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| Hello. In today's Daily Pitch, we look at Brookfield's AI infrastructure partnership with Qatar, asset managers' optimistic responses to our PE survey and the first official partnership between a college athletics program and a PE firm. |
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| Analyst outlook: AI's most overheated spaces |
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By Jacob Robbins, Technology Reporter
AI-based code generation startups and autonomous driving software companies are among the most overheated and overhyped areas of AI, according to our 2026 Artificial Intelligence Outlook.
Behind all the enthusiasm and billions of dollars VCs are pouring into these subsectors, the risk of investments going to zero is high, PitchBook analysts warn.
Most of the subsectors all have one thing in common: a surge of new startups doing little to differentiate themselves from one another.
"Some of the most obvious ideas are crowded," said James Ulan, PitchBook's director of emerging technology research. "Eventually, this will lead to disproportionate capital destruction—more than is normal in venture." |
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Take, for example, AI code creation, which has been one of the buzziest AI subsectors this year.
Companies like Anysphere, maker of "vibe coding" tool Cursor, have hit record business metrics. Anysphere became the fastest startup to reach $100 million in annual recurring revenue, achieving the feat in 12 months.
Cognition, a competitor that acquired the remaining assets and staff of Windsurf after Alphabet poached most of the company's top executives in a $2.4 billion acqui-hire deal, doubled its revenue from July to September.
These companies' success has attracted more companies to their subsectors, as well as more capital from investors pouring in. Code Metal, an AI-based code completion startup, raised $36.5 million for its Series A in November. Back in April 2024, Augment announced a $227 million round for its AI coding agent.
But the risks remain high.
"The market is oversaturated with startups that are too often simply thin wrappers around foundation models lacking any deep or defensible moats," said Derek Hernandez, a senior emerging technology analyst covering software companies.
"The window for new entrants is closing fast, and for undifferentiated startups trying to mimic the top leaders, they are heading toward widespread commoditization and, very likely, value destruction." |
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• Brookfield Asset Management has teamed with the Qatar Investment Authority to invest $20 billion in AI infrastructure as the Middle East becomes a rapidly growing market for the sector. Find out more
• Our PE survey signals a positive outlook for 2026, with AI bringing a mix of risks and rewards. Read more
• Could evergreen funds provide the exit that GP stakes investors want? These perpetual, cash-generative investments could finally find a home in this rapidly expanding corner of the private markets. Read more |
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| University of Utah athletics breaks ground with landmark PE deal |
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| Utah quarterback Devon Dampier (Ed Zurga/Getty Images) |
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By Jessica Hamlin, Sr. Funds Columnist
The University of Utah's board of trustees approved a landmark deal between the athletics department and a New York-based PE firm yesterday.
The pending deal marks the first official partnership between a college athletics program and a PE firm.
Under the new venture, buyout shop Otro Capital will partner with the university's nonprofit University of Utah Growth Capital Partners Foundation to create a for-profit offshoot called Utah Brands and Entertainment. The company will be tasked with growing revenue out of the school's athletic programs.
The agreement comes during a challenging period for the University of Utah's sports programs and college sports more broadly. In 2024, Utah's athletic department had a $17 million deficit, primarily stemming from the school's departure from the Pac-12 Conference in 2023 and its subsequent entrance into the Big 12.
In July, a settlement between the House of Representatives and the NCAA finalized an antitrust settlement of $2.8 billion that allowed colleges to directly pay athletes for their name, image and likeness and bring in revenue-sharing agreements with student athletes.
The settlement has reshaped the financial structure of college athletic programs. Schools are now allowed to share up to $20.5 million in revenue with student athletes.
For every college athletic program, this is uncharted territory. The University of Colorado's athletic department, for example, projects a $27 million deficit for FY 2026 after a $10 million contract for its football coach Deion Sanders and $20.5 million in NIL payments to its athletes.
Utah's history-making deal is meant to help with that.
"Certainly, there's a short-term firm solution here with capital that's very important, and I'm not going to deny that," Utah athletic director Mark Harlan said in yesterday's board meeting. "But I think the long-term ability for us to get better quickly is upon us, especially in the changing atmosphere."
Under the leadership of chief executive David Anderson, Utah's foundation, with over $400,000 in assets, will retain a majority interest in the newly formed UB&E and will appoint the majority of its board members. The foundation is separate from the university's over $2 billion endowment.
Otro Capital will own a minority stake in the new company and oversee select revenue streams, including media rights, ticketing, concessions, merchandise, corporate sponsorships and university trademarks and licensing. |
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Smart reads that caught our eye.
• High-performing stocks are luring private companies back to IPO consideration. Bankers are preparing for a busy 2026, with public listings expected to maintain a strong pace. [Bloomberg]
• Despite President Donald Trump's approval to export Nvidia chips to China, Beijing will still limit access. Chinese regulators still want to focus on the country's semiconductor self-sufficiency and are discussing an approval process for purchasing the H200 chips. [Financial Times]
• TikTok, YouTube, Instagram and Facebook are now banned for Australians under 16. Advocates across the country argue that tech companies have been slow to introduce harm-reduction measures for children. [ | | | | | | |
