The industry is splitting into 'minnows' (subscale funds) and 'megas' (large, multi-asset firms). A significant portion of smaller funds are expected to fail due to being under-reserved and over-invested, while large firms expand into diversified platforms, resembling private equity giants.
Companies are engaging in a collectively irrational arms race, spending billions on AI training infrastructure where CapEx growth is outpacing revenue growth. This potential bubble could be disrupted by technological shifts like on-device inference, which reduces reliance on massive data centers, and strategic moves by players like Google to commoditize high-end models.
Science and technology are now a primary vector of geopolitical competition and cooperation. This is evident in the fracturing of international space collaboration, the race for AI dominance, and the creation of strategic initiatives like the India-Middle East-Europe Economic Corridor (IMEC) to counter rival influence.
Venture capital is experiencing a significant rotation away from software-as-a-service (SaaS) and towards capital-intensive sectors involving physical assets. This includes defense technology (e.g., Anduril), aerospace, semiconductors, and the energy infrastructure required to power the AI boom.
Keep pulling the thread on Josh Wolfe & Brett McGurk.