021. That came at a time of “significant ebullience,” the university noted in its 2022 financial report, allowing the school to avoid discounts the funds would have faced just over a year later.

Yale, meanwhile, is negotiating a nearly $3 billion sale of private equity holdings at a discount of less than 10%, a spokesperson for the Yale Investments Office told the school’s newspaper. The university pioneered the institutional push into alternative assets, with 95% of its $41 billion endowment allocated to growth-oriented assets like PE, venture capital, real assets, and global equities.

“Following a months-long review, the University is in process to sell select private equity fund interests,” Yale said in a statement to Fortune. “Private equity remains a core element of our investment strategy, and we continue to commit significant capital to our existing world-class partners, while pursuing new private equity opportunities to support the long-term growth of the Endowment.”

This doesn’t appear to be a distressed sale, McGlinn said, but the deal is otherwise hard to evaluate. More mature funds trade very differently than newer ones, and various positions are typically packaged together in these types of transactions.

“Yale being Yale, you can assume they’re getting the best price they can,” McGlinn said.

Buyers juice returns with ‘NAV squeezing’

Still, investors in PE funds, known as “limited partners,” sold their stakes at an average discount of 11% compared to the net asset value, or NAV, of these holdings on their balance sheets, according to Jeffries.

It may seem odd that universities are looking to sell when valuations are likely down across the board this year as borrowing costs remain elevated. But demand in the secondary market is booming. Secondary sales increased 45% to $162 billion last year, per Jeffries.

As a result, Yale, Harvard, and other universities could take much less of a haircut than they might have feared while also booking gains on their initial stakes.

That’s because there is reason to believe many buyers are willing to overpay, McGlinn said. Regardless of what secondary funds dish out to acquire these stakes, he explained, they are allowed to then mark these investments up to the old net asset value. 

McGlinn calls this process “NAV squeezing.” As The Wall Street Journal reported last year, it can result in one-day windfalls of 1,000% or more, gains that McGlinn said secondary funds report as real returns.

“It makes your brain melt,” he said.

Comparing NAV squeezing to a Ponzi scheme might go too far, said Jeffrey Hooke, a senior lecturer in finance at Johns Hopkins Carey Business School and a longtime critic of PE. But he agrees it looks quite shaky, even if the technique is permissible according to generally accepted accounting principles, or GAAP.

“It’s almost like a full wash and rinse cycle,” said Hooke, formerly the principal investment officer of the World Bank’s International Finance Corporation.

Universities, of course, get to be on the other side of these deals. Even though they are selling their PE stakes at a discount to NAV, they could be getting more than the capital they had committed to those investments up until this point. 

In other words, endowments might still be escaping with a profit.

This story was originally featured on Fortune.com

• After Israel decimated Iran’s military in its initial wave of air strikes, reports on Saturday indicated Iranian energy infrastructure was under attack. Meanwhile, Tehran warned that closing the Strait of Hormuz, a critical chokepoint in the global energy trade, was under consideration. Oil prices spiked on Friday, and escalation of the Israel-Iran conflict could send them higher.

The Israel-Iran conflict is poised to include economic targets as both sides seek leverage in the rapidly escalating series of attacks.

After Israel decimated Iran’s military in its initial wave of air strikes, reports on Saturday indicated Iranian energy infrastructure was under attack. That includes the Pars South gas field, considered to the world’s largest reservoir of natural gas, as well as oil refineries.

That comes as Israeli Prime Minister Benjamin Netanyahu warned on Saturday that, “We will strike every site and every target of the ayatollahs’ regime,” after he earlier urged the Iranian people to overthrow their government.

On Friday, Israel’s defense minister said Iran crossed “red lines” by launching its missiles at civilian areas as part of its retaliatory attacks.

Former Deputy Secretary of State Wendy Sherman told Bloomberg TV that she believed that’s a signal Israel will target Iran’s oil and economic infrastructure.

Meanwhile, Tehran’s retaliation could similarly extend into energy markets. Despite Iran launching hundreds of missiles and drones at Israel, analysts have noted that it has few viable military options and its overall capabilities have been severely degraded by Israel.

An Iranian lawmaker said closure of the Strait of Hormuz, a critical chokepoint in the global energy trade, was under serious consideration. The equivalent of 21% of global petroleum liquids consumption, or about 21 million barrels per day, flows through the strait.

That could spike oil prices even higher after they jumped 7% on Friday to more than $70 a barrel as markets reacted to the early stages of the Israel-Iran conflict.

