Quantum computing's déjà vu

PitchBook Daily Pitch — July 7, 2026 Summary

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1. Key Themes

PE Exit Market Is Bifurcating: M&A Is Collapsing While IPOs Are Rebounding

US PE exits in Q2 totaled $102.6 billion, down roughly 46% from the prior quarter, driven almost entirely by a collapse in M&A. Corporate asset sales fell 63% to $38.5 billion, and sponsor-to-sponsor deals sank 57% to $24.5 billion — hitting "the lowest quarterly mark in at least a decade." Meanwhile, IPO exits surged, with PE firms bringing 12 portfolio companies public (double Q1), lifting IPO exits to "roughly 31% of total US PE exit value in the quarter, nearly triple the share of Q1."

The Era of Multiple Arbitrage in PE Is Over

The structural tailwinds that powered easy PE returns have disappeared. As PwC's Eric Janson put it: "You've got to have a little more conviction to do a deal, because the days of making your money on the back end from multiple arbitrage are done." This is forcing PE managers to find alternative liquidity solutions and be more disciplined in deal underwriting.

Hybrid Credit Is Emerging as a Structural Solution to the PE Liquidity Crisis

With $4 trillion in unrealized NAV trapped in PE portfolios and no easy exit path, hybrid investing — which combines "equity-like returns and credit-like downside protection" — is filling the gap. Apollo's Hybrid Value business has raised $14.4 billion across three closed-end funds since 2018, and demand is accelerating as the macro environment grows more uncertain.

AI's Unit Economics Are Deeply Broken at the Frontier

OpenAI and Anthropic are generating revenues in the tens of billions (11 digits) but spending in the hundreds of billions (13 digits), "raising serious doubts about both companies' IPO prospects." The implied burn rate is orders of magnitude beyond historical norms for pre-IPO companies.

AI-Driven Tech Layoffs Are Happening Alongside Record Revenue — A Harbinger of Structural Workforce Shifts

"There have been 120,000 tech jobs cut in 2026 with AI cited as a factor, even as some of the companies doing layoffs posted record revenues. Cloudflare laid off 20% of its staff in the same quarter it hit its highest single-quarter revenue in company history." This decoupling of headcount from revenue signals a structural, not cyclical, reduction in tech employment.

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2. Contrarian Perspectives

Valuations Haven't Corrected Despite Mounting Risk — and That's the Problem The conventional assumption is that more risk equals lower valuations. But Apollo's Matt Nord identifies a dangerous disconnect: "Normally, when there are a lot of risks, valuations are lower; that's how you get compensated for taking risk." Yet valuations remain elevated despite AI disruption risk, geopolitical uncertainty, inflation, and macro volatility. Nord attributes this to divergent long-term growth assumptions: "It's really become a bet on 'What is the longer-term growth rate?' There's a disconnect between what investors are seeing now and what they are anticipating." The implication: markets are pricing in a best-case scenario that may not materialize.

Quantum Computing's SPAC Revival Should Be Treated With Skepticism Quantum computing had "$5.7 billion across four SPAC deals" in Q1 2026, ending an exit drought — but the article explicitly warns this pattern has precedent: "the same trend a few years ago was accompanied by disappointment." Investors chasing the quantum SPAC wave risk repeating the 2020–2021 cycle, where SPAC-fueled hype outpaced commercial reality.

Europe's Emerging PE Managers Are Being Structurally Frozen Out Despite conventional belief that diversification benefits new managers, Europe's emerging PE managers are "capturing barely a tenth of capital raised this year as LPs double down on established names." This LP flight to safety is compressing the competitive landscape and may reduce long-term returns by concentrating capital in the largest, most correlated strategies.

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3. Companies Identified

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4. People Identified

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5. Operating Insights

1. Hybrid Capital Is Now a Viable Alternative to Equity Dilution or Distressed Sales For portfolio company operators and founders who need liquidity without selling equity or accepting a distressed valuation, hybrid instruments offer a structured middle path. Apollo's Nord frames the opportunity: "There's $4 trillion of unrealized NAV [in PE]. A lot of these DPI issues are not going away." Operators negotiating with PE backers should understand hybrid financing as a lever their sponsors may increasingly pull — and founders can proactively propose it to avoid down rounds.

2. AI as a Cost Rationalization Tool Is Already Happening at Scale — Even in Record Revenue Quarters The Cloudflare example — 20% workforce reduction concurrent with record revenue — signals that AI-driven margin expansion is becoming an operating norm, not a future aspiration. Entrepreneurs building SaaS businesses or managing headcount-heavy operations should model scenarios where AI enables equivalent output with materially fewer employees, as investors will increasingly expect this.

3. The IPO Window Is Open — PE Firms Are Using It With M&A buyers cautious and sponsor-to-sponsor activity at decade lows, "public offerings emerged as a bright spot in an otherwise barren quarter," with IPO exit value up 40%+ QoQ. Operators leading PE-backed businesses should accelerate IPO readiness processes — audits, reporting infrastructure, public narrative — as sponsors are actively seeking this path.

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6. Overlooked Insights

1. Vietnam Fintech Is Attracting Tier-1 Global PE Interest The quiet bidding war for Momo — with Blackstone, CVC Capital Partners, and MUFG all competing for a stake — signals that Southeast Asian fintech is entering a serious institutional capital phase. This geography and sector combination received only a brief mention but represents a notable convergence of global mega-fund attention on an emerging market digital payments asset.

2. The Private Credit Market Is Quietly Recalibrating Sector Exposure The newsletter flags that "new signals showing the health of the private credit market indicate a changed landscape as lenders and investors alike reassess their exposure to the asset class and once-favored sectors." This recalibration of sector preference within private credit — not just overall volume — is briefly mentioned but could have significant downstream effects on which industries can access private credit at favorable terms going forward.