Cash Is King Again

The third week of the Iran conflict has shifted the economic narrative from short-term disruption to long-term structural damage — and the financial system is starting to feel it. Institutional investors don't worry about an AI bubble anymore: they're preparing for higher global inflation and reaching for cash. We're expecting a correction on the venture secondary market. Meanwhile, OpenAI and xAI are fighting for enterprise dominance, and SpaceX is fighting for exclusivity in orbital computing.

Liquidity Became the Story

And the war isn't happening in isolation. It's landing on top of what traders have been calling the "SaaSpocalypse" — the AI-driven selloff that wiped roughly $2 trillion from software stocks between January and February. The private credit funds that financed much of this sector are now sitting on deteriorating portfolios. 

Former Coinbase CTO Balaji Srinivasan published a pessimistic essay about the future of tech financing that captured the mood:

"Also assume tech financing crashes for the indefinite future. The genius plan to get the Gulf states caught in the crossfire has incinerated much of the funding for LPs, for data centers, and for IPOs. Anyone in tech who supported this war may soon learn the meaning of 'force majeure' as funding gets yanked."

BlackRock's $26 billion HPS Corporate Lending Fund — the world's largest asset manager's flagship private credit vehicle — received $1.2 billion in redemption requests. It couldn't honor roughly $580 million of them. 

Same week: Kraken, the crypto exchange valued at $20 billion after raising $800 million in November, froze its IPO plans. The company had confidentially filed with the SEC and was set to go public in Q1. Now it's waiting for "market conditions to improve." 

And it's not just crypto. CNBC reported on India — the world's busiest IPO market — as a case study: major tech and consumer startups including PhonePe (Walmart-backed), Zepto, Flipkart, and Oyo have all deferred IPO plans amid valuation mismatches. 

Gulf capital: "pencils down"

The biggest source of private company capital globally — Gulf sovereign wealth funds — might be pausing. AGBI published the most recent analysis: Gulf states are expected to continue investing in the US despite the disruption, but analysts say they may scale back spending, shift priorities, and seek revised terms. Rachel Ziemba told AGBI that the investment pledges made to the Trump administration were always more "aspirational" and "symbolic" than realistic, and the Iran conflict may further increase the gap between promises and implementation.

Context: Middle Eastern sovereigns invested $42.5 billion in direct venture capital in 2025 alone, up from $13.3 billion in 2024 (PitchBook). 

Fund managers confirm the shift

The Bank of America Global Fund Manager Survey (March 17) made the sentiment shift official. 210 fund managers overseeing $589 billion responded:

• Cash levels jumped to 4.3% from 3.4% in February — the biggest monthly surge since March 2020 (COVID). Cash had hit a record low of 3.2% in January.
• Growth expectations collapsed: only a net 7% expect stronger growth, down from 39% in February.
• Inflation expectations surged: net 45%, up from just 9%.
• Top tail risks shifted from "AI bubble" (25% in February) to "Geopolitical conflict" (37% in March). Private credit rose to 16% — for the eighth consecutive month, PE and private credit topped the list of most likely sources of a systemic credit event (63% of managers).

What this means for venture secondaries

We think the liquidity squeeze is about to hit the secondaries market in a very visible way.

More supply is coming. Throughout 2025, bid share on the LBX platform ranged from 30% to as high as 48% in some months — especially in AI, which was a heavily bid-heavy sector. As of this week, bid share on the platform sits at ~40% of total volume. We expect ask volume to increase further as LPs seek liquidity and the denominator effect forces rebalancing.

A pricing correction will follow. The end of 2025 was the peak of "hype investing" — the period when most bids on the secondary market were made at premiums to primary rounds. That era is ending.

We're already seeing early signs in Q1: the biggest AI names have shifted from bid-heavy to ask-heavy, and the LBX25 Index is flat. We expect more supply, wider discounts, and a broader correction across sectors heading into Q2.

For buyers with dry powder, this could be the best entry window since 2022.