In a note on Saturday, George Saravelos, head of FX research at Deutsche Bank, estimated that the worst-case scenario of a complete disruption to Iranian oil supplies and a closure of the Strait of Hormuz could send oil price above $120 per barrel.

Such a closure might entail use of mines, patrol boats, aircraft, cruise missiles and diesel submarines, while clearing the strait could take weeks or months.

“Given the significant global implication of such a closure, we believe that potential closure of the Strait is likely to be kept as last resort leverage and only to be considered in extremis,” Saravelos added. 

In a column in Foreign Affairs magazine on Friday, Kenneth Pollack, a former CIA Persian Gulf military analyst and former director for Persian Gulf Affairs at the National Security Council, said there’s a low likelihood Iran would close the strait.

That’s because Iran would quickly go from a “sympathetic victim to a dangerous nemesis in the eyes of most other countries,” while Western countries and perhaps even China would use force to reopen the strait, he predicted.

“And Tehran would have to worry that such a reckless threat to the world’s economies would convince Washington that the Iranian regime had to be removed,” Pollack added. “That fear is surely greater with U.S. President Donald Trump—who ordered the death of Iranian general Qassem Soleimani in January 2020—back in office.”

This story was originally featured on Fortune.com

Greetings, Term Sheeters. This is finance reporter Luisa Beltran, subbing for Allie.

Chime Financial waited years to go public and ended its first day of trading on Thursday with a $16.1 billion valuation. That’s 36% lower than the $25 billion valuation Chime snagged in 2021, when it was a buzzy fintech unicorn. 

Still, the Chime IPO is being celebrated as a win for the company—and more importantly, as a clear signal that the public equities market has cracked open for new issues, especially those in the fintech category.

Dan Dolev, a senior analyst in fintech equity research at Mizuho Securities, said the IPO market is open for fintechs. “There is a lot of thirst for fintech IPOs. If you are going to do a fintech IPO, this is the Chime,” Dolev quipped. 

Shares of Chime opened Thursday at $43, up 59% from its $27 offer price. The stock soared to an intraday high of $44.94 before losing momentum, closing at $37.11.

Shawn Carolan, a partner at Menlo Ventures who led the venture firm’s investment in Chime, said he was proud of the fintech’s performance. “Any time you price above the range and trade up, it’s a good day,” Carolan said.

Menlo Ventures, along with Chime’s management, are not selling shares in the IPO. “The companies that are good you want to hold on to,” he said.

Founded in 2012, Chime offers traditional financial services, like fee-free checking and savings accounts, to lower income U.S. consumers that earn up to $100,000 a year. The startup had 8.6 million active members as of March 31, with two-thirds relying on Chime as their primary bank, according to a regulatory filing. Roughly 70% of its members use Chime to buy food, groceries, gas, and utilities.

Chime is building a generational financial services company, said COO Mark Troughton, who spoke to Fortune from the Nasdaq. “We knew from day one that we wanted to be public. It’s time to execute in the public market,” he said.

Chime is one of several companies, including eToro, Hinge Health, and MNTN, that have recently delivered strong debuts. Many have retained those gains in the aftermarket. But it’s the breakout performance of crypto firm Circle that renewed investor appetite for high growth tech companies. Last week, Circle rocketed 168% in its debut on the New York Stock Exchange after raising $1.05 billion with its IPO. Circle’s stock continued to gain in later trading sessions and is currently up 243% from its $31 offer price.

Chime’s more modest first-day pop came after the neobank raised $864 million late Wednesday. The fintech sold 32 million shares at $27 each, $1 above its $24 to $26 price range. Of the 32 million shares, about 6.1 million are coming from shareholders while the company is providing the rest.

Chime could’ve gone public “way earlier” but had to wait for the markets to settle down for the IPO window to open, Menlo Ventures’ Carolan said. IPOs have largely been on hold since the go-go days of 2021, when 397 companies went public using a traditional IPO. But their dismal performance, roughly 80% of the Class of 2021 are still trading below their offer price, cast a pall on new issues. Since late 2021, the number of IPOs has slowed down significantly.

Carolan thinks the IPO market is open for great companies. Strong companies like Chime can go public in any market, he said. “It remains to be seen if the market is receptive to much smaller companies that are less profitable or growing slower,” he said.

See you Monday,

Luisa Beltran
X: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

This story was originally featured on Fortune.com

Aydin Senkut got 50 nos before he heard one yes. 

