Edith Yeung, general partner at Race Capital, and Larry Aschebrook, founder and managing partner of G Squared, speak during a CNBC-moderated panel at Web Summit 2024 in Lisbon, Portugal.
Rita Franca | Nurphoto | Getty Images
LISBON, Portugal — It’s a tough time for the venture capital industry right now as a dearth of blockbuster initial public offerings and M&A activity has sucked liquidity from the market, while buzzy artificial intelligence startups dominate attention.
At the Web Summit tech conference in Lisbon, two venture investors — whose portfolios include the likes of multibillion-dollar AI startups Databricks Anthropic and Groq — said things have become much more difficult as they’re unable to cash out of some of their long-term bets.
“In the U.S., when you talk about the presidential election, it’s the economy stupid. And in the VC world, it’s really all about liquidity stupid,” Edith Yeung, general partner at Race Capital, an early-stage VC firm based in Silicon Valley, said in a CNBC-moderated panel earlier this week.
Liquidity is the holy grail for VCs, startup founders and early employees as it gives them a chance to realize gains — or, if things turn south, losses — on their investments.
When a VC makes an equity investment and the value of their stake increases, it’s only a gain on paper. But when a startup IPOs or sells to another company, their equity stake gets converted into hard cash — enabling them to make new investments.
At the same, however, there’s been a rush from investors to get into buzzy AI firms.
“What’s really crazy is in the last few years, OpenAI’s domination has really been determined by Big Techs, the Microsofts of the world,” said Yeung, referring to ChatGPT-creator OpenAI’s seismic $157 billion valuation. OpenAI is backed by Microsoft, which has made a multibillion-dollar investment in the firm.
‘The IPO market is not happening’
Larry Aschebrook, founder and managing partner at late-stage VC firm G Squared, agreed that the hunt for liquidity is getting harder — even though the likes of OpenAI are seeing blockbuster funding rounds, which he called “a bit nuts.”
“You have funds and founders and employees searching for liquidity because the IPO market is not happening. And then you have funding rounds taking place of generational types of businesses,” Aschebrook said on the panel.
As important as these deals are, Aschebrook suggested they aren’t helping investors because even more money is getting tied up in illiquid, privately owned shares. G Squared itself an early backer of Anthropic, a foundational AI model startup competing with Microsoft-backed OpenAI.
Using a cooking analogy, Aschebrook suggested that venture capitalists are being starved of lucrative share sales which would lead to them realizing returns. “If you want to cook some dinner, you better sell some stock, ” he added.
Looking for opportunities beyond OpenAI
Yeung and Aschebrook both said they’re excited about opportunities beyond artificial intelligence, such as cybersecurity, enterprise software and crypto.
At Race Capital, Yeung said she sees opportunities to make money from investments in sectors including enterprise and infrastructure — not necessarily always AI.
“The key thing for us is not thinking about what’s going to happen, not necessarily in terms of exit in two or three years, we’re really, really long term,” Yeung said.
“I think for 2025, if President [Donald] Trump can make a comeback, there’s a few other industries I think that are quite interesting. For sure, crypto is definitely making a comeback already.”
At G Squared, meanwhile, cybersecurity firm Wiz is a key portfolio investment that’s seen OpenAI-levels of growth, according to Aschebrook.
Wiz is now looking to reach $1 billion of ARR in 2025, doubling from this year, Roy Reznik, the company’s co-founder and vice president of research and development, told CNBC last month.
“I think that there’s many logos … that aren’t in the press raising $5 billion in two weeks, that do well in our portfolios, that are the stars of tomorrow, today,” Aschebrook said.
