OpenAI’s Music Race, Inside the Growing Secondary Market, AI for Mental Healthcare | Oct 27, 2025

0:13Welcome, everyone, to the information's TITV. My name is Corey Weinberg. I'm in for Akash and it is Monday, October 27th. TI TV is in California, the Golden State, the next few days, just like the World Series. I'm coming to you from my home in Los Angeles, just three miles from Dodger Stadium. Tomorrow, Akash will host from the Adobe MAX conference in LA. And on Wednesday, Natasha Mascarenhas will take the mic from Napa Valley at the Information's Women in Tech Media and Finance Conference. Looking ahead, we have a trifecta of big tech news events this week. It's going to be busy. We have NVIDIA's GTC conference in Washington, D.C.

1:01starting today. Most of the rest of the Magnificent Seven reports earnings this week starting tomorrow. And we will have a tech IPO. Corporate travel startup Navon is likely to ring the bell at the New York Stock Exchange later this week. We'll have plenty of analysis on those stories later in the week. Today, we're sticking with the private markets, my favorite subject. We'll discuss a debate on fun concentration that is cropping up in venture capital. We'll talk with our reporters about OpenAI's push into AI-generated music. That'll be interesting. And I'll interview the CEO of Mental Health Unicorn Spring Health.

1:44But let's first get to our first guest and our first segment on the growing startup secondary market. We have Javier Avalos, the CEO of Caplight, one of the data providers that tracks the secondary market most closely. And we have Hans Swildens, CEO and founder of Industry Ventures, which just agreed earlier this month to sell itself to Goldman Sachs in a deal that could be worth up to$965 million. Javier and Hans, welcome to TITV. Thanks, Corey. Good to see you. Hans, you're a returning guest to the program. Your firm is, I think, about 25 years old. And Goldman CEO David Solomon pointed to the fact that industry was a pioneer in secondary venture investing as a reason to want to pick you guys up.

2:39Set the backdrop for us here. What's happening now that makes secondary investing more important to the venture capital ecosystem? Thanks again for having me on. I appreciate it. Um, so yeah, we've, we've been, uh, pioneering the secondary market for 25 years, um, started originally, uh, when the dot-com collapse happened and helped, uh, build a secondary market for, for venture and tech growth. And, you know, one of the reasons why, um, Goldman was interested in partnering more deeply with us and acquiring our firm is that we've worked with them along this whole journey since over 20 years as the markets developed.

3:22And I think we've reached an inflection point here. And they would agree that the market is large, growing, and not going away. It's a structural component in the market of how venture funds, limited partners, corporate investors, hedge funds, mutual funds get liquidity. similar to how Goldman pioneered the IPO market in terms of helping raise capital and getting liquidity for shareholders a long time ago. Our firm was one of the pioneers pioneering the secondary market to generate liquidity. And that market is obviously growing. Javier, Caplight, your firm, reported last week that it saw, I think, a 29 % increase in month-over-month transactions in the secondary market in September and trading volume was up by about half so far this year.

4:17What's driving the growth? Yeah, that's right, Corey. It's been a huge year so far for the VC secondaries market. And as you mentioned, about 50 % up on a volume basis from where we are this year versus where we were last year, same time. As far as like what's driving the growth, we really see three things. I mean, one is access. This little thing called AI has very quickly like shifted the VC paradigm where there are only a few funds in the world that can get like pure AI exposure. And so the secondary market has popped up as like one place where you don't have to be one of like the top 10 venture funds in the world.

4:59You can still go and find an avenue to get exposure to some of these really hot AI companies. On the back of that, rounds are getting larger and larger as a solution for venture funds, potentially not having billions of dollars of dry powder just sitting around, but wanting to participate in some of these massive AI rounds. We're seeing an increase in SPV transactions with a lot of money flowing through special purpose vehicles to get into some of these severely oversubscribed funding rounds. And then valuations are high. We've hit a new peak following the 2021 to 2022 venture correction. With that peak comes folks who were invested early, who are seeing the venture secondary market as an opportunity to get some DPI, return capital to their investors, and keep the VC ecosystem flowing.

5:51So is it fair to say that the relatively dormant IPO market has been pretty good for both of your businesses? Like how is that sort of feeding into the growth that you're seeing in the secondary market? Yeah, happy to start this one off. I think there's a common misconception that when the tech IPO market is hot, that's a negative for the venture secondaries market. It's actually the opposite. When there is an active IPO offering, IPO window, that tends to be when we see additional dollars coming in on the buy side of the venture secondaries market. We saw it in the 2021 cycle. We're seeing it again this year.

6:32I think as long as there's not a situation where every unicorn hits the exit at the exact same time, which it doesn't make sense for that to happen, you can see positive IPO activity correlated with strong secondary market environment. And I want to get a little bit into how this market actually functions. Hans, how have you seen sort of the secondary market mature? How do this still need to go from here? Venture has generally been behind, I think, the private equity industry and sort of building up the infrastructure around secondaries. Sort of what are you seeing in the last couple of years that signals maybe that maturation process is happening?