“I thought I was never going to raise that fund,” said Senkut. “I had my first son coming, and it was a really tough time…. So, when I heard that first ‘yes,’ I thought it was a miracle.”

The year was 2009, and Aydin Senkut—a Turkish immigrant who’d first arrived in Silicon Valley in 1995—had been investing since he left Google in 2005, where he’d been the company’s first product manager and was official employee number 63. He wanted to prove he wasn’t just lucky, but that he could engineer luck, both for himself and for others. Determined to build something from scratch like his entrepreneurial parents, Senkut in 2006 launched Felicis Ventures, a firm named after the Latin word for “good fortune.” His fortune wasn’t very good at first, as he tells it—rejected by former Google colleagues almost unanimously, he forged ahead fundraising, drowning in nos. That first institutional fundraise, finally, pulled together $41 million, with early backers like Peter Thiel and Marc Andreessen. At a moment when little else was in his control, Senkut focused on what he could: his business card.

“I was so into details, like Steve Jobs,” laughed Senkut, founder and managing partner of Felicis. “I literally found this specific printing shop in South San Francisco. They were the only ones that took heavy card stock and embossed business cards.”

He still keeps that card—it’s even got a QR code that to this day, links back to his contact information. Now, three logos, nearly 20 years, and nine funds later: Felicis has raised its tenth fund at $900 million, the firm’s largest to date, Fortune can exclusively report. It comes two years after the firm announced its ninth fund of $825 million in 2023, and the size of the 35-person team has remained consistent since. The firm’s current portfolio includes Notion, Plaid, and Canva, along with AI startups like Supabase, Mercor, Runway, Poolside, Revel, and Skild AI. Credit Karma, Adyen, Shopify, and Weights & Biases are some of Felicis’s key exits over the years. But Senkut remains acutely attuned to the version of himself that was rejected by dozens of other VCs and LPs at the very beginning.

“You can do one of two things,” he said. “You can either admit defeat, let people put you in a box, like you’re a loser. Or you can take that and say ‘No, I’m not a loser.’ And the way to show them they’re wrong is that you have to pull magic tricks out of nowhere… That’s why there will never be a victory lap.” 

Senkut is often described as being in “founder mode”—a term originated via Brian Chesky and Paul Graham to describe a relentless, hands-on leadership style. That ethos carries through in how Felicis engages with startups: the firm includes a unique clause in its term sheets promising never to vote against a founder, contractually aligning itself with the entrepreneur.

“We kept saying we were founder-friendly,” said Senkut. “One of our founders was like: What the hell does that even mean? Just commit. So, it’s now in our term sheet.”

I tell Senkut that I could easily see that going wrong, and he doesn’t flinch. 

“It could go really wrong,” he said. “We’ve made hundreds of investments and there were only two in the history of Felicis where things have gone drastically wrong. But you can’t be successful on fear. You’ll only be successful on the companies that work out… That’s the most misunderstood aspect of venture. People think we sit at a table, eliminating risk. And no, actually—you’re taking it on. You’re running into the risk. It’s like F1. One driver says, ‘I can crash, but that’s what it’s gonna take to cut another 0.01 second and get over the finish line first.’ That’s the mindset.”

Felicis was notably active during the ZIRP (zero-interest rate policy) era, when markets were frothy and valuations were especially high. According to prior TechCrunch reporting, Felicis funded 50% more deals in 2022 than in 2021. Senkut isn’t worried how that might shake out—that’s part of the race, too.

“If you’re not active, you’re actually going backwards,” he told Fortune. “We can’t say that we’ll just sit it out for a while: Nobody’s going to care about you in nine months. So we never stop investing… The big fabric that people are missing is this: The only thing that matters in this business is not the stages, ownership, whatever. It’s all about how you look after you invest. Is there a hockey stick growth?”

One of the most dramatic growth stories in AI right now is recruiting startup Mercor, which raised a $100 million Series B led by Felicis in February. Mercor CEO and cofounder Brendan Foody wasn’t planning to raise at the time—but when Felicis invited him and his cofounders to race Ferraris in Las Vegas, he figured, “why not?”

“They’ve got incredible hustle—like very few other firms,” Foody told Fortune. “They asked what valuation we thought made sense, we gave them a range of $1 billion to $2 billion, and they went straight to the top. We closed the deal.”

