Sunday Ghospel

Happy Sunday

the world of LinkedIn job updates has long given rise to a fair share of peculiar announcements. But just like the FTX shook up cryptocurrencies, the company also took it upon itself to innovate LinkedIn: Former top exec Ryan Salame just announced his new role as inmate in federal prison.

With that I share this week’s review, while I do my own review of Paul Graham’s infamous essay to see whether I may have missed the relevant passage explaining how Salame’s announcement perhaps still fits into being in “Founder Mode”

Cheers
Philip

The week in review

Taking the temperature

• Earnings season kicked off Friday with two big banks. Both reported Q3 results, both saw shares climb. Analysts expecting 4.1% earnings growth across the S&P 500 (FactSet's call)

• Tesla took a hit—maybe tied to the lukewarm reaction to those robotaxis and robovans unveiled last week

• Consumer sentiment dipped for the first time in three months. University of Michigan’s prelim index came in at 68.9, down from 70.1. Economists were betting on a small rise.

Venture tabs

This week in global VC funding

• EUR 4.9bn invested

• 471 deals

Top Funding Rounds

1. Form Energy | US | EUR 365.2m | Leading iron air energy storage developer

2. Northvolt | SW | EUR 200m | Operator of Li-Ion battery plants

3. Writer | US | EUR 180m @ EUR 1,533m pre-money | Full stack genAI platform to enhance organisational workflow

4. Asaas | EUR 240m | BR | EUR 134m | Billing and invoice management platform

5. City Therapeutics | US | EUR 122m | Medicine formulation via RNAi technology

6. EvenUp | US | EUR 122m @ EUR 852m | AI platform for legal practice management software

7. Nalu Medical | US | EUR 104m @ EUR 234m pre-money | Neuro stimulation devices to mitigate chronic pain

8. Q-CTRL | AU | EUR 102m @ EUR 131m pre-money | Quantum computing sensors

9. Gropyus | AT | EUR 100m | Modular building systems

10. Nelly Solutions | DE | EUR 100m | Digital patient management and healthcare FinTech solution

Top Investors
Including only accelerators when and where relevant

1. Seraphim Space | UK | 11 Investments

2. Y Combinator | US | 7 Investments

3. Alumni Ventures | US | 6 Investments

4. Lightspeed | US | 4 Investments

5. Plug and Play | US | 4 Investments

6. Sequoia | US | 3 Investments

7. SpeedInvest | AT | 4 Investments

8. Accel | US | 3 Investments

9. Bpifrance | FR | 3 Investments

10. Global Brain | JP | 3 Investments

There’s been a dry spell for exits from the private capital that poured in during the frothy days of 2021 and 2022. The chart perfectly illustrates the surge in capital deployment back then and the subsequent pullback. Last week, I noted CRV returning capital to investors without even calling it. Perhaps with interest rate shifts and markets gradually reopening, exits will eventually materialize—but it's a race against time, as LPs are eagerly awaiting those elusive distributions.

While the VC world pins its hopes on IPOs, trade sales, or more recently secondaries to materialise returns, our levered friends in Private Equity are still grabbing headlines with dividend recaps. YTD volume for US PE-backed recaps is nearing USD 70bn—on track to beat the USD 76bn record set in 2021. CD&R and H&F, seem particularly keento make this year one for the history books. In September, their PortCo Belron launched the biggest recap ever. EUR 8bn, with EUR 4.4bn earmarked for shareholder distribution.

This might keep LPs happy in the short term. Yet it raises eyebrows (at least both of mine)—especially considering the extra debt being added at relatively high interest rates. It all feels a bit nostalgic, as I am getting flashbacks to Bain Capital's bust KB Toys deal in 2012. Can’t help but recall the news of LME troubles and distressed PE cases that surfaced over the summer. To a layman like myself dividend recaps records in tandem with LMEs feels paradoxical.

Here to make sense of this, I’ll quote Tweedledee from Lewis Carroll’s Alice in Wonderland Through the Looking Glass:

"Contrariwise, if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic."

Perhaps it all adds up if we just apply a little Wonderland logic.

The week ahead

Economic Events

Wednesday

UK CPI September

• Consensus: 1.9% YoY

• Last: 2.2% YoY

Thursday

Eurozone CPI September

• Consensus: 1.8% YoY

• Last: 2.2% YoY

ECB Rate Decision

• Consensus: 25 bps cut to 340bps

• Deposit facility rate

  • Consensus: 25bps cut to 325bps

• The ECB reiterated expectation for inflation to slow towards the year end target of 2% during its September meeting. For now the minutes have been relatively vague but markets expect the ECB to move rather quickly to counteract the slowing economy across the zone. Greek CB chief Yannis Stournaras mentioned to the FT that even with a cut in Nov and another 25bps slash in December the rate would be baselining at 300bps which in his view is restrictive. Bundesbank’s Nagel also pivots from his previously hawkish stance

Philly FED Manufacturing Index October

• Consensus: 4.2

• Last: 1.7

Chinese Q3 GDP Read

• Consensus: 4.6% YoY

• Last: 4.7% YoY

Earnings I will be watching

Big week ahead for earnings—financials keep rolling in, and now the heavyweights in consumer staples step into the ring. Meanwhile, TSMC and ASML's reports will be make-or-break for the semis. To the equity analysts, especially those covering financials: friendly reminder. Coffee ≠ water.

• Walgreens Boots

• J&J

• Citi

• Goldman

• State Street

• BofA

• United Airlines

• Rexford Industrial

• ASML

• Morgan Stanley

• Equifax

• Discover

• TSMC

• Netflix

  • Some sounds around an expected price increase, considering the streaming platform has a dense catalogue but has not raised prices in c. 3 years

• Blackstone

• Infosys

• WD40

  • Not that this is an industry big name but it’s a personal favourite after years of riding a bike to school and WD40 being my most trusted companion to ensure I have a non-squeaky bike

• First National

• American Express

• P&G