Executive Summary
Jeff Richards drops a nuclear insight: "If you're a public market investor fishing in software right now, you're fishing in a river in Fresno and the private market investors are getting the fish in Alaska, Colorado, Montana, Patagonia." This isn't hyperbole—it's a structural arbitrage hiding in plain sight. Richards manages Notable Capital and sees private AI companies booking "hundreds of millions of dollars in new business in Q4" while growing 60-80% annually. Meanwhile, public software trades at 10-15x forward revenue despite 20% growth rates. The disconnect is staggering: Palantir commands 97x sales precisely because scarcity creates premium. Richards confirms the AI spending surge is real—Ramp's data shows 74% of tech companies now pay for AI tools, 60% in finance, 45% in manufacturing. But this capital flows to private companies building consumption-based models that undercut seat-based incumbents. One Richards portfolio company told customers they'd drop from $15,000 per sales rep to $3,000 using AI-native CRM. The kicker? These private companies are raising at $5-10 billion valuations with secondary markets providing liquidity, removing IPO urgency. Richards expects late 2026/2027 IPO wave as regulatory certainty improves and companies exhaust private capital patience. The arbitrage opportunity: public markets will reprice dramatically when 10-15 AI-native companies with $5-10 billion market caps and 60%+ growth hit exchanges. Current software multiples assume scarcity continues indefinitely—a bet against innovation history.
Key Insights
what Jeff Richards said“We literally have several companies in our portfolio that booked hundreds of millions of dollars in new business in Q4 and these are not the OpenAIs and Anthropics of the world these are companies you've probably never heard of”
what Jeff Richards said“One of our companies that bought from one of these companies told us that their spend prior to this new purchase was around $15,000 per sales rep on their tech stack they think under this new model to be closer to $3,000”
what Jeff Richards said“Technology 74% finance 60% manufacturing 45% retail 38% healthcare 31% construction 30% - clearly every industry is spending money in AI”
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