Foody sees Felicis as uniquely poised to help Mercor—whose revenue surpassed $75 million over about two years—in its next phase of growth, citing the firm’s deep understanding of frontier AI research and hiring help. Felicis managing partner Sundeep Peechu and partner James Detweiler have been taking calls with “almost every candidate” as Mercor has been hiring, Foody said. The firm doesn’t disclose ownership, but told Fortune it varies—Mercor was the largest check of Felicis’s last fund at $50 million, while the smallest was $100,000. 

Supporting these types of AI companies is key to Felicis’s future and, to this end, the firm this year hired OpenAI’s Peter Deng as a general partner. (Deng was a consumer VP leading the team working on ChatGPT.) Katie Reister, Felicis managing director and GP of fund of funds investing, said that Felicis is actively making choices to stay competitive in a venture space that, over the last two decades, has become more ferociously competitive.

“We’re constantly evolving what our platform looks like, and does it match the game that’s being played today,” said Reister, who was a Felicis LP herself for seven years while an SVB director. “I actually don’t like to think of venture as gambling, so that’s not the association I’m making. I think of it as getting to play a game over and over, but the game changes every time. How do you keep winning? You have to constantly change. You have to be aware of that, recognize that ego doesn’t matter. The fact you’ve won before doesn’t matter.”

To win, Felicis is ultimately looking to underwrite without reservation, going all-in, come what may. Data bears this out: In fund nine, 94% of Felicis’s investments were at the seed or Series A stage, and 87% of the capital deployed went into rounds where the firm led or co-led. They expect a similar breakdown for fund ten. When Senkut was raising the first institutional Felicis fund, he heard 50 nos before landing his first yes—from Judith Elsea, managing director at Weathergage Capital.

“Felicis has reinvented itself from a small, scrappy seed stage investor to a large, scrappy multi-stage investor who regularly leads deals,” says Elsea.

While startup investors often catch an “innovation wave” and reap big profits, Elsea wrote Fortune in an email, the VCs who stay relevant are the ones who are already paddling out for the next wave as the first one reaches the beach: “Being a VC investor is hard to do well and particularly hard to do well over long periods of time. Felicis is showing that kind of stamina.”

Senkut goes to waves too, and we talk about the HBO series, The 100 Foot Wave. You have to be ready to wipe out seriously in order to succeed spectacularly.

“If you ask me, like, our biggest fail mode is we need to take more smart risks,” said Senkut. “So, you have to really unwind your brain, like that surfer in Portugal. I used to say we’re wave surfers. But I realized there are too many good surfers, and too many waves. So, now I’m saying we’re tsunami surfers.”

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

This story was originally featured on Fortune.com

Greetings, Term Sheeters. This is finance reporter Luisa Beltran, subbing for Allie.

After Circle’s standout IPO performance last week, all eyes are turning to Chime Financial. The well-known neobank is scheduled to begin trading on Thursday and could benefit from a rush of IPO excitement. 

The company is selling 32 million shares at a price range of $24 to $26, with the final price for the offering to be set on Wednesday. Nearly 26 million of the shares being sold are coming from the company itself, while the rest will come from selling stockholders. Chime will trade Thursday on the Nasdaq under the ticker CHYM.

Founded in 2012, Chime offers traditional financial services, like fee-free checking and savings accounts, to lower income U.S. consumers who earn up to $100,000 a year. The Chime IPO appears to be oversubscribed and has seen investor demand exceeding the number of shares available by more than 10 times, according to Seeking Alpha, which cited a Bloomberg report.

After crawling for more than three years, the IPO market is finally experiencing a rebound, though it’s unclear whether that will last. Several companies, including eToro Group, Hinge Health and MNTN, posted strong debuts in May and each has since remained above its IPO price. The best performance by a newly public company so far this year belongs to AI infrastructure company CoreWeave, despite a less than ideal start. CoreWeave went public in late March, around the time when President Trump announced his “Liberation Day” tariffs, which caused many IPOs and deals to be put on hold. CoreWeave turned in a lackluster first day, with shares closing one penny above its $40 IPO price. Its stock rose in April and really began to gain steam in May. As of late Tuesday, CoreWeave’s shares were up 287% from its $40 IPO price.

Retail investors often get shut out of the IPO market, but CoreWeave shows that there are still opportunities to invest in undervalued companies, said Matt Kennedy, senior IPO strategist at Renaissance Capital, a provider of pre-IPO research that manages two IPO-focused ETFs (NYSE: IPO, IPOS). (Shareholders who bought CoreWeave on March 31, when the stock closed at $37.08, have seen the shares soar more than 317% since then.) “Even in a hot area like AI there can be opportunities that fly under the radar,” he said.

