June 8, 2026 · 6:33 am

Florida: Let the Sunshine In…

The U.S. Census Bureau estimates that approximately eight million people relocate between states every year. In 2024, the most recent data available, over 873k people moved to Florida pushing the population to 23.5 million. Covid triggered a significant inflow of people from other parts of the country as has a favorable tax regime, and for many, the decidedly Red State tilt is attractive. The median age of a Florida resident is 42.6 years, ranking fifth oldest state in the country.

With this migration, Florida’s exceptional healthcare sector has become only more essential. As a keynote speaker at the recent Moffitt Cancer Center’s Business of Biotech Summit, it was quite revealing to hear about the Florida healthcare and life science ecosystem which is both wide and deep. Last week the Administration released a proposal to amend the Office of Management and Budget’s (OMB) Guidance for Federal Financial Assistance framework which determines how the federal government allocates research grants. This risks deeply politicizing where and to whom these funds will go with unintended knock-on effects. 

Domestic Migration Patterns (2020 – 2024)

Source: Census Bureau

This shifting demographics will have profound implications across many dimensions of society and the domestic economy. For one, the migration of wealth to Florida alongside longer life spans will see continued explosive growth in the long-term care sector. The Federal Reserve estimates that people born before 1964 (Baby Boomers and older) have $110 trillion of net worth. Cerulli Associates estimates that $2 trillion of this will be passed to younger generations and another $1.3 trillion will be passed on to spouses this year. Overall, the Federal Reserve estimates that the amount of wealth that can be bequeathed to the next generation is 424% of GDP (2021 data), up dramatically from 256% 25 years ago.

Net Wealth in U.S. by Generation

Source: Federal Reserve

Florida enjoys a historic strength anchored in a low-cost manufacturing base, both in pharmaceuticals and medical device. Around that base has risen an emerging research cluster as evidenced by the $1.5 billion of R&D expenditures by Florida universities. The National Institutes of Health has contributed nearly $930 million in research funding this past year.  Expect that to increase given the OMB’s directives to allocate research funds to projects and states more in line with the Administration’s political agenda. This does not augur well for other life science clusters in Blue States that have been historic strongholds of innovation.

Select Florida estimates that the state now has over 1,000 biotech R&D establishments and more than 1,400 medical device manufacturers, making life sciences the second most significant industry in Florida. The National Center for Science and Engineering Statistics highlighted that there are more than 1,500 clinical trials being run in the state. It is believed that there are more than 90k professionals in the life sciences sector in Florida.

These data do not even begin to capture the extraordinary healthcare services sector in the state given the needs of the older population. The Florida Hospital Association estimates that there are 321hospitals in the state which contribute nearly $200 billion of economic activity and accounts for 345k jobs.

Florida Healthcare Ecosystem

Source: J.P. Morgan, BioFlorida

It is not surprising that investors have identified Florida as an important cluster to support. According to Pitchbook, there was over $1.0 billion invested in 117 healthcare and life sciences companies in Florida in 2025 with the year-to-date pace set to eclipse the amount of capital invested, granted in fewer companies. There has been a marked increase in the number and size of later stage financings over the past five quarters, suggesting a rapidly maturing innovation ecosystem as well. This trend underscores the strong research and manufacturing infrastructure and the accommodative regulatory environment.

Florida Healthcare and Life Sciences Venture Capital Activity

Source: Pitchbook

Given the positioning of how business-friendly Florida is and that it is arguably the cradle of crypto, it is somewhat ironic that the state has launched a very public investigation into OpenAI to determine culpability in its role in mass shootings on Florida campuses. At its essence these cases assert that AI companies are criminally liable for their products. Given the extraordinary potential of AI in healthcare and life sciences, the adjudication of these cases may reflect how prepared the state is to unleash these capabilities for scientific research.

Additionally, this debate highlights the struggle balancing privacy rights and public safety. More fundamentally, which jurisdiction – the states or federal government – ultimately should resolve these issues. The Administration issued yet another executive order last week requiring its oversight of new AI models. Combined with the OMB’s edict, the federal government will cast a long dark shadow over scientific research.

Last week also saw the Republican Florida legislature add a measure to the fall ballot which dramatically reduces property taxes in the face of rapidly escalating property values given the influx of wealthier residents. Such a change has raised concerns that education, safety net healthcare, and other public infrastructure will not be adequately funded. 

There are a few other possible storm clouds on the horizon. Notwithstanding that Tampa was just ranked the second most attractive city for recent college graduates according to ADP, the rapidly rising living costs have forced many middle-class Floridians to consider relocating away from the state. The influx of wealth and the current Administration’s hostility to immigrants are at risk of hollowing out the middle-class. Data from the Internal Revenue Service calculated that new arrivals to Miami-Dade County between 2022-2023 had an average income of $178k, the highest in the country, more than twice those who departed. An analysis by the Wall Street Journal concluded that deaths outnumbered births in Florida each year since 2020, a trend likely to get worse given the age distribution.

We hope you will join us for our next quarterly Expert Roundtable Series on June 16, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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April 20, 2026 · 6:10 am

Light My Fire…

This past quarter 3,336 companies raised over $267 billion which eclipsed every prior full year, save two of them (2021 and 2025), underscoring the extraordinary enthusiasm among venture capitalists for anything AI. Notwithstanding the frothy valuations and capital intensity of AI platform companies, one of the pleasant knock-on effects might be the surge in new company formation. While AI adoption may also foretell dramatic job losses, it does strongly suggest that with the proliferation of these capabilities it will be easier to be an entrepreneur. 

New Business Applications

Source: Apollo

Just over the past twelve months the number of new business applications spiked from ~100,000 per month to ~140,000 per month (right hand axis, above). Notably, the onset of the pandemic and its short-lived recession six years ago pushed many to become entrepreneurial out of necessity. The forces are different now and the impact less dire and immediate, but the result may be similar.

Obviously, it is a complicated, confusing time, made more so by conflicting social media posts almost hourly from the Administration and the on-again, off-again war with Iran. While making short-term investment decisions is fraught with extreme risks now, there are important signals to watch. Unemployment rates are manageable and in line with a good economy. Inflation is only slightly elevated, even in light of the body blows delivered to the economy over the past year. Somewhat surprising, the NASDAQ Index is trading at levels that are below historic averages, which for many may be counterintuitive given frothy private market valuation multiples.

NASDAQ 100 Forward P/E Ratio

Source: Citadel Securities

The employment picture is more nuanced, exacerbated by the hostility directed at immigration. Currently the level of job vacancies is largely balanced with the level of unemployment. Early in the pandemic the number of unfilled jobs spiked labor inflation rates. The prospect of job losses, perhaps due to impact of AI-driven replacement capabilities, may serve to mute the impact on inflation. In fact, according to the Bureau of Labor Statistics the U.S. economy only added a net of 181,000 jobs in all of 2025. An analysis by Fortune estimated that the U.S. healthcare sector alone created 693,000 new jobs in 2025, and that were it not for healthcare, overall job growth would have been negative.

