Speaker 1: All right, twenty twenty five, marking a big year for
Speaker 1: deal making, with a second half surge catapulting global M
Speaker 1: and A to a near record volume of three point
Speaker 1: six trillion dollars. In our next guest says an increasing
Speaker 1: number of exits are expected through twenty twenty six, starting
Speaker 1: with IPOs, but quickly expanding to a more vibrant M
Speaker 1: and A market. Let's get to it with Bob Curly.
Speaker 1: He's Deputy Chief Banking Officer of Regional Banking at Western Alliance.
Speaker 1: Joining us right now. Hey, Bob, good to have you
Speaker 1: here twenty twenty five. How did that end up for
Speaker 1: you and your team?
Speaker 2: Thank you, Happy new year to you and Tim. The
Speaker 2: year was fantastic. When I talked to you guys in June,
Speaker 2: I was optimistic that we would see a good second half,
Speaker 2: and my expectations were exceeded. In fact, both for the
Speaker 2: bank overall and for innovation banking in particular. We've had
Speaker 2: a very strong finish to the year, and it looks
Speaker 2: like a good build to the book for next year.
Speaker 1: Well, tell us little bit more about that, give us
Speaker 1: some color, or give us some insight into exactly what
Speaker 1: you're seeing. What kind of deals are we talking about, Well.
Speaker 2: We're talking across the whole scale, which is a little
Speaker 2: bit different. What we had not seen before was earlier
Speaker 2: stage companies in the innovation sector going out and successfully
Speaker 2: raising money. The spigot has now turned back on. We
Speaker 2: started to see that late Q three and in the
Speaker 2: Q four we had any number of companies tap the market,
Speaker 2: and even more our teed up to tap the market
Speaker 2: as we go into the new year. Part of it
Speaker 2: was the reopening of the IPO market, and by attention,
Speaker 2: as was just discussed on your show, the M and
Speaker 2: A market has really come back as well. So there's
Speaker 2: additional sources of liquidity in the market that we had
Speaker 2: not seen. That gets people who are funders of these
Speaker 2: businesses more optimistic as to what the future will be,
Speaker 2: what the exits will look like, and hence willing to
Speaker 2: make bets today.
Speaker 3: A lot of ways to fund these businesses. There's equity investment,
Speaker 3: there's venture debt, which I know you certainly specialize in
Speaker 3: which one will take a front seat in twenty two.
Speaker 2: Well, it's always led by the equity side, and that's
Speaker 2: both private and public equity. When we're talking about IPOs,
Speaker 2: that's public equity. But what the function of venture debt
Speaker 2: is to be able to extend early stage companies runt
Speaker 2: cash runways so that they can accomplish milestones or traction
Speaker 2: with clients to prove out that their solution does indeed work.
Speaker 2: And you can imagine what the valuation leap is when
Speaker 2: they are able to do that so well.
Speaker 3: They don't have to give up any equity To.
Speaker 2: Do that, they give up far less equity wall.
Speaker 3: Far less do they not give up any equity if
Speaker 3: it's venture debt.
Speaker 2: They do give a little bit depending on the situation.
Speaker 2: In the early stages, they'll provide warrant coverage on the transaction.
Speaker 2: It gives a little bit of upside to the to
Speaker 2: the lender, but compared to equity, much less delutive.
Speaker 3: But are you ever doing deals in venture debt where
Speaker 3: you're just loaning money and you're not actually getting an
Speaker 3: equity stake.
Speaker 2: That tends to be for later stage companies, growth type companies,
Speaker 2: so antinuum, it starts with the very earliest stage. You
Speaker 2: do see equity attachments to almost all the deals, and
Speaker 2: as the company progresses through its development chain, there'd be
Speaker 2: less equity, more to debt focus.
Speaker 1: Hey, Bob. What kind of companies though? Is it all
Speaker 1: AI related? Is it bioscience, biotechnology? Give me an idea
Speaker 1: of the kind of deals that are coming across your desk.
Speaker 2: I would say AI is a backbone or AI is
Speaker 2: now being attached to everything that comes across at anyone's desk,
Speaker 2: and so you have to dig in and understand what
Speaker 2: the level of AI is. In many cases it's machine
Speaker 2: learning or displaying automation. So everyone's putting the AI tag
Speaker 2: on everything, But that is the constant backbone or the
Speaker 2: consistent backbone that we see. It's now being applied to
Speaker 2: a whole lot of businesses. For example, in our medical
Speaker 2: and life sciences groups, we're seeing the use of AI
Speaker 2: much more, much accelerating in that area. Also seeing energy
Speaker 2: what had been clean tech is now becoming energy tech.
Speaker 1: What does that mean?
Speaker 3: So it's energy change?
Speaker 1: What does that mean?
Speaker 2: No? I think it's a focus from just focusing on
Speaker 2: clean energy, for example, to how do we get more
Speaker 2: sources of energy at a more compelling price. And so
Speaker 2: it's really a transition in terms of AI on the
Speaker 2: what it's doing is transitioning the software what had been
Speaker 2: the software business into an AI business. But it's really
Speaker 2: going after the applications business. So how do we solve
Speaker 2: a specific company's problem today, what's the ROI on that?
Speaker 2: And that's where we're seeing applied AI really make some gains.
Speaker 1: Bob, I want to go back to something you said
Speaker 1: though about deals coming across the desk, and you said
Speaker 1: everybody's attaching AI and you've really got to kind of
Speaker 1: go through stuff. That makes me a little nervous because
Speaker 1: that reminds me of the dot com where everything but
Speaker 1: through dot Com on, you know, and said they had
Speaker 1: an Internet strategy and every but he didn't. So is
Speaker 1: there a lot of that coming through or no.
Speaker 2: I would say everything has a consistent backbone or consistent
Speaker 2: theme of AI, and what you have to look at
Speaker 2: is what is the comparative differential that they provide and
Speaker 2: how long lasting is that that differential going to last?
Speaker 2: And as a result, what we're doing is focusing on
Speaker 2: those sectors where there's a more immediate ROI for the
Speaker 2: ultimate enterprise client.
Speaker 3: Bob Curley, Deputy Chief Banking Officer of Regional Banking at
Speaker 3: Western Alliance, joining us on this first trading day of
Speaker 3: the year,