Then there’s crypto firm Circle, which raised $1.05 billion with its IPO. Circle shares rocketed 168% during its June 5 debut. The stock gained during its next two trading sessions but lost ground on Tuesday, with shares falling 8%. Circle is currently up more than 241% from its $31 IPO price.

Circle delivered the “the best first day pop for a $1 billion IPO in our records. That’s quite an achievement,” Kennedy said.

Both CoreWeave and Circle have benefited from a wave of enthusiasm engulfing the IPO market, Kennedy said. He expects that excitement to extend to Chime. The fintech has shown tremendous growth over the last few years and is now turning the corner on profitability, said Kennedy. Chime narrowed its net loss to $25.3 million in 2024, compared to losses of $203.2 million in 2023, and reported net income of nearly $13 million in the first quarter.

FOMO, or fear of missing out, will also help Chime. The fintech has “brand recognition, growth and a lot more people are following the IPO market now than a month ago. Once traders start to see pops are possible that will get people interested,” Kennedy said.

Chime was valued at $25 billion in 2021, the height of the IPO market, but is now chasing an $11 billion valuation, a more than 50% drop. Kennedy thinks Chime could pop. “When excitement builds, you will see people pour into these companies,” he said.

See you tomorrow,

Luisa Beltran
X: @LuisaRBeltran
Email: luisa.beltran@fortune.com
Submit a deal for the Term Sheet newsletter here.

Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

This story was originally featured on Fortune.com

Time is relentless, dwindling, and utterly relative. 

“The Greeks have two words for time,” Ryan Alshak, founder and CEO of Laurel, told me in a Los Angeles conference room in May. “There’s chronos, which is clock time, and kairos, which is your perception.”

Alshak has built his life around time—literally. His startup, Laurel, is designed to map how people spend theirs at work. By connecting with tools like Slack, Microsoft Outlook, and Zoom, Laurel quantifies knowledge work, using AI to help individuals and companies see where time goes—and which tasks and activities deliver the most return. The platform is gaining real traction in time-sensitive industries like law and accounting, with ambitions to redefine productivity even in fields where time isn’t billed by the hour.

“Our entire mission is to return time, and the statistic that underpins that: The average knowledge worker today works nine hours a day, but only adds leverage for three,” Alshak said.

The entrepreneur has a knack for imbuing his timekeeping and work analytics startup with axioms that sound like they might have come from the lips of ancient philosophers. “The finiteness of time is the universe’s ultimate feature, because it forces us to confront the reality that we don’t have infinite minutes,” Alshak says. “So, are we spending it wisely? That’s a highly personal decision. Laurel will never tell people how to spend their time, but we’re going to give you information that helps you make the best decision.”

The pitch seems to be working. Laurel has raised a $100 million Series C led by IVP, Fortune has exclusively learned. GV joined as a new investor in the round, which values Laurel at $510 million—more than double its previously undisclosed valuation, according to the company. The raise also includes a $20 million tender offer, the startup’s first. Other new backers include DST Global, OpenAI’s Kevin Weil, Alexis Ohanian, GitHub CTO Vladimir Fedorov, and Notable Capital’s Hans Tung. Existing investors—Marc Benioff’s Time Ventures, ACME, AIX Ventures, Anthos, and Gokul Rajaram—also participated.

Laurel, which has 59 employees, traces its roots back to 2016, when it launched under a different name: Time by Ping. But the company struggled to gain traction. Alshak says the problem was twofold—an overcommitment to the legal industry, and NLP technology that wasn’t yet up to the task. That changed in 2022, when Alshak gained early access to OpenAI’s GPT-3. He paused everything, overhauled the product, and reintroduced the company as Laurel. When ChatGPT launched, it came with a flood of interest he couldn’t have predicted. After years of nos, “I went from the crazy person to the person who firms were calling, saying ‘help us,’” said Alshak. “That created the zero-to-$26 million-contracted era we have over the last 24 months.”

For accounting giants like Ernst & Young and Grant Thornton, and national law firms like Saul Ewing and Frost Brown Todd, Laurel has become part of their AI strategy. The startup isn’t without competition—rivals include 38-year-old Aderant and 8VC-backed PointOne. But Laurel’s hard-won velocity started drawing attention from investors, including IVP general partner Ajay Vashee. The former CFO of Dropbox, he was compelled by the idea that you could truly start to solve the intractable question of time management, planning, and resource allocation.  