Vacancy to Unemployment Ratio

Source: Bureau of Labor Statistics, BofA Global Research

More specifically, the labor market for IT positions has turned decidedly negative. In March employment in the technology sector declined by 24% from March 2025, according to data from Challenger, Gray & Christmas, with an overall net IT job loss of 52,000 in 1Q26. Bureau of Labor Statistics data had IT unemployment at 3.9% at the end of 1Q26, up from 3.1% in 1Q25. Bank of America data highlights the rotation from payroll costs to increased expenditures on technology among U.S. small businesses – technology replacing labor.

 Payments to Payroll vs. Technology Services

Source: Bank of America (percent change, 3-month rolling average)

The level of venture capital investment this past quarter was historic by any measure. The five largest investments totaled $195.6 billion of the $267.2 billion (73% of the total) and yet was only 0.1% of the deals closed. While one might credibly argue that the $122 billion OpenAI round is not a venture capital deal, undeniably the AI companies simply dominated this past quarter, capturing nearly 89% of all invested capital and represented 43% of all companies. Notwithstanding a level of “AI-washing” with how companies now describe themselves, Pitchbook estimated that in 1Q26 AI companies accounted for 45% of the $9.5 trillion value held by venture capital funds.

This level of activity somewhat obfuscates the continued decline in the absolute number of investments made at each stage, although the proportion of larger and later stage rounds continued to increase. This rotation highlights the concentration of capital behind fewer companies as well as the dramatic increase in late-stage company valuations. Across all sectors late-stage rounds averaged $47.6 million ($44.0 billion invested across 925 deals) in 1Q26 as compared to $24.8 million in 4Q25. 

Quarterly Venture Capital Investment Activity

Source: Pitchbook

This is not just a U.S. phenomenon although the U.S. market carries much of the water. Globally, 1Q26 venture capital investment activity touched $300 billion in nearly 6,000 companies, according to Crunchbase data. Of this amount, $242 billion was invested in AI companies.

Global Venture Capital Investment Activity

Source: Crunchbase

An obvious implication of this level of concentrated investment activity is the restocking of the unicorn herd. In 1Q26 another 66 unicorns were minted bringing the total to 912 companies valued at $5.8 trillion based on the post-money valuations of the last round according to Pitchbook. While many choose to stay private and independent longer, many other scaled companies continue to struggle to exit.

This shines a bright light on a cruel irony: rarely has such a new technology generated so much investor interest and created so many valuable companies and yet exit activity remains frustratingly elusive. Notwithstanding that 1Q26 looks like a blow-out quarter for exits, the $347 billion includes the $250 billion combination of SpaceX with xAI, which was not really a liquidity event. Setting that transaction aside, the $97 billion of remaining exit activity continues the modest recovery seen over the last several quarters in total exits. The average transaction value (ex-xAI) in 1Q26 was nearly $300 million, which is appreciably greater than the $230 million in 4Q25.

Quarterly Exit Activity

Source: Pitchbook

Analysts are calling for the SpaceX IPO this year to be valued over $1.5 trillion (~55x 2026 revenues) – crazy for a company that was last valued at $350 billion just over a year ago. This event could well be followed by IPOs at OpenAI and Anthropic, among several other very significant private venture-backed companies. Much could still derail any or all of these liquidity events but there is cautious optimism that investors will start to see dramatic distributions unlocked later this year. Obviously, it will be unevenly felt at first but one should expect to see that fundraising prospects for the long tail of venture capital firms should improve.

Secondary transactions continue to come of age as a possible path to liquidity. Last year secondaries totaled $240 billion across all private asset classes according to Jeffries, which was a six-fold increase from 2015. To provide some context, the broader private capital industry is estimated to be $24 trillion.

Fundraising in 1Q26 totaled $47.8 billion across 172 funds (average fund size $278 million), which compares nicely to the $66.7 billion across 626 funds (average fund size of $107 million) in all of 2025. What this masks is again the extreme concentration of success for just several firms in 1Q26. In fact, just six funds accounted for $36.4 billion or more than three-quarters of the capital raised. Exclusive of these top six funds, the average fund size was $69 million. Of all the funds raised in 1Q26, only 29 were raised by first-time fund managers. Shockingly, the median fund size in 1Q26 was an extremely modest $15.3 million.

As a point of comparison, “hot money” institutional investors in this risk-off environment moved nearly $11 billion just in March alone from junk bond funds into investment grade bonds, a 24-fold increase from February according to JP Morgan.

In the current climate investment returns have been hard to come by. HFR, a leading hedge fund data provider, tallied industry performance in March to be -3.1%, the worst performance for hedge funds since March 2020 (admittedly, April 2026 may show some recovery in performance given the “TACO” phenomenon). For 1Q26, not surprisingly the best performing asset was the New York Mercantile Exchange (NYMEX) Heating Oil Index, which surged 96.3%; the top four performing assets were all oil related. Cocoa was in last place, generating a -45.6% return. Cambridge Associates recently released its most recent venture capital performance data (4Q25), which were 7.8% and 11.6% for early-stage and late-stage, respectively, which does not look too bad in comparison.

Investment activity in the healthcare technology sector continues to be both resilient and encouraging. According to Rock Health, $4.0 billion was invested in 110 companies in 1Q26, suggesting an annual pace of ~$16 billion in approximately 450 companies – or just 13% of the last OpenAI round. The average deal size of $36.7 million is nearly twice that of just two years ago. Although 1Q26 activity was slightly down from 4Q25 ($4.2 billion), it was up smartly from the $3.0 billion invested in 1Q25.

Digital Health Investment Activity

Source: Rock Health

An internal Flare Capital analysis of 1Q26 AI healthcare technology investments based on both Pitchbook and Rock Health data highlights an interesting market development. It certainly appears that early-stage round sizes are materially larger and being done at elevated valuations. Dilution in Seed and Series A rounds coalesced between 18 – 22% (which is obviously not how one should value a company but is an oft-cited benchmark nonetheless). In 1Q26, our data showed that for Seed rounds the average and median pre-money valuations were $20.7 million and $17.1 million, respectively. For Series A and B rounds average and median pre-money valuations spiked significantly to $96.4 million and $58.0 million, and $402.6 million and $459.8 million, respectively.

Arguably, the value creation curve historically has been more asymptotic for healthcare technology companies as it took a few years at the outset to establish product/market fit to confirm that the products or services lowered costs and/or increased revenues and/or improved outcomes. That dynamic seems to have changed as companies are raising more capital, sooner. The curve now appears more linear, up and to the right as product development timelines have compressed dramatically.

In 2023 healthcare became the fastest growing component in the personal consumption expenditure price index (PCE) and is now nearly 17% of the index. As of late 2025, healthcare accounted for more than 50% of the growth in PCE. Coupled with the growth in the healthcare labor force and aging U.S. population, healthcare costs continue to drive overall inflation. It is estimated that by 2030 there will be more Americans older than 65 than younger than 18 for the first time in the country’s history. Fortunately, Goldman Sachs analysts recently concluded that a 70-year-old today as the equivalent cognitive capacity of a 53-year-old in 2000.

