Issue 27: Bonds Run Under Everything

Last week the 30-year US Treasury bond hit 5.18 percent, the highest in 19 years, and almost everyone wrote it up as a story about Washington and the deficit. For me, and so many others in our private markets world, it was about something else. Because of course, when the government has to pay you 5 percent to lend it money, every other investment, whether stocks, real estate, or private deals, has to look better than 5 percent to be worth your time.

Which also means all of them get quietly re-measured against the new bond rate.

Bonds run under everything.

Four things this week, plus a note at the end.

Bonds Run Under Everything

Higher discount rates show up everywhere in private markets: fund returns, deal valuations... and in the price someone is willing to pay you for your equity, with carry hurdles and IRR targets and continuation-fund pricing all re-baselining at the same time.

What it means depends on which side of the table you sit on, and which side of the AI line.

A non-AI founder is raising into a higher bar than they faced eighteen months ago, and a non-AI investor is paying fees that do less work than they used to, because the categories those fees cover are the ones not growing.

An AI founder is inside the one category capital is still chasing, but the price the room expects went up alongside the rates, and an AI investor is paying more for the same exposure across the board.

The single operator move that survives all four reads is the same, which is to treat the bar as higher. The deals that close from here will not be the ones with the biggest story, but the ones whose numbers hold up against a 5 percent risk-free benchmark.

I liked the WSJ's coverage of this; link lives here.

What Most Founders Get Wrong About the First Thirty Seconds

I have watched hundreds of founders prep for a raise...the pattern is the same almost every time. Four to six weeks of work go into the deck...and about thirty minutes of work going into the actual pitch. Then the founder will nervously hop on zoom and try to avoid word-vomiting. I know I'm being a tad bit too blunt, but this literally happens all too often.

Fundraising is sales...and sales is a transfer of emotion, and you cannot transfer emotion through a slide, which means in a market where the bar just went up, the pitch is doing more of the work, not less.

My full thoughts on this: Your Pitch Is Rehearsed in the Wrong Place.

The Fee Stack Nobody Models

Carry, management fees, and deal costs quietly take a cut of every private return, which means you can lose money in a deal that performed well.

Fees are not the enemy, though, because they buy real things, namely sourcing, selection, diligence, and a manager whose payday depends on yours. The honest question is not whether fees are bad, but whether you are still the person who needs to pay for what those fees actually buy.

Most sophisticated investors end up with a blend.

My full thoughts on this: What You Actually Pay to Invest in Private Markets.

The S-1 Clause That Pays Out If You Land on Mars

Buried in the SpaceX S-1 last week was a personal incentive clause that grants Elon Musk one billion shares of stock if he lands and operates a city on Mars, while the same filing notes he already controls 85.1 percent of the voting power through dual-class shares.

So just to be clear, the CEO of a company filing for a $2 trillion IPO has already locked up super-voting control of his own company, and the document also notes that if the same CEO personally relocates humanity to another planet, he gets paid again. LOL.

There is a lesson in there.

A Note From the Long Weekend

I spent most of last weekend off-grid with my family, and the noise faded fast. I will spare you the philosophy. What I will say is that there is no version of this week's news that does not make me grateful for the operators in our "orbit" who are were busy papering something, so... thank you, if that is you. ;)

More next Friday.

One Last Thing

If you know a founder with a real company and real numbers who is fighting through this rate environment, forward this and reply with their name, and if they launch a portal with us I will send you a thank-you you will actually want.

And if you want to see what we built, go to dealbox.io and click Get Started, tell us what is broken in your raise process, and we will fix it.

Thomas Carter
Chairman and CEO, Deal Box
May 22, 2026

This newsletter is educational. It is not investment, legal, tax, or accounting advice, and it is not an offer to buy or sell any security. Securities offered under Rule 506(c) are available only to verified accredited investors who have completed accreditation verification. You should consult your own qualified legal, tax, and investment advisors.