The Fine Print of Preference

Public markets were weak over the past week, with the S&P500/Nasdaq100 -2%/-3%. YTD the S&P500/Nasdaq100 are now +8%/+10%. In our view, weak performance was driven primarily by fading optimism about the prospects for rate cuts, driven in part by sticky inflation data. Our NPM Private Market Tracker*, which shows the estimated average price performance of the 50 largest names in our internal Tape D® data, is now +19% YTD, significantly outperforming public markets. (Source: NPM; Bloomberg)

Private market preferred issuances have continued to grow share as a vehicle for capital raising among growth-stage companies. Unlike common equity, preferred securities in the private market typically offer investors enhanced downside protection through liquidation preferences and dividend rights. In recent years, the rise of special purpose vehicles (SPVs) has facilitated broader access to preferred issuances by a wider range of investors, including family offices and crossover funds.

While the trend for overall preferred issuance has been up, there are also notable sub-currents, which can be indicative of overall market strength or weakness. Perhaps the most telling metric we track is valuation. In 2025 to date, 66% of priced rounds have been “up” rounds vs. 76%/69% in 2023/24. For now, we do not view the change as significant, as the proportion of down rounds has been flat, at 5-6%, We would also point out that the proportion of seed and early stage rounds has increased to 53% in 2025 from 47% in 2023. To us, a continued rise in early stage investment suggests that VCs are constructive on innovation, which, overall, we view as positive for the private markets. (Source: NPM)

Liquidation preferences, which speak to downside protection concessions issuers need to give to investors, have been relatively stable in recent years. If anything, there has been a slight decrease in seniority given to new investors (4% in 2025 vs. 11% in 2023), which again speaks to high investor appetite. (Source: NPM)

Finally, we note the continued, and perhaps unsurprising, market share rise of the Information Technology sector (“IT”). IT was 36% of total deals in 2023 and is 41% in 2025 YTD. This increase has largely been driven by growth in the AI Ecosystem, which accounted for 13% of deal volume in 2025YTD vs. 3% in 2023. (Source: NPM)

BIGGEST MOVERS AND TOPICAL NAMES

Based on our proprietary Tape D® data, the best performers of the large cap names in the private market thus far in 2025 have been x.AI (+176% estimated share price performance), Anduril Industries (+139%) and OpenAI (+119%). (Source: NPM)​​​​

RECENT EVENTS

• Google signed a 6 year agreement with Meta to spend $10bn on cloud computing services. (8/21; The Information)
• Open AI has reportedly hit $1bn in monthly revenue. (8/20; Strictly VC)
• AI search provider Perplexity AI made a $34.5bn offer for Google’s Chrome. (8/13; Bloomberg)
• Trump administration in talks with Intel about the US government taking a stake in the company. (8/14; Bloomberg)

NOTABLE CAPITAL RAISES

• Crusoe is in talks to raise $1bn of capital at a $10bn valuation. (8/21; The Information)
• Databricks is raising capital at a $100+ bn valuation. (8/20; The Information)
• Perplexity AI is raising additional capital at a $20bn valuation. (8/13; Bloomberg)
• Cohere raised $500mm at a $6.8bn valuation. (8/14; Bloomberg)
• Cognition, an AI coding tool developer raised $500mm at a $9.8bn valuation. (8/14; StrictlyVC)
• GPU chip maker Rivos is in talks to raise $500mm at a $2bn valuation. (8/14; StrictlyVC)
• Lambda is in talks to raise new capital at a $4-5bn valuation. (8/14; StrictlyVC)

NOTABLE EXITS

• After pulling its IPO earlier this year, fintech Klarna is reportedly considering an IPO for later this year. (8/14; StrictlyVC)
• Cloud provider Lambda is reportedly considering an IPO later this year. (8/14; StrictlyVC)