All of this points to the extraordinary opportunity technology has to re-architect clinical and administrative workflows throughout healthcare, especially as AI can make the system less expensive, more effective. A recent study by Johns Hopkins estimates that 10% of Medicare Advantage enrollees will disenroll this year as insurers modify plan offerings due to costs, exacerbating issues of access. Already 14% of all ACA members have missed first premium payments in 1Q26. Notwithstanding that many healthcare providers are seeing improved operating margins through deployment of agentic AI technologies, anxiety is high over pending deep cuts to reimbursement rates, particularly for the Medicaid segment in 2027.

This is happening against the backdrop of the fiscal condition of the U.S. economy. Recent Congressional Budget Office estimates the federal deficit will be $1.9 trillion in 2026 or 5.8% of GDP, increasing to 6.7% in 2036. The trailing 50-year average was only 3.8%. The publicly held federal debt is projected to be 120% of GDP, up from 101% in 2026, eclipsing the all-time high of 106% in 1946. This deficit needs to be financed, which will run the risk of crowding out other investment opportunities and/or absorbing significant capital, likely to the detriment of other possible uses.

As Percent of U.S. GDP

Source: Congressional Budget Office

We hope you will join us for our next quarterly Expert Roundtable Series on June 9, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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March 30, 2026 · 5:05 pm

Flare Capital Expands the Team, Again…

Ours is an extremely competitive business. In addition to providing capital, venture capitalists assist with recruiting, connecting portfolio companies to potential customers, and engaging in strategic discussions. Great entrepreneurs have no shortage of investors with whom to partner. Therefore, the privileged position for investors is to flex on thought leadership and be able to draw on relevant prior experiences. As such, we could not be more excited to welcome Dr. Graham Gardner and Dr. Rochelle Walensky as Executive Partners to the firm.

Graham founded and scaled one of the most meaningful companies in the healthcare technology sector, Kyruus Health, which he sold very successfully at the end of 2025 to RevSpring. After getting two degrees from Brown University (BA, MD), Graham practiced medicine for several years before getting his MBA at Harvard Business School. He then became a venture capitalist, but not for long as he quickly started his first company while serving as a Venture Executive at Highland Capital Partners.

Graham has been well known to us for many years. In fact, one of our other Executive Partners (Gary Gottlieb) served on the Kyruus Health board for over a decade. In addition to offering thoughtful strategic advice to our portfolio companies, Graham has an extraordinary network among provider and payer executives which will be a tremendous commercial resource as well. The path to building a significant company is nonlinear as companies search for product / market fit and Graham will be a great asset along that journey.

Rochelle was also known to all of us, if nothing else from seeing her on television every day during the height of Covid in her capacity as the Director of the Centers for Disease Control and Prevention from 2021 – 2023, providing thoughtful, competent, and reassuring assessments as to how the pandemic was unfolding. As a recognized infectious disease expert, Rochelle is deeply articulate about issues confronting the healthcare system at large. Much of her academic work now as a Senior Fellow at Harvard University (where she also received her MPH, in addition to having an MD from Johns Hopkins University and a BA from Washington University) is focused on the clinical and economic outcomes of medical decisions, with a specific emphasis on access to public health.

Many of our founders are focused on technologies that utilize AI to affect systemic transformations of the healthcare delivery system. Rochelle will be an extraordinary resource for those portfolio companies that look to address the system’s shortcomings and failures with an emphasis on lowering costs and improving access. She, too, is incredibly well networked in the public policy arena, and obviously, the role of government officials and regulators is critical as the healthcare industry is being re-architected.

Please join us in welcoming these two healthcare industry leaders to the Flare Capital team.

An update on another important component of our extended team, which is our Flare Scholars program and Flare Scholar Ventures (FSV), our pre-seed investment initiative for Flare Scholar-sponsored projects. With 509 current and former Flare Scholars, who are young brilliant passionate emerging healthcare technology entrepreneurs, we now have 38 FSV portfolio companies, meaningfully exceeding our initial goal. Four of those companies are now significant core investments while 16 have raised meaningful follow-on rounds of capital. In total, our FSV companies have raised more than $400 million, most notably and recently is Qualified Health. The progress of the FSV program is inspirational as we continue to on-board the next generation of great healthcare technology entrepreneurs.

We hope you will join us for our next quarterly Expert Roundtable Series on June 9, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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March 9, 2026 · 6:37 am

A Port in the Storm…

The chaotic geopolitical environment has created unprecedented global anxiety and has also led to disruptive patterns of migration. More than 18% of U.S. adults last year were diagnosed with depression or were in treatment for depression, according to the Gallop National Health and Well-Being Index as of September 2025, which is dramatically greater than the 10.5% in 2015. It has reached such an extreme that 29% of those who now disapprove of the country’s leadership would take the extreme measure to permanently relocate outside of the country.

Percentage Who Would Move Permanently Away from the U.S.

Source: Gallup Survey (November 2025)

With the invasion of Venezuela, and now the invasions of Iran and the lesser covered invasion of Ecuador (“joint lethal kinetic operations” aka Operation Southern Spear), it was a fascinating time to travel in Latin America. The oasis in all of this turmoil is Uruguay, often referred to as the “Switzerland of South America.”

A country of just over three million people and slightly smaller than Oklahoma nestled between Brazil and Argentina, Uruguay almost appears out of place. The democratic government is stable and well-functioning. The World Bank’s Control of Corruption Index ranked Uruguay an impressive 96% as compared to the United States score of 90% (this was as of 2023 so these scores have undoubtedly changed). The country is a recognized leader in environmental regulation. There was even one 2026 Winter Olympian from Uruguay, Alpine Skier Nicolas Pirozzi, which further underscores the charm and determination of this small country.

The U.S. invasion of Venezuela (aka Operation Absolute Resolve) appears to have had a modest impact on regional affairs and has left Uruguay relatively unscathed. Goldman Sachs recently forecasted 2026 GDP growth for Latin America to be 1.9% with inflation at 4.3%. Shockingly, the Venezuelan economy declined by 80% over the last dozen years to be now equivalent to the Uruguayan economy of approximately $80 billion. The government deficit in 2025 was just 4.1% of GDP.

Clearly, the global commodity bull market has recently benefited many of the regional economies in Latin America. The recent International Monetary Fund Uruguayan GDP growth estimate for 2026 of 2.4% compares well to the seven largest Latin American countries.

Projected GDP Growth for 2026

Source: Goldman Sachs

While the spillover effects from the issues in Venezuela (and now Cuba) appear to be somewhat muted – so far – the other significant benefit for developing country economies has been the global rotation of capital away from the U.S. concurrent with the weakening dollar. The outflows have been nothing short of dramatic.

Share of U.S. in Allocation of Global Equity Flows

Source: BofA Global Economics Research

The knock-on effects on the Latin American venture capital industry have been significant as well. While exits and the lack of liquidity also plague this region, the level of new investment activity in 2025 was an encouraging $4.1 billion across 681 deals. This was an improvement over the $3.6 billion invested in 2024, but still quite a bit below the $17.4 billion invested in 2021, according to data from Cuantico VP. Perhaps not surprisingly, the fintech sector was the most active, capturing 61% of total investment and 29% of all deals.