7:16Yeah, I think that's a really good point. When you look at venture and growth, it's been delayed from private equity development and sophistication in terms of getting liquidity. And so we've always played catch up, honestly, to the private equity markets. That includes real estate, infrastructure, credit, alternatives, the bulk of its buyout. But in terms of what we're seeing in our market, the new kind of area of the market that's growing rapidly is continuation funds. This is an area of the market that grew rapidly starting about 10 years ago in the buyout market. And we just started feeling that growth in the last couple of years.

8:06um and and so what you'll see is more and more liquidity structures coming from the buyout market that were already uh um kind of accepted being applied into the venture market and so uh continuation fund if you don't know what it is it's a a fund that it's basically an old venture fund or a portfolio of investments that is um you know recapped or uh restructured to continue the management and funding of the portfolio companies and holding them longer. And so, you know, we saw almost a dozen of these last year in our market. We'll see probably two dozen this year, maybe three dozen next year. And the thing that's really interesting about them from a growth perspective in terms of our market sizing is that these transactions have been, are very large because it's a whole portfolio of traditional venture fund ownership, which, as you know, has large ownership stakes across a number of companies.

9:08And so the transaction sizes are larger. So we're seeing transaction sizes become larger and larger over the last few years. And we think that'll continue so that it'll drive more market growth in terms of total TAM. Do LPs like continuation vehicles? Are they voting for these or are they signing up for these? Yeah, I think that the buyout market had that period of time where LPs didn't really know, right is this a good thing or bad thing for the buyout market um and what they all settled on was it was a good thing because it allows it gives lps an option to take liquidity or not take liquidity it gives the gps an option to continue holding the investments to maximize the value um and you know as an lp in a venture fund or in a portfolio you're not forced to sell into the continuation fund, you can check a box and say, I'll roll into it.

10:00And therefore, you're not affected and you can continue your ownership. You just switch from the fund that you're in to the continuation fund or the fund you're in becomes the continuation fund. So, there's a couple of different structures of how you structure the actual continuation fund legal process, but you can just keep going. And so, LPs have settled on the fact that they like it because they can take liquidity or not take liquidity. They can take partial liquidity, full liquidity, or not take any. And that's honestly what you need to offer folks to have a good, fair functioning market. I quickly just want to hit on some of the tensions in this market.

10:38You know, some of the hottest AI companies often don't want that many secondary trades happening without their involvement. They'll reject potential trades brought to them or exercise their right of first refusal. I had a story today about how Andrel is, how hot they are in the secondary market. And their COO, I quoted as saying, anyone claiming they can offer Andrel secondary shares is probably misrepresenting the facts and maybe defrauding buyers to say nothing of charging layers of egregious fees. Does he have a case? Like, what are the tensions that lie here with some of these companies, Javier, and how are buyers navigating it?

11:20Yeah, I think he does have a case. And I thought your story was really well written. I encourage folks to read it. The stakeholders here all have their own thing that they're solving for. For the companies, that's making sure that investors on their cap table are of a quality that they care about. And it's also preventing distraction from operating the company and therefore sort of running these processes in somewhat orderly fashion. I think because of that, any ad hoc trading of this stuff or any trading that could cause the company to lose control is automatically going to be like a really sensitive point for the company.

11:59And I think that that makes sense. At the end of the day, this market exists to get liquidity for some of the earliest investors, the risk takers that are kind of backing these companies as a solution for them to sort of return cash to their investors to keep the whole ecosystem going. The secondary market needs to exist as like a release valve for when pressure builds up where liquidity is a must have, but it needs to be done in somewhat orderly fashion. And so I think over time, you see more companies leaning into like more systematic programs for offering liquidity. You see companies that are open to doing special purpose vehicles for syndication, but in a much more controlled manner where the company is getting the ability to kind of OK participants in each SPV.

12:42And if there is going to be ongoing continuous trading, you have companies that are sort of opting in for that. And to be clear, we don't have that yet. Like there is no NASDAQ or New York Stock Exchange for private companies just yet, but I do see that happening in the future. Well, there'll be a lot more to dig into there. Javier and Hans, thanks for joining me. This is one of my favorite topics, so thanks for the conversation.

13:11All right. Well, in glass-walled boardrooms across Sandhole Road and in San Francisco's South Park, venture capitalists and their limited partner backers are debating the basic question, what kind of firm are we? Some firms are in search of scale, amassing a huge amount of capital that they spread out over a wide set of startups. Others are sticking to the more boutique roots of venture capital and making more concentrated bets. One VC thinking and writing about this debate is Finn Barnes, who co-founded the San Francisco-based early-stage VC firm, The General Partnership, after a long tenure at First Round Capital.

13:52He wrote a blog post last week called Alpha VC vs Beta VC, The Two Competing Logics of Venture Capital. Finn, welcome to TITV. Hey, Corey. Good to see you. Thanks for having me. So, yeah, of course. Thanks for coming in. Are you dialing in from your SF