Check out the companies making headlines in extended trading. Palantir Technologies — Shares dropped nearly 7% after the defense tech company reported first-quarter earnings that were in line with Wall Street’s expectations. Adjusted earnings of 13 cents per share came in-line with the consensus estimate, per LSEG. Palantir reported $884 million in revenue, topping the $863 million forecast by analysts. Vertex Pharmaceuticals — The biotech stock dropped 2% on disappointing quarterly results. Adjusted earnings came in at $4.06 per share, below the $4.32 per share forecast by analysts surveyed by LSEG. Revenue of $2.77 billion also missed analysts’ estimates for $2.85 billion. Mattel — Shares of the toymaker declined 2.5% after management paused its 2025 full-year guidance due to tariff uncertainty. Meanwhile, first-quarter results topped analysts’ estimates. Neurocrine Biosciences — The maker of neurological drugs jumped 11% postmarket after first-quarter revenue of $572.6 million topped a $559.6 million estimate from analysts surveyed by FactSet. Sales of Ingrezza, used to treat movement disorders, rose 8% year-over-year to $545 million. Lattice Semiconductor — The chip stock fell 3.8% after first-quarter earnings and revenue both were in-line with consensus estimates. Lattice guided toward current quarter revenue between $118.5 million to $128.5 million, while analysts polled by LSEG expected $123.6 million. Adjusted earnings are estimated to range from 22 cents to 26 cents per share, versus the 24 cents per share analysts were looking for. Hims & Hers Health — The telehealth company dropped 1%. Guidance for second-quarter revenue came in lighter than expected, ranging from $530 million to $550 million, while analysts polled by FactSet sought $564.6 million. Earnings and revenue for the first quarter surpassed the Street’s expectations, however. Ford Motor — The maker of F-series pickup trucks fell 2.7% after hours on first-quarter results showing earnings ex-items before interest and taxes (EBIT) plunged to $1.02 billion from $2.76 billion a year ago, according to FactSet. Ford estimated the net cost of higher tariffs on EBIT in 2025 at about $1.5 billion and withdrew forward guidance. Clorox – Shares of the cleaning products manufacturer fell 2.8%. Clorox posted adjusted earnings of $1.45 per share on revenue of $1.67 billion in the fiscal third quarter. That fell short of analysts’ call for $1.57 per share in earnings and $1.73 billion in revenue, per LSEG. Diamondback Energy – The energy stock advanced nearly 1% after reporting better-than-expected results. Diamondback earned $4.54 per share, ex-items, in the first quarter, topping FactSet consensus estimates for $4.18 per share. Cash capital expenditures of $942 million in the period was less than the $952.8 million forecast by Wall Street. — CNBC’s Darla Mercado and Scott Schnipper contributed reporting
Check out the companies making headlines in midday trading: Berkshire Hathaway — Warren Buffett’s conglomerate saw shares drop more than 4%, retreating from record highs reached on Friday. Monday’s sell-off came after the 94-year-old Buffett announced his intention to step down as CEO. The board voted unanimously on Sunday to make Greg Abel president and CEO on Jan. 1, 2026, and for Buffett to remain as chairman. Meanwhile, Berkshire’s operating earnings fell 14% in the first quarter , driven by a 48.6% plunge in insurance-underwriting profit. On Semiconductor — Shares tumbled more than 8% despite the chipmaker’s top- and bottom-line beat in the first quarter. On also issued second-quarter guidance, estimating adjusted earnings coming in between 48 cents and 58 cents per share, while analysts polled by FactSet forecast 51 cents per share. Top-line guidance between $1.4 billion and $1.5 billion also mostly came above consensus estimates for $1.41 billion. Skechers USA — Shares of the footwear company surged nearly 25% after it agreed to be acquired by 3G Capital for $63 per share . Other footwear stocks rose in sympathy following the announcement. Crocs gained almost 5%, while Deckers advanced more than 2%. Tyson Foods — Shares of the Jimmy Dean and Hillshire Farm parent slipped almost 8% after revenue for the second fiscal quarter came in at $13.07 billion, missing the consensus forecast of $13.14 billion from analysts polled by FactSet. However, Tyson posted earnings of 92 cents per share, excluding items, beating the Wall Street estimate of 83 cents per share. Howard Hughes — The stock added 3.7% after activist investor Bill Ackman’s Pershing Square agreed to buy nine million newly issued shares of the real estate developer. The hedge fund is paying $100 per share, which represents a 48% premium to Howard Hughes’ closing price on Friday. Sunoco — Shares fell nearly 6% after the motor fuel distributor shared its plan to acquire Parkland, a Canada-based competitor. The cash-and-stock deal is valued at more than $9 billion, which includes debt. Loews — Shares of the conglomerate pulled back 1.3% after the company’s first-quarter report showed a drop in earnings. Loews reported $370 million in net income for the period, or $1.74 per share, down from $457 million and $2.05 per share a year earlier. The company saw net income declines in its insurance and hotel businesses. Streamers — Streaming stocks declined after President Donald Trump announced Sunday in a Truth Social post a 100% tariff on movies produced outside of the U.S. to save the “dying” American movie industry. Netflix lost more than 1%. Amazon , Paramount Global and Warner Bros. Discovery each shed roughly 1%. EQT — The natural gas stock popped almost 3% following UBS’ upgrade to buy from neutral. UBS called the stock “well positioned” to capture upside tied to the firm’s positive outlook for natural gas next year. Wendy’s — The fast-food chain added 1% on the back of JPMorgan’s upgrade to overweight from neutral. JPMorgan said the stock’s current share price offers a “value-oriented opportunity” for investors. Sotera Health — Shares jumped nearly 5% after Goldman Sachs upgraded the testing lab company’s stock to buy from neutral. Goldman said the company has a “durable” business model and should be able to withstand an economic downturn. — CNBC’s Sean Conlon, Lisa Kailai Han, Hakyung Kim, Michelle Fox, Jesse Pound and Yun Li contributed reporting.
People watch as Berkshire Hathaway chairman Warren Buffett is seen on a screen speaking at the Berkshire Hathaway Inc annual shareholders’ meeting, in Omaha, Nebraska, U.S., May 3, 2025.
Brendan McDermid | Reuters
Berkshire Hathaway shares are hanging on solidly Monday as investors process Warren Buffett‘s surprise announcement to step down and envision a new path for the conglomerate after his legendary 60-year run.
Buffett, 94, picked the very last moment at Berkshire’s annual meeting in Omaha, Nebraska, to tell his loyal shareholders that it’s time for Greg Abel, vice chairman of non-insurance operations, to replace him as CEO. The board voted unanimously on Sunday to make Abel president and CEO on Jan. 1, 2026, and for Buffett to remain as chairman.
Class B shares fell 2.9% in premarket trading Monday after hitting an all-time high at $539.80 Friday. Class A shares dropped 2.8% after closing at a record high at $809,350 apiece. Berkshire issued Class B shares in 1996 at a price equal to one-thirtieth of a Class A share. In 2010, Berkshire Class B shares split 50-for-1.
“Shareholders should welcome this transparent transition, but also have confidence that Warren isn’t going anywhere,” said Macrae Sykes, portfolio manager at Gabelli Funds and a Berkshire shareholder. “Retaining the position of Chairman means he can continue to mentor Greg and the Berkshire leaders, while also providing additional intellectual capacity when the inevitable time for more major capital allocation occurs.”
It marks an end of an epic era for Berkshire, which was a failing New England textile mill six decades ago when Buffett used an investment partnership he ran to take control. Berkshire has grown into a one-of-a-kind juggernaut worth nearly $1.2 trillion with businesses encompassing insurance, railroad, retail, manufacturing and energy. Buffett is handing over his reins on a particularly high note as Berkshire shares just reached a new peak Friday.
Berkshire Hathaway Class B shares
“Buffett leaves a company that is less reliant on his investing capabilities, with an array of leading businesses with strong cash flows,” Brian Meredith, UBS’ Berkshire analyst, said in a note. “Operationally, we expect little change at BRK and the culture/strategy to remain unchanged under Abel.”
The stock could also be reacting to Berkshire’s first-quarter results that showed a 14% decline in operating earnings, driven by a 48.6% plunge in insurance-underwriting profit. Berkshire said the Southern California wildfires led to a $1.1 billion loss during the period.
Berkshire shares have significantly outperformed the S&P 500, rising nearly 19% this year. Investors seeking relatively safe places to hide find Berkshire appealing because of the defensive nature of its huge insurance empire and the conglomerate’s unmatched balance sheet.