Venture Capital Investment Activity in Latin America

Source: Cuantico VP Market Intelligence Platform

Notwithstanding that Uruguay ranked only #68 on the World Intellectual Property Organization’s Global Innovation Index in 2025, there are 26 venture capital firms listed in the country’s venture capital directory published by Asociacion Uruguaya de Capital Privado. While the 2025 data recorded only $11.8 million invested in just a dozen deals, which dipped slightly from the $12.4 million in 2024, Uruguayan venture capitalists scored well on the Venture Capital Efficiency Index, which measures venture capital investment as percent of country GDP. The total venture capital industry in Uruguay is estimated to be approximately $40 million.

Venture Capital Efficiency Index

Source: Cuantico VP Market Intelligence Platform

Like most regions of the world, changing demographics risks playing havoc with traditional industries given aging populations and poorly funded social safety nets. A recent study by the World Economic Forum determined that Latin America had the slowest regional annual productivity growth over the past 25 years at 0.4%, and in fact, was negative over the last ten years. Fortunately, the analysis goes on to conclude that the impact of AI could lift productivity growth by 1.9% to 2.3%, generating between $1.1 – $1.7 trillion of economic value in the region.

Uruguay has a universal health system with both public and private providers and accounts for approximately 9% of GDP. Mortality rates are meaningfully lower than other Latin American countries with life expectancy rate of 78.3 years, the second highest behind Chile at 81.2 years. The President of Uruguay, Yamandu Orsi, recently moved the retirement age from 60 to 65 for those born before 1977 in anticipation of these demographic changes.

The healthcare system is expected to be under some pressure as the population continues to age, which accounts for the significant and concerted investments in digital health. Even with the second highest proportion of doctors per 1,000 people in the region (4.6), the country launched several foundational programs such as a nationwide digital prescription system, centralized digital diagnostic imaging network, and a national electronic health record platform.

Population Pyramid: 2000 – 2025

Source: Pan American Health Organization

Swirling around the angst of immigration from Latin America, there is an emerging irony that an increasing number of people are looking to leave the U.S. Here is to Uruguay continuing to be an oasis in this roiling ocean. The country ranked #28 in the World Happiness Report with a score of 6.66 out of 10, the third highest in Latin America. The highest country was Finland at 7.74; the U.S. was #24 at 6.72.

Serenity indeed contributes to good health…

We hope you will join us for our next quarterly Expert Roundtable Series on June 9, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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February 17, 2026 · 7:14 am

Healthcare’s Labor Paradox… 

That was certainly unexpected. The January payroll report was effectively twice as robust for jobs added to the U.S. economy than was forecasted just several days ago. This was powered by more than 82k and 42k new healthcare and social assistance jobs, respectively, accounting for virtually all of the 130k increase. This strength masks the overall weakness in employment across the other sectors of the economy. It also highlights one of the paradoxes of healthcare technology, which is how quickly automation and AI will lower administrative and clinical costs by reducing labor needs.

Change In Nonfarm Payrolls

Source: U.S. Department of Labor

It is estimated that there are 17 million (and as high as 22 million) healthcare workers in the U.S., according to the National Center for Health Workforce Analysis, accounting for more than 14% of all employees. Foreign born healthcare workers tend to be clustered at both the high- and low-ends of the skill and income distribution, with the lower skilled workers in the home health segment particularly vulnerable to the current Administration’s deportation program.

Foreign workers now account for approximately 15% of the U.S. population but are 39% of all home health aides, according to IPUMS, which tracks census data. In addition to the 230k deportees in 2025, there were another 270k people arrested at the border and another 40k people who “self-deported” in 2025, placing extraordinary pressure on all labor-intensive sectors of the economy.

Estimated Number of Deportees

Source: New York Times

The Centers for Medicare and Medicaid Services recently reported that the national healthcare spending reached $5.3 trillion in 2024, which is an increase of 7.2% over 2023 and is now comfortably above 18% of GDP. On a per capita basis, this is nearly $15,500. There were over 214 million enrollees in private health insurance in 2024, notably seven million more people due to the extension of enhanced Affordable Care Act tax credits. Without these credits, the average ACA enrollee will see monthly health insurance premiums spike from $888 to $1,904, according to KFF.

Against this backdrop there has been a profound shift in the economic composition of the U.S. population with the Middle Class being a smaller percent of the overall population as the affluent class has grown. Across all strata, household income increased significantly over the past half century, although the median income for the lowest income households increased only 55% as compared to 78% for the highest income household, according to the Pew Research Center. In 2022, the ratio of highest to lowest median income was 7.3x (it was 6.3x in 1970). While there may be proportionally fewer poor households, the ability to pay for healthcare has been severely impaired, putting significant strain on public resources and safety nets.

Distribution of U.S. Population

Source: American Enterprise Institute

The importance and magnitude of these social safety net programs is highlighted by an analysis by the American Enterprise Institute that concluded that a family of five with no earnings receives benefits totaling $55k annually. Furthermore, the powerful “leveling effect” of these programs is made more apparent when looking at a comparison of that same family earning $20k versus $80k annually. The higher income family effectively takes home only $11k more than the lower income family in after tax earnings given the substantial government subsidies. Interestingly, Goodwill Industries had its best year ever in 2025 with revenues in excess of $7 billion across its 3,400 stores.

These benefits may contribute to some of the hostility directed at these programs today. For example, Medicaid, which accounts for approximately 19% of all healthcare spending ($919 billion in 2024), is expected to decrease by over $900 billion over the next decade given announced cuts to the federal budget. In so doing, the number of uninsured Americans will increase by more than 7.5 million people.

Furthermore, more than 41.7 million people participated in the Supplemental Nutrition Assistance Program (SNAP) in 2024, according to USDA data. In aggregate, the SNAP outlays totaled $99.8 billion (~$187 per person) and while a federal program, the benefits are administered at the state level which has now introduced a chaotic patchwork system of guidelines and criteria. In certain states, these benefits have become much harder to access.

Hopefully, all these investments in public health are paying off. According to the National Center for Health Statistics, life expectancy in the U.S. hit a high-water mark in 2024 as the opioid crisis started to recede somewhat, dropping by 26%. Those born in 2024 could expect a life expectancy of 81.4 years and 76.5 years for women and men, respectively. The mortality rate in 2024 was 722.1 deaths per 100k.

While 1.2 million people died from cancer from 1990 to 2023 according to American Cancer Society data, the survival rates have improved notably with 70% of cancer patients living for at least five additional years after initial diagnosis. This underscores the criticality of continued robust investment in scientific discovery, and the lunacy of current officials’ attacks on research. Gavi, the Vaccine Alliance, estimated that 19.8 million lives were saved in the first year of the Covid vaccines being available.

In addition to scientific R&D investment, the pace of investment in new healthcare technologies improved in 2025 to $14.2 billion across, an increase of 35% over the $10.5 billion invested in 2024, according to Rock Health. The $4.2 billion invested just in 4Q25, the largest quarterly results for the past ten quarters, suggests a further strengthening of the sector into 2026.