“I lived the struggle firsthand,” said Vashee. “At most companies, it’s a total black box. You set goals, you’ll set your budget and plan for the year. And every quarter, you check in and it’s a scramble. What did this team do? Did we actually hit these goals? It’s a really inefficient and clunky process. But I had this vision with Ryan about how that can be completely redefined.”

Vashee and Alshak struck a deal in about a week, spending more than 20 hours together over several days. During diligence, Vashee encountered something he’d never seen before: “Laurel is the only company I’ve seen—and we’ve evaluated thousands since I joined the firm—that received a 10 out of 10 CSAT [customer satisfaction score] rating from every single customer I spoke with,” he said. “And we talked to dozens of customers across legal, accounting, and consulting.”

Tom Barry, managing partner at accounting firm GHJ, has been a Laurel customer since the start of the year—and as an accountant, he’s spent his career living in the six-minute increments the industry bills clients in. The same goes for his colleagues at GHJ, with whom he’s been in close conversation as the firm rolls out the platform.

“Like any other change management technology, there’s a bell curve,” said Barry. “Most people are in the middle of the bell curve. And, first of all, it’s better than any other user interface they had. So, that’s a quantum leap forward. Then there’s another element—you have any idea the amount of business insights we can get on this thing? We’re seeing the long game on all this right now: It’s not just a tool to help track time.” 

Laurel’s long game goes beyond traditional timekeeping industries. The platform is starting to show companies the ROI of AI tools—quantifying productivity before and after adoption. “Most companies are putting the cart before the horse,” said Alshak. “None of the LLMs have figured out how to quantitatively prove the impact of AI in the enterprise. They’re relying on surveys or adoption as a proxy.”

“[Famed consultant and writer Peter] Drucker said you can only manage what you measure,” he added. “In the AI world, I think you can only automate what you measure.”

When I suggest this kind of tracking could veer into Orwellian territory, Alshak doesn’t flinch. Laurel, he said, prioritizes SOC and ISO compliance, field-level encryption, and data ownership—customers control their own data.

“Laurel is about aligning employee and employer,” he said. “Minimize input, maximize output. We want people to take agency over their time.”

Barry, the GHJ accountant, joked that time is both his friend and his enemy. That’s true for all of us—sooner or later, we’re reminded that time runs out. Alshak told me he thinks about death often. I believe him. Even Laurel’s LLM-powered chat interface is named Mori—a nod to the Latin phrase memento mori, or “remember you must die.”

For Alshak, the beginning of Laurel is inextricably tied to the end of his mother’s life, the end of their time together—she passed away from cancer in 2018, just weeks after the company closed its seed round. 

“A minute with her at the end was worth a million minutes doing anything else,” said Alshak. “And I realized that I’m not building a timekeeping company. I’m building a company that allows people to understand: Am I spending my time in the way I want? I want to be the mirror back to the world, and I want to teach the world this lesson: We care so much about our dollars, but we’re so cavalier about our minutes. And that’s a fundamentally inverted framework.”

“I’m trying to live as if I’m gonna be here for 78 years, 4000 weeks,” he added. “I want every minute to matter.”

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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This story was originally featured on Fortune.com

• President Donald Trump has long wanted to reprivatize Fannie Mae and Freddie Mac, which have been under government control ever since they needed a $191 billion bailout during the Global Financial Crisis. For Wharton finance and real estate professor Susan Wachter, heavy regulation of utilities and insurance carriers is the best model for the mortgage giants.

No members of the Fortune 500 saw their shares surge last year like Fannie Mae and Freddie Mac did. Hedge funds who bought nearly worthless stakes in the mortgage giants after the Global Financial Crisis could stand to make billions if President Donald Trump fulfills his goal to take both firms public.

Several experts, meanwhile, remain focused on how to free Fannie and Freddie from government control without repeating the mistakes that helped lead to the 2008 meltdown.

Uncle Sam bailed out both government-sponsored enterprises, which provide crucial liquidity to housing markets, when both teetered on the brink of insolvency. After being delisted from the New York Stock Exchange in 2010, their shares continued to trade over the counter.

Billionaire hedge fund owners Bill Ackman and John Paulson are among those who snapped them up, betting the U.S. government would eventually make good on its pledge to reprivatize both agencies. With Trump raising the issue on his social media platform last month, it hasn’t gone unnoticed that both men have backed the president.

“The subtext of the media stories is that [Fannie and Freddie] shareholders, which include many supporters of [Trump], are looking for a gift from the President,” Ackman wrote in a lengthy post on X last week. “Nothing could be further from the truth.”

