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⚖️ With less competition and cheaper entry points, we see the lower middle market as the segment best positioned for upside through 2026. Find out more in our latest US PE Middle Market Report.
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| Since yesterday, the PitchBook Platform added: |
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| When headline valuations aren't what they seem |
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| (Chloe Ladwig/PitchBook News) |
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By Michael Bodley, Senior Venture Capital Reporter
Startup valuations in news headlines don't always match the price every VC paid behind the scenes.
While multiple valuations in a single funding round aren't new, the AI boom has enabled some founders to play favorites in this way. And VCs tell PitchBook they're seeing an uptick in this practice lately, often to reward early believers in a startup, funding round leads, or top investors.
"For investors who committed early, despite the risk, and committed to providing real value to the founders beyond cash—rather than piggybacking on others' convictions—a tranche round creates value and meritocracy in the AI era," said Josh Constine, a venture partner at SignalFire. His firm has landed preferred terms in some investments, he added.
Earlier this month, Mercor co-founder Brendan Foody accused Sequoia of using two-tranche rounds to inflate headline valuations. Sequoia partner Shaun Maguire responded that the firm splits its check only when rivals will pay more than it will for a hot deal.
Recent venture rounds with such structures include vibe-coder Lovable's Series A last July, and AI-native IT startup Serval's Series B round in December, according to PitchBook data.
The companies did not return requests for comment.
That said, VCs squeezing into the round and paying a premium for that privilege is risky, said Kyle Stanford, PitchBook's director of US venture capital research. AI startups raised $255.5 billion globally in the first quarter of 2026, surpassing the full-year 2025 total in a single quarter, according to PitchBook's Q1 2026 AI VC Trends report.
"It's definitely been a theme that we've seen," said Mike Paulus, founder and CEO of PCM Encore. "[Investors] rolling up their sleeves has always meant a lot, and in a way, everyone else got to come in the round."
Still, founders do have to navigate delicate relationships when forcing some VCs into worse economics on their investments.
"It certainly can affect relationships with new investors," he said. "You want to start off that partnership with every side feeling good and all-in on supporting the company." |
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| A message from Baker Tilly |
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| How the AI infrastructure boom is reshaping tech investment trends |
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AI investment is reshaping the technology landscape, and the infrastructure powering it is becoming the next major investment frontier. Baker Tilly’s 2026 Investment Monitor: AI and Digital Infrastructure explores how venture capital, private equity, and M&A activity are evolving as investors shift focus from AI model training to deployment, monetization, datacenters, semiconductors, and energy infrastructure.
From record-setting AI dealmaking and surging PE-backed acquisitions to mounting pressure on software valuations and infrastructure scarcity premiums, the report examines the forces redefining technology investment. Discover where investors are placing bets as AI moves from experimentation to monetization.
Download report |
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• Australia’s VC ecosystem remains divided over a capital gains tax overhaul, with investors warning it could drive talent to lower-tax rivals. Find out more
• EQT has agreed to buy Berlin-based satellite group Exolaunch, a SpaceX rideshare partner, marking the firm's first foray into a sector previously dominated by VC. Read more
• Now that SpaceX is listed, revisit our research about how OpenAI is going public as the most expensive AI company in its peer group—not by market cap, but by what investors are paying for each unit of business quality. Get it here |
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| New Mountain seeks its next great investment—in someone else's fund |
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| (Gary Hershorn/Getty Images) |
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By Jessica Hamlin, Senior Funds Columnist
New Mountain Capital has quietly built out a GP-led secondaries strategy called Atlas.
The New York-based firm, better known for its buyout funds, is seeking to raise up to $2 billion, according to a 2025 Bloomberg report, and filed a Form D with the SEC for New Mountain Atlas I on May 15, 2026.
The strategy targets continuation vehicles run by other GPs, with New Mountain positioning itself as a lead or co-lead investor.
The firm's core philosophy for Atlas is that of a solutions provider to the GPs running the CVs that the fund will eventually underwrite through creative deal structures. Its position as the lead or co-lead of a third-party CV, and its deep roots in the primary buyout market, give it the negotiating power to secure favorable terms.
The pitch to GPs is one of market intelligence. "We can go to a sponsor and say, 'Let us catalyze a GP-led, give liquidity to your LPs, and by the way, we believe your number-one most synergistic competitor is going to be for sale in two months,'" president and COO Adam Weinstein told PitchBook.
While hypothetical, the scenario speaks to Atlas's approach to investment selection. When evaluating whether to buy into a manager's continuation fund, the New Mountain team places emphasis on LP-GP alignment because it’s a positive signal of investment quality and indicates the GP is providing sufficient time and information to all stakeholders, Weinstein said.
New Mountain's own CV track record, including a $3.1 billion vehicle for Real Chemistry and an April 2026 deal combining Azuria and Inframark, gives it something to point to. Whether that's enough to compete in an increasingly crowded GP-led market remains to be seen. |
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