While there were slightly fewer companies that raised capital in 2025 over the prior five years, the average deal size was significantly larger pointing to the impact of large AI financings. One word of caution: there are more than 600 companies which raised capital in 2021 – 2022 that have yet to raise another round. It is unclear what is to become of those companies as many undoubtedly are sub-scale.

Healthcare Technology Investment Activity

Source: Rock Health

There was a marked shift to AI-centric companies by investors in 2025, which now account for more than half of all healthcare technology financings. These companies are focused on solutions to automate many labor-intensive tasks in healthcare. Additionally, healthcare was 22% of all AI financings as compared to just 13% in 2024, pointing to an increased level of investor awareness and acceptance of the potential AI has in healthcare. This also likely reflects companies recasting themselves as AI-forward or AI-native now.

Source: Bessemer Venture Partners

The knock-on effect of AI euphoria has been profound on valuations and round sizes across all stages in the healthcare technology sector. One trend that is clearly evident is the significant “pull forward” of capital to the earliest rounds of financing. Seed investments in healthcare technology AI companies were on average $15.3 million in size at $41.6 million pre-money for an average post-money valuation of nearly $57 million. The pre-money valuation of the following Series A was only a 1.7x step-up, which compares unfavorably to the 3.4x step-up from the Series A to Series B rounds. Even more surprising was the absence of a step-up from the Series B to Series C rounds, perhaps suggesting that many Series B companies struggled to show meaningful commercial progress. 

Healthcare Technology AI Investment Activity (through 1H25)

Source: Proprietary Flare Capital analysis based on Rock Health and Pitchbook databases

The promise of healthcare AI is to materially lessen the reliance on labor in clinical and administrative workflows. In spite of essentially flat Medicare rate increases announced for 2027, there are several promising federal initiatives to facilitate greater efficiencies such as the ACCESS Model (AI-supported care models for chronic disease) or the WISeR Model (AI-enhanced prior authorization) or the MAHA ELEVATE Model (evidence-based functional lifestyle medicine interventions). Quite clearly, the current Administration is pushing to remove many of the AI guardrails in place to encourage business model transformation.

One interesting development has been the extraordinary level of chatbot engagement for health-related matters. OpenAI recently rolled out a health tab in ChatGPT that now has 40 million daily visitors. Patients are uploading medical records and test results, desperately looking for guidance and insights while circumventing already capacity constrained providers. This phenomenon underscores the opacity and frustration of engaging with the healthcare system today that operates like a gated community as patients scurry into corners of the internet looking for answers. It also highlights the need for greater “data liquidity” so that fringe commentators do not receive media attention in the absence of authoritative clinical voices.

Interestingly, it is not just patients looking for online assistance. Physicians are now readily embracing AI tools at the point-of-care. Given the pressure on healthcare labor, such advances, if reliable, will provide significant leverage for the provider workforce.

Most Popular AI Tools for Physicians

Source: 2025 Physicians AI Report

Notwithstanding the precipitous drop in consumer confidence this past month from 94.2 to 84.5, the lowest monthly reading in a dozen years and lower than at the depths of the Covid pandemic, public market investors seem to be returning to the healthcare sector. Ironically, general consumer sentiment appears to have soured on the state of the jobs market, although jobs remain relatively plentiful in the healthcare sector even with rapid AI adoption. According to national net buy/sell trading data, an analysis by Morgan Stanley concluded that of the eleven tracked sectors, healthcare experienced the greatest month-over-month improvement in overall investor sentiment to start the year.

Monthly Sector Rotation

Source: E*Trade, Morgan Stanley

We hope you will join us for our next quarterly Expert Roundtable Series on March 3, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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January 26, 2026 · 7:20 am

One More Addition to the Flare Capital Team…

At its essence a venture capital firm connects great entrepreneurial talent with capital. Ideally that capital comes with significant additional attributes such as help with recruiting and important introductions to customers and business partners. It is with great excitement that we announce that Kendall Cook has joined Flare Capital as our Manager of Events and Community to help deliver those other benefits.

After spending much of her life in the Bay Area, Kendall moved to Boston to attend Northeastern University, one of the crown academic jewels in New England. After college and a few internships at high-growth local companies such as DraftKings, she joined a terrific early-stage venture firm where she served as its Events & Operations Manager for several years.

After close to a decade of living in Boston, Kendall remains a passionate San Francisco 49ers and Stanford University sports fan. In fact, when pressed, she fessed up to having an Andrew Luck poster on her wall as a little girl. She even met John Elway, one of her other heroes. It doesn’t feel like she will ever be a Patriots fan, even though they are going to Super Bowl LX.

In addition to managing our litany of events, Kendall will focus her efforts on building important healthcare technology communities around the firm, whether they draw from emerging great entrepreneurs or from our nearly three dozen strategic investors or our several dozen portfolio companies or other investment firms. A cornerstone asset of the firm is our Flare Scholar program, which now numbers more than 500 current and former Flare Scholars. This initiative has attracted some of the most impressive Rising Stars in our sector – and there is so much more that we can be doing with our Flare Scholars.

Please join us in welcoming Kendall to the Flare Capital team…

We hope you will join us for our next quarterly Expert Roundtable Series on March 3, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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January 20, 2026 · 6:55 am

Venture Capital: All Chips on Black vs. Playing the Percentages…

Over the past 100 years there have been 29,078 publicly listed U.S. stocks, of which 4% of them accounted for nearly all the economic wealth created this past century. Less than 100 companies were responsible for half of those gains. Approximately 52% of those companies had negative cumulative returns according to research from Arizona State University.

Those same researchers then studied the 63,785 global stocks between 1990 and 2020 and showed that 55% of U.S. and 57% of non-U.S. stocks generated returns below that of a one-month Treasury bill. In that same period just five companies accounted for a shade over 10% of the $75.7 trillion of the net equity value created. Half of that wealth creation was by 0.25% of the companies; all of it by just 2.4% of the companies during that period.

Issues swirling around the concentration of capital, of wealth, of resources are quite acute now. According to Bloomberg, the top ten U.S. technology founders saw their collective net worth increase by $550 billion to $2.5 trillion in 2025, largely on the coattails of the AI phenomenon. The top ten private companies are now worth $2 trillion.

Globally, hedge funds had their best year in 2025, increasing assets by $628 billion to over $5 trillion, in spite of only generating a 12.8% return. This was rather middling when compared to dozens of other asset classes (NASDAQ was up 20.4%, S&P 500 up 16.4%). Silver was the top performing asset this past year, increasing over 142%; three of the top four assets happen to be metals. Sadly, the poorest investment in 2025 was orange juice, which dropped nearly 59%.

The venture capital industry is navigating the noisy distractions coming from D.C., while coming to terms with the impact of AI during a confusing but reasonably good economic climate. In December inflation was 2.7% and the unemployment rate ticked down to 4.4%. Additionally, labor productivity increased 4.9% in 3Q25 while output jumped 5.4% with hours worked increasing by just only 0.5%. As a point of comparison, annual improvements in labor productivity in the 2010s averaged 1.1%.