Paulson did not respond to a request for comment.  

A ‘utility model’ for Fannie and Freddie

Ackman, the CEO of hedge fund Pershing Square, has said ending government conservatorship could reward taxpayers while maintaining widespread home availability and affordability.

A host of thorny issues need to be sorted out before executing what would be the largest public offerings in history, many experts warn. Those debates aside, however, there’s an even weightier question about how the biggest players in American mortgage markets should operate as private companies.

For Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, the heavily regulated model for utilities—where state agencies decide how much companies can charge consumers—has proven its worth. She also sees parallels to the insurance industry, where regulators oversee rates to protect customers while also preventing risk from being underpriced. 

“It helps insure against another bailout,” she told Fortune, “and it helps maintain profits in the long run.”

Fannie and Freddie support 70% of America’s mortgage market, according to the National Association of Realtors, by purchasing mortgages from lenders and packaging them into mortgage-backed securities, freeing up originators to make more loans. They also guarantee payment on those securities if borrowers default, charging a premium for providing that insurance.

There are many explanations floated for why the housing bubble spelled doom for Fannie and Freddie’s balance sheets. The main problem, Wachter said, is that when housing prices tanked by about 20% in 2008, many of the loans Fannie and Freddie insured were “underwater,” meaning the value of the homes securing those packaged loans had fallen below the amount borrowers owed.

As they competed for business, Fannie and Freddie had not collected adequate fees to compensate for taking on this risk, Wachter said.

“If these entities go private without oversight, there is a risk of a race to the bottom,” she said.

Both institutions also got into trouble by buying large amounts of riskier, private-label mortgage-backed securities to hold as investments. They financed these purchases with cheap debt accessible thanks to the so-called “implicit guarantee,” or the belief among investors—which ultimately proved correct—that the government wouldn’t let the enterprises fail.

In short, Fannie and Freddie both juiced profits by “chasing yield,” becoming what many commentators called the world’s largest hedge funds helped by what was, in effect, a government subsidy. Taxpayers paid the price when these bets on risky assets collapsed.  

A path forward

Wachter believes reforms instituted under conservatorship have made Fannie and Freddie much more resilient while remaining relatively effective at encouraging middle-class homeownership.

The early days of the COVID-19 pandemic provided a major test, she said, when a massive spike in unemployment briefly sparked fears of another mortgage market collapse.

“Fannie and Freddie could go on, continue to lend,” said Wachter, co-director of the Penn Institute for Urban Research, “even as it offered forbearance to borrowers.”

Both enterprises remain central to a fixture of the American dream: the 30-year, fixed-rate, prepayable mortgage. Of course, some question whether continuing to favor that New Deal-era invention is still worth the cost.

Last month, Trump said the U.S. government “will keep its implicit GUARANTEES,” though what he exactly meant remains unclear. Continuing to federally back Fannie and Freddie as private firms would spark fears about a repeat of 2008. Put them completely on their own, however, and mortgage rates likely go higher as investors demand compensation for taking on more risk when buying both enterprises’ packaged loans.

“But I think what that debate misses is that if you keep the government backing to these giants, you are going to restrict [the] private market and private competition,” Amit Seru, a professor of finance at the Stanford Graduate School of Business, told Fortune. “And that means giving up on lots of innovative products.”

For example, the U.S. housing market’s pandemic boom eventually stalled, partially due to what has been dubbed the “lock-in effect.” Existing homeowners who bought before mortgage rates skyrocketed in 2022, when the Federal Reserve dramatically hiked borrowing costs to fight inflation, have been reluctant to sell and take out a new mortgage at a higher rate. 

In many European countries, Seru noted, that’s less of a problem thanks to products that allow people to sell their house, buy a new one, and take their existing mortgage with them. That’s typically not possible in the U.S., he said, because Fannie and Freddie’s dominance means originators can’t stray too far from the industry standard.

“No one can compete with the government,” said Seru, a senior fellow at the Hoover Institution, a conservative-leaning think tank.

Ackman, meanwhile, sees Fannie and Freddie remaining at the core of the American mortgage market. To facilitate a public offering, Ackman has suggested the Treasury cancel its roughly $350 billion worth of senior preferred shares, meaning it would forgive its right to repayment and dividends. That would remove a massive liability from the enterprises’ balance sheets, making them much more attractive to private investors. 

But the government wouldn’t get wiped out. Separate from the preferred shares, it also has warrants that give it the right to buy nearly four-fifths of Fannie and Freddie’s common stock at one-thousandth of a cent, or $0.00001, per share. Fannie stock currently trades at about $9, and Freddie is around $7.

