The business of GPU preorders

---

1. Key Themes

🖥️ Theme 1: GPU Compute Scarcity Is Restructuring the Neocloud Market

The shortage of GPU compute is so acute that neocloud providers like TensorWave are running eBay-style auctions for future access, fundamentally shifting market power toward suppliers.

"It's so scarce that whoever wants to pay the most is gonna get it." — Piotr Tomasik, co-founder and COO, TensorWave

Contract durations are lengthening dramatically as a direct result, with multi-year deals becoming the new norm.

"If you had asked for a six-year contract just two years ago, people would laugh you out of the room, but that's not uncommon nowadays." — Kevin Cochrane, CMO, Vultr

Implication for investors: Neocloud providers with locked-in long-term contracts are accreting structural revenue advantages. Smaller AI startups, meanwhile, face a worsening compute access problem.

---

🏦 Theme 2: Neocloud Debt Is Safer Than the Market Believes

The mainstream narrative frames neocloud debt facilities as dangerously leveraged, but a contrarian cohort of investors argues the signed-contract backlogs make these loans structurally sound.

"You had abnormally high growth, abnormally high customer concentration, and abnormally high debt. That was the cocktail investors had to navigate through." — Antolin Garza, partner, Karmel Capital

"The market has persistently underweighted the value of the signed-contract backlogs." — Antolin Garza, Karmel Capital

Even in default scenarios, the contracts themselves are structured to protect lenders:

"The terms by which one of these contracts can be cancelable are super small—like force majeure. Even if a neocloud fails, most of these contracts are being written in ways to still protect the lenders." — Piotr Tomasik, TensorWave

---

🌍 Theme 3: Sovereign AI & Geographic Diversification of AI Infrastructure

Governments are actively building national AI capabilities, signaling a broader geopolitical fragmentation of AI infrastructure investment.

"The UK launched a $675M sovereign AI fund to reduce its dependence on technology from other countries."

Implication: This creates a durable, government-backed investment theme in AI infrastructure outside the US, particularly in Europe and emerging markets.

---

🌱 Theme 4: Africa VC Is Maturing Beyond Its Payments Roots

Africa's VC market is broadening its sectoral base, suggesting the ecosystem is entering a new phase of maturation that may attract more generalist global capital.

"Africa's VC market has started the year with a bang as investment spreads across more sectors—signaling the market's maturation beyond its payments industry roots."

---

🛡️ Theme 5: Defense Tech VC Is Surging, Even Into Unprofitable Companies

Venture capital continues to pour into defense tech regardless of profitability, with last quarter registering near-record deal volumes.

"VCs haven't been shy about investing in unprofitable defense tech companies. Last quarter saw the second-highest VC deal total on record in the industry, and much of which went to companies spending heavily."

---

2. Contrarian Perspectives

Neocloud Debt Is a Mispriced Opportunity, Not a Systemic Risk

The consensus treats neocloud leverage as a red flag. A small group of investors, backed by direct portfolio exposure, argues the market has systematically mispriced the value of forward-contract backlogs as collateral. The combination of GPU scarcity and near-unbreakable contract terms (cancelable only under force majeure) means lenders are better protected than commonly understood.

"The market has persistently underweighted the value of the signed-contract backlogs." — Antolin Garza, Karmel Capital

"The terms by which one of these contracts can be cancelable are super small—like force majeure. Even if a neocloud fails, most of these contracts are being written in ways to still protect the lenders." — Piotr Tomasik, TensorWave

Evidence: Karmel Capital has deployed this thesis via investments in CoreWeave, Lambda Labs, and Crusoe.

---

LPAC Membership Is an Underappreciated Due Diligence Edge in Secondaries

The industry treats LP Advisory Committee (LPAC) membership primarily as a governance mechanism. Pantheon's experience suggests it is actually a significant information asymmetry tool in secondary transactions — providing diligence depth that dramatically exceeds standard LP reporting.

"This GP is well known for the fact that if you're an LP in their funds, you basically get only a paragraph [on how they're performing], on each company, every quarter. But if you're on the LPAC, you get pages per company." — Amyn Hassanally, Pantheon

---

OpenAI Is Now a Life Sciences Competitor, Not Just an AI Lab

The assumption that frontier AI labs would stay in their lane is being challenged directly. OpenAI's GPT-Rosalind release into drug discovery is a direct threat to specialized life sciences AI players.

"OpenAI aims at drug discovery with GPT-Rosalind, a new frontier model unveiled yesterday. The release challenges the assumption that life sciences are too specialized for AI labs to explore."

---

3. Companies Identified

---

4. People Identified

---

5. Operating Insights

For Neocloud Operators: Prioritize Long-Term Contracts as Both Revenue and Collateral Strategy

Lenders are now underwriting neocloud debt against signed-contract backlogs rather than physical chip assets. Operators who secure longer-duration contracts not only stabilize revenue but unlock better debt terms and lower perceived risk. Actively steering customers toward multi-year deals is now a capital strategy, not just a sales preference.

"The company would pick a customer seeking a longer contract over a shorter one." — Kevin Cochrane, CMO, Vultr

---

For Secondary Investors: LPAC Seats Are a Structural Due Diligence Advantage Worth Pursuing

In secondary transactions, LPAC membership translates into qualitatively superior portfolio intelligence — potentially the difference between a paragraph and pages of company-level data per quarter. Investors structuring secondary programs should prioritize LPAC access as a core part of their underwriting infrastructure.

"It gives us incredible insight into the assets we're buying... if you're on the LPAC, you get pages per company." — Amyn Hassanally, Pantheon

---

For Secondary Market Participants: Selectivity Is the Edge When Deal Flow Overwhelms Capital

The 2026 secondaries market has more supply than capital to absorb it. The operational discipline is not sourcing — it is filtering. Pantheon explicitly rates managers as "A" or "B" and concentrates on portfolios dominated by "A" managers.

"We're being extremely selective about what we're leaning into because there's much more deal flow than there is capital to absorb it." — Amyn Hassanally, Pantheon

---

6. Overlooked Insights

Smaller AI Startups Are Being Structurally Squeezed Out of Compute Access

While the GPU scarcity narrative focuses on upside for neocloud providers, the article briefly surfaces a significant downstream consequence: smaller startups are being priced and prioritized out of compute access as providers favor larger, longer-term customers. This dynamic could widen the competitive moat for well-capitalized AI incumbents and create a structural barrier to entry for early-stage AI companies.

"Unfortunately, these dynamics are not favorable for smaller startups looking to access compute power from these providers."

---

2017 Vintage Global Funds-of-Funds: Low DPI Despite Decent IRR

The Daily Benchmark data shows 2017 vintage global funds-of-funds posting a median IRR of 14.32% but a median DPI of only 0.47x — meaning LPs have received back less than half their invested capital nearly a decade in. This is a meaningful liquidity signal for LPs evaluating the realized return profile of fund-of-funds structures in a prolonged exit drought.

"Median IRR: 14.32% | Median DPI: 0.47x" — PitchBook Daily Benchmark, 2017 Vintage Global Funds-of-Funds