Not surprisingly, most of the recent venture capital activity was centered on AI as each sector of the economy scrambles for solutions to drive additional productivity gains. Of the $339.4 billion invested in 16,709 companies in 2025, $222.1 billion was attributed to 5,793 AI companies according to Pitchbook (65% of the capital, 35% of the companies).

Globally, $469 billion was invested according to CB Insights, 48% of which was in AI companies, and goes on to caution that many of the marque venture funds have become highly “concentrated AI funds, not diversified portfolios.” Obviously, AI round sizes were larger than for non-AI companies: $38.3 million versus $10.8 million, respectively, underscoring profound investor exuberance.

S&P 500 Companies’ Real Revenue per Worker

Source: Bank of America US Equity & Quant Strategy, FactSet, Bloomberg

The investment activity over the course of the year saw a notable increase in 4Q25, returning back to the quarterly pace of euphoric 2021. Notwithstanding that the total number of investments continued to modestly decline, the average deal size spiked to $27.1 million, likely reflecting several mega-AI financings. In fact, eight of the eleven rounds greater than $1 billion this past quarter were for AI companies; those eleven companies raised $37.4 billion or 41% of 4Q25’s totals. Anthropic’s $15 billion “venture” investment punctuated this past quarter’s activity.

Venture Capital Investment by Quarter

Source: Pitchbook

Underneath a relatively serene surface are profound challenges to the venture capital model. First and foremost is the significant lack of liquidity. Arguably, liquidity serves as a proxy for the relevance of much of what VCs do: does the inability to sell portfolio companies point to a general apathy or indifference towards those companies? Obviously, some founders may choose to simply stay independent, or the board may determine that the runway for significant additional value-creation is long so best to stay the course. More often than not, though, that is not the case.

An analysis by Pitchbook highlights the extreme state of affairs. Since 2022 net cash flows from limited partners totaled $197 billion through 2Q25. While this does not yet reflect the significant exit activity in 2H25, the venture capital model is predicated on the ability to recycle capital. This does not mean to imply significant impairment but rather it underscores the challenges over the past few years to find attractive buyers coupled with a largely non-existent IPO market. Having said that, though, there are some concerns that companies funded several years ago may be at severe risk of obsolescence given the rapid pace of change.

Net Cash Flow to Limited Partners ($B)

Source: Pitchbook (as of 2Q25)

Notwithstanding the lack of predictable and material distributions back to limited partners, exit activity in 2025 started to recover with $297.6 billion across an estimated 1,635 transactions (average size of $182 million). The year ended with an upswing with 4Q25 exits totaling $93.6 billion across 422 transactions (average size of $222 million) and was the strongest quarter for exits since 4Q21 ($221 billion, 565 transactions, average size of $391 million). IPO activity in 2025 continued to be somewhat underwhelming with only 48 IPOs of venture-backed companies, although the total value was $116.7 billion, both ahead of 2024 amounts of 44 companies and $41.4 billion, respectively.

Another industry concern is that fewer firms are raising much larger funds, exacerbating a “bar belling” of the industry. Fundraising in 2025 continued the anemic downward trend started in 2022 with only $66.1 billion raised by 537 funds (average fund size of $123 million; median fund size was only $26 million). More than $23 billion of the total raised in 2025 (35%) was by funds greater than $1 billion in size. Furthermore, only $6.6 billion was raised by 92 first-time fund managers (average fund size of $72 million), reflecting further concentration among larger established branded firms.

With just under $300 billion of “dry powder,” the venture capital industry certainly has the wherewithal to power through economic turmoil. But even this investment capacity underscores the concentration of capital among fewer investment managers. Nearly 60% of the “dry powder” is held by funds greater than $500 million, and yet those funds represent just under 7% of the number of funds raised over the past four years. Similarly, only ten private equity funds raised 46% of all capital in 2025 according to the Financial Times. A knock-on implication of this concentration might well be fewer start-ups being funded as larger funds tend to make larger, later stage investments.

Venture Capital “Dry Powder” By Fund Size

Source: Pitchbook (as of 1Q25)

The venture capital industry has been referred to as a game of grand slams – wish it were that straightforward. According to MLB.com, in the 2025 season there were 120 grand slams sprinkled across 163,685 at bats (0.07% of each at bat). While the average is markedly more attractive in venture capital, failure is unfortunately a reality. Data from S&P Global Market Intelligence shows that bankruptcies in 2025 were at a 15-year high with 785 filings. A review of failure rates by stage reveals two interesting observations: failure rates decrease as companies scale and the top decile of companies ranked by valuation at each round fail less often.

Failure Rates by Stage

Source: Pitchbook

While these data might suggest a reasonably predictable progression up and to the right, occasionally interim financings are more “complicated.” If milestones are not hit, but existing investors remain engaged and enthusiastic, it is not uncommon for the subsequent round to be at a lower valuation and/or with economic terms to attract (i.e., induce) additional capital. This is a dynamic that is closely watched to gauge the health of the venture ecosystem. Fortunately, the percentage of down and flat rounds has improved in 2025 with less than 20% as compared to mid-20% in 2023, but not as good as the rocking 2021 – 2022 timeframe when that was in the mid-teens.

Percentage of Down and Flat Rounds

Source: Pitchbook

It is estimated that today there is $261 trillion of investable assets globally. In fact, since the 1990s as a percentage of global GDP, assets have increased from 75% to approximately 200% (~120% equities, ~80% bonds/other). According to the National Venture Capital Association, at the end of 2024 there were 3,111 firms managing $1.25 trillion of venture assets in the U.S., a relatively modest portion of the global market. Recently released data  from Cambridge Associates, a leading institutional advisory firm, presented venture capital returns data as of June 2025 that highlight the recent “air pocket” these firms are navigating. As of 2Q25, the one-, three-, five-, ten-, and 15-year returns were 11.4%, 0.1%, 15.0%, 13.1%, and 15.1%, respectively.  

Limited partners need to stay convinced that commitments to venture capital funds will drive enhanced returns while also diversifying overall portfolios. The conundrum now is whether the incremental volatility is justified in light of significantly reduced liquidity. A comparison of various asset class 15-year returns by Pitchbook highlights the dilemma confronting investors today.

Returns by Asset Class

Source: Pitchbook (as of December 2024)  

Fortunately for investors seeking direct exposure to the AI craze, venture capital remains the most direct, efficient way to do that, as it has for every other transformative wave of innovation. As these new AI capabilities demonstrate attributed enduring economic value creation expect to see marked increase in liquidity (arguably there are early signals in 4Q25 data). In addition to the improved productivity metrics, another indicator that technology may be profoundly replacing labor is evident in the share of economic output that is captured by workers’ wages, which has never been as low as it is now. What was once in the mid-60% range has dropped now to below 54%, suggesting we have become meaningfully less reliant on humans.