If Washington cancelled its entire senior preferred stake, the value of the warrants would increase by roughly $280 billion.

That would be the most lucrative outcome for Ackman, who alternatively could see the value of his common stock diluted to almost zero if Fannie and Freddie go public without the Treasury cancelling most of its senior stake.

“[Fannie and Freddie] shareholders don’t have their hands out,” Ackman wrote in his social media post last week. “The opposite is the case. Hundreds of billions of dollars of funds that belonged to [Fannie and Freddie] were unilaterally taken by the government years ago, and the companies never received credit for these payments.”

The U.S. government has collected at least $301 billion in profits from Fannie and Freddie, earning nearly 60% on the $191 billion it paid to bail the mortgage giants out in 2008. Ackman says his plan could pave the way for a similarly sized payday for Uncle Sam in a much shorter window.

Wachter and Seru don’t necessarily disagree. Still, they ultimately see the government’s senior preferred shares as a sideshow compared to bigger questions about what Fannie and Freddie should look like as private enterprises.

“There is a lot at stake here,” Seru said, “which I think goes well beyond Ackman’s investments.”

This story was originally featured on Fortune.com

Silicon Valley denizens may not think of the U.S. government as a hub for cutting-edge innovation, but the venture firm DataTribe has a 10-year bet that says otherwise. Defense tech has become one of the hottest areas in VC, but DataTribe flips the approach on its head. While companies like Palantir and Anduril develop tech to sell into governments, DataTribe works with recent government alumni to adapt their cybersecurity expertise for the private sector. The approach has paid off, with DataTribe recently closing a $41 million fund—its third. 

I spoke with DataTribe’s managing directors Leo Scott and Robert Ackerman last week to understand this strange moment for government-tech industry relations. Elon Musk and Donald Trump were escalating their social media flame war, with Trump threatening to cancel Musk’s portfolio companies’ government contracts. Meanwhile, Anduril had just announced a massive funding round and a $31 billion valuation. “Within all the chaos, there’s opportunity,” Ackerman told me. “But right now it’s a mess.” 

DataTribe’s unique approach insulates it from the other government-aligned venture operations, which probably had panicked meetings this weekend about who to align with in the Musk-Trump feud. The tech industry and the defense wings of the government have a longstanding relationship—that’s how Silicon Valley initially got bankrolled, after all, even if some tech companies in recent years have distanced themselves from such work under pressure from employees. But as companies like Meta start to cozy back up to military clients, DataTribe deviates from firms like a16z’s American Dynamism, or even the CIA-affiliated In-Q-Tel, that view the government as their customer. That approach can be risky, as Musk is learning the hard way.  

DataTribe does the opposite, advising its portfolio companies not to chase government dollars. Instead, it recognizes the amount of research and development occurring in the government, helping recent departees take those findings and apply them to the private sector. One such portfolio company, Dragos, was founded by former cybersecurity experts at the National Security Agency to work with companies to assess their operational guardrails. The startup, which DataTribe backed at the seed stage, was last valued in a 2021 funding round at $1.7 billion. 

Ackerman described DataTribe’s strategy as the “reverse In-Q-Tel,” meaning it looks for technology that already exists within the government, then builds a commercial application for it. That means it’s often working with first-time founders who may have never built products outside of the government, which is why DataTribe participates at the seed stage, preferring to write $2 million to $3 million checks and taking large stakes in its companies of around 25%, as it then works closely with them to scale up. Out of its new $41 million fund, DataTribe has already deployed around half the capital and plans to be fully invested in about a year, according to Scott. 

The recent exodus of government workers, including from Musk’s campaign of DOGE-related layoffs, hasn’t created many new opportunities for DataTribe, because many of those leaving are more policy-focused, says Ackerman. Still, the mayhem in D.C., especially around the budget, justifies DataTribe’s approach that government dollars aren’t a safe bet—but that government talent is. 

“I do feel like we were waving the flag a little bit earlier in terms of understanding the value within the U.S. government technologically,” Ackerman said. “The average cybersecurity professional deserves to have the best tools, and we just wanted to be in a position to help focus on that.”

New York goes it alone…Carta has a new report finding that the share of NYC startups with a solo founder has nearly doubled since 2015, rising to 32% in 2024. Mavericks should be cautious if they want outside capital, though—only 13% of VC-backed startups in New York had solo founders. 

Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com

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This story was originally featured on Fortune.com