That may be the more troubling development…

Share of U.S. GDP for Labor

Source: Bloomberg

We hope you will join us for our next quarterly Expert Roundtable Series on March 3, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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December 22, 2025 · 7:03 am

Flare Capital Promotions: Operating at the Top of Their Licenses…

Some of the most consequential decisions venture capital firms make involve hiring, in large measure due to the teams being relatively small and the need to work together productively and collaboratively. Arguably, even more important are the decisions involving promotions, so it is with great enthusiasm that we announce several promotions on the Flare Capital team.

I remember vividly when I first met Margaret Malone. It was in Chicago on October 24, 2018, and we were hosting a “meet and greet” for University of Chicago Booth School of Business students. It was clear from her prior work experience that she was deeply committed to both the healthcare technology sector and the investment business. She asked probing questions about the firm’s investment strategy and was very thoughtful about where she saw the sector going. We were thrilled that she agreed to be a member of the great Flare Scholar Class of 2019.

It was an easier decision to offer Margaret a position at the firm upon her graduation in the summer of 2020, unfortunately right at the outset of the pandemic. Notwithstanding all our collective struggles adapting to being fully virtual, her impact was immediate and significant. She closed several of our Flare Scholar Ventures (FSV) pre-seed investments and made important contributions to many of our core portfolio companies. Margaret now serves as a key board member for one of our more promising companies – Visana Health – and an observer on several other boards,, She also plays a leading role in our “company co-creation” initiative with several of our strategic limited partners. Margaret also serves on important industry boards such as the Digital Medicine Society (DiMe).

So, it was an even easier decision to promote Margaret to partner. It has been so gratifying to see her rapid ascent as a rising star in our industry. Please join us in congratulating her.

There is a pattern emerging here. Uma Veerappan joined the firm in July 2022, after having been a member of the terrific Flare Scholar Class of 2021 AND graduating from the University of Chicago Booth School of Business. She has played a leading role in several of our FSV investments, most recently in an exciting company in the autonomous surgical robotics space. We are spending more time exploring the “hardware-deliver AI” theme and Uma’s prior experience at one of the world’s leading robotic-assisted surgical robotics companies has been very helpful.

This summer Uma graciously relocated to Silicon Valley and is now driving our “ground game” in that important market. The decision to promote her to Vice President was an obvious one. Again, please join us in congratulating her.

Next one up. Effective marketing and building community are critical success factors for venture capital firms as we look to match capital with people. We do so much more than “sell money” – our philosophy is that we are the “invited guest” of the entrepreneur, who often has numerous other firms available to them. We operate in an hyper-competitive industry so the clarity and relevance of our messaging to the market is critical. Equally important are the various communities we build around the firm.

I vividly recall when I first met Amanda DiTrolio on a cold New York City morning nearly two years ago. She had very successfully scaled the Health Tech Nerds platform to a community of nearly 6,000 avid participants, after having been a healthcare analyst at CB Insights for three years. She immediately understood the importance of the role with us and the impact she could have. She brought order to our marketing chaos.

The decision to promote Amanda to Vice President of Marketing and Platform was also an easy one. In addition to sharpening our messaging, she has made great strides in our community building activities, striking a high note this fall when we rented Fenway Park for our inaugural Compass Summit with our portfolio companies and other essential members of the broader Flare Capital community.  Not to be overlooked are her contributions building out our AI Advisory Council, our quarterly Expert Roundtable Series, and other published content.

Last but absolutely not least is our decision to promote Caroline Glen to Vice President of Investor Relations. That was fast. Caroline joined us several months ago after IR roles at several terrific firms, including RA Capital, Bain Capital, and Cambridge Associates. As the firm continues to scale, one of our core competencies will continue to be fundraising and how we collaborate with our limited partners.

Approximately half the capital we manage is on behalf of nearly three dozen leading strategic companies, which in aggregate have purchased just under $1 billion of products and services from our 60+ portfolio companies. The level of commercial activity is profound and appropriately reflects the critical capabilities many of our portfolio companies are bringing to market. Additionally, our financial limited partners (sovereign wealth funds, endowments, family offices, etc) are equally critical to our success, in part due to the level of co-investment activity which has been significant.

Caroline projects gravitas and inspires great confidence in the role. It is a profoundly transformative yet chaotic time in healthcare and she has done a marvelous job articulating the investment opportunities to our investors. In addition to the deep rolodex she brings to the firm, she has been quickly embraced by our existing limited partners.

While these promotions may reflect the natural evolution of the firm as we continue to scale, they are also a hat tip for the terrific contributions these colleagues have made since joining.

We hope you will join us for our next quarterly Expert Roundtable Series on March 3, 2026 at 12:00pm ET (register here). To stay connected, subscribe here for the latest updates, news, and insights from Flare Capital Partners.

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December 8, 2025 · 6:48 am

Secondary Market: Second Time’s a Charm…

Global alternative assets under management was estimated to be $19.5 trillion at the end of 2024 according to JP Morgan Asset Management, of which approximately $4 trillion is in private equity, and half of that is in funds older than four years. It is somewhat surprising that only in the past couple of years has there been an explosion in secondary market activity. And yet, even as it looks that 2025 will be a high-water mark in secondary volume according to Lexington Partners, a leading secondaries investment firm, the $200 billion of transactions will only be about 1% of global AUM.

Over the past dozen years the level of activity has increased ~8x. In the history of secondary market transactions, 80% of the activity has been just in the past decade. Up until about five years ago, the amount of secondary “dry powder” covered at least one to two years’ worth of transaction volume. That changed in 2025 with the rapid maturity of the secondary market and the acute structural need for greater private investor liquidity in the face of a dramatic drop in M&A and IPO volume over the past few years.

Secondary Transaction Volume and Amount of “Dry Powder” Available in Years

Source: Lexington Partners

Secondary transactions generally come in two flavors: (i) limited partners selling their interests in funds (“LP-Led”); and/or (ii) general partners creating “continuation vehicles (CV)” to sell specific portfolio companies to a new entity, affording original investors liquidity or the opportunity to roll-over into the CV (often referred to as “GP-Led” transactions). According to Jefferies, there was $103 billion of secondary market volume in 1H25, of which $56 billion was LP-Led and $47 billion was GP-Led. This level of activity was 51% greater than the $68 billion in 1H24.

Institutional investor interest in the secondary market is highlighted by the dramatic increase in AUM for the sector. According to Pitchbook, the total capital was $687 billion in 1Q25, a nearly 20x increase over the past two decades. It is estimated that approximately 10% of inflows to secondary funds are now from retail investors, further underscoring the broader acceptance. Secondary funds are often the only approach to get investment exposure to massively successful private companies like SpaceX and OpenAI. Notably, Goldman Sachs, Morgan Stanley, and Charles Schwab all acquired secondary investment firms in 2025.

Size of Secondary Market (AUM in $B, through 1Q25)

Source: Pitchbook

Through 3Q25 secondary funds have raised $105 billion, putting 2025 on pace to be the strongest fundraising year. There has been $122.6 billion raised over the trailing four quarters, which is an increase of 22% over the prior period according to Pitchbook. Jefferies estimated that at the end of 2Q25 that there was $302 billion if dedicated available secondary capital. As a point of comparison, the private credit industry increased 100-fold since 2006 to almost $700 billion.

Secondary Fundraising (through 3Q25)

Source: Pitchbook

Lexington Partners estimates that 12.7% of all commitments to global private investment funds between 2005 – 2017 have been sold in the secondary market. Just since 2018, over $5.8 trillion has been committed to private investment funds, suggesting significant runway for future LP-Led transactions.

For LP-Led transactions, the discount to reported Net Asset Value (NAV) is a critical marker that investors track. Across all asset classes, pricing was 90% of NAV for 1H25 which was slightly down from 91% in 2024 but sharply greater than 81% in 2022. Buyout funds tend to trade with the smallest discount to NAV while real asset and venture capital funds trade at significantly larger discounts, in part due to the perceived mortgage refinancing risks for real estate and that much of the limited partner commitments for venture capital funds are likely still unfunded and those portfolio companies will require additional capital. In general, U.S. and European funds traded at smaller discounts while Asian and Emerging Market funds often trade at 30+% discounts to NAV.

LP-Led Portfolio Pricing

Source: Jefferies

Limited partners are embracing secondary transactions as an approach to create liquidity and have started to sell stakes in higher quality funds, not just those perceived as “bad” or underperforming funds. Historically, limited partners would sell older, poorly performing funds but in 1H25 the weighted average vintage of all funds sold was seven years old, according to Jefferies data, with younger funds trading at a smaller discount. In 1H25 53% of all transaction volume was for buyout and private equity funds, while venture capital and growth equity accounted for 22% of the total.  

More liquidity bolsters fundraising activity. It is estimated that there is $3.7 trillion of value tied up in nearly 830 “unicorn” companies. Coupled with the lack of significant M&A and IPO volume, investors are stuck with the conundrum of how best to turn unrealized gains into realized gains. This has been made even more urgent if one anticipates a dramatic correction for frothy AI-hyped portfolio companies. Pitchbook tallied over 13,000 M&A deals in 3Q25 worth $1.3 trillion so there may be a glimmer on the horizon.

The explosion in the availability of private credit affords private equity funds the possibility for dividend recaps, whereby free cash flow positive portfolio companies may be able to access debt for distributions, but that is not an alternative for most venture-backed portfolio companies. 

U.S. Venture Capital Exit Activities (LTM)

Source: Pitchbook

Over the latest twelve months the volume of M&A activity ($107 billion) rivalled that of total IPO activity and was within shouting distance of secondary transaction volume for venture capital funds. The experience for private equity funds is comparable. This manufactured liquidity underscores the severe need for distributions. Historically, private equity funds tended to have an exit-implied distribution yield that ranged from high-teens to low-30s percent; that is, how much of the NAV is distributed in a given year. According to recent Pitchbook data, there is estimated to be a nearly 400 basis point delta (16.0% vs 11.8%) between what announced M&A activity would suggest and the actual distribution yield of 16.0%. This gap accounts for the marked increase in GP-Led transactions.

Distribution Yield for Private Equity Funds

Source: Pitchbook

There is no longer shame attached to GP-Led transactions as they often involve some of the best performing portfolio companies that fund managers are reluctant to let go of. There was a 68% increase in these transactions in 1H25 over 1H24 with more than $47 billion in volume (87% are continuation vehicles, 13% are structured equity, fund finance, tender offers). More than 90% of GP-Led transactions in 1H25 were priced at less than a 10% discount to NAV. Approximately 60%, 17%, and 8% involved buyout, private credit, and venture capital funds, respectively. There was a marked increase in secondary transactions involving real estate funds given the dramatic inflows in digital infrastructure assets (i.e., data centers).  

GP-Led transactions are not for everyone. According to data from Hiive, the top 20 traded private companies in the secondary market over the last 12 months account for 96% of all deal value; the top five account for 74%. Data from Sydecar suggests that the number of secondary special purpose vehicles that are raised to invest in these sought after private companies increased over 680% and the amount of capital grew by 1,340% over just the past two years.

A recent survey of 68 secondary investment firms by Lazard points to a possible rotation away from the most popular names to middle-market opportunities (60% stated that 60+% of their transactions will be middle-market focused) as these transactions become more routine.

During a week when regulators announced the roll back of corporate lending rules instituted in 2013 by the Federal Deposit Insurance Corporation and the Federal Reserve to limit the amount of riskier loans, UBS announced that there are now 2,900 billionaires who control $15.8 trillion of cumulative wealth, much of which is in private investment vehicles. Undoubtedly some of this wealth is in crypto assets, which has suffered through a miserable few months with Bitcoin dropping 35% just in the past several weeks. Hopefully a portion of the $3.7 billion of November Bitcoin ETF outflows make its way to secondary funds.

Bitcoin ETF Fund Flows

Source: SoSoValue

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November 24, 2025 · 6:59 am

Another Addition to Flare Capital Team…

We could not be more excited to announce that Pam Walser has joined the investment team at Flare Capital as our Controller, a critical role as the depth and complexity of our portfolios increase. In addition to an impressive academic career at the University of Massachusetts Isenberg School of Management (Bachelor of Business Administration, Accounting & Information Systems), she spent more than eight years at KPMG at the start of her career, ultimately being promoted to an Audit Senior Manager. While at KPMG, Pam was identified as a “Rising Star” and was asked to serve as a national instructor, traveling across the country training new KPMG recruits. Most recently, Pam spent four years as a Finance Manager at Summit Partners, one of the pre-eminent investment firms in the country.

Importantly, Pam will drive initiatives to deepen our portfolio company analytics and reporting. Given that nearly three dozen strategic Limited Partners account for a substantial portion of the capital we manage, there are numerous commercial opportunities for our several dozen portfolio companies to engage with those investors. We are also fortunate to have numerous traditional financial Limited Partners (family offices, sovereign wealth funds, endowments, foundations, etc), which are active co-investors in many of our portfolio companies. This “Strategic Engagement Model” generated nearly $1 billion of revenue for our portfolio companies and approximately $275 million of co-investments. Securing early revenues is essential as our entrepreneurs search for product / market fit.

As a lifelong Bostonian, we were also struck that Pam purchased a house in Foxboro sight unseen but is not a rabid New England Patriots fan. She has run a few marathons but not the Boston Marathon (yet).

Please join us in welcoming Pam Walser to the Flare Capital team…

+++++++++++++

Quick update on our Flare Scholars program and Flare Scholar Ventures (FSV), two of our more successful initiatives. Since inception, we now have 466 current or former Flare Scholars, who are passionate young professionals from many of our strategic Limited Partners and leading academic centers around the country. At the end of 2019, we announced the formation of FSV, whereby we support Flare Scholar-sponsored “pre-seed” opportunities. To date, there are 34 investments in the program

As we look to recruit the Flare Scholar Class of 2026, we could not be more impressed with the quality of all our Flare Scholars. Capital will always follow great talent and in this market, it will be great talent that wins.

And please join us for our next quarterly Expert Roundtable Series webinar on December 9, 2025, at noon ET. And subscribe here to follow other news and insights from Flare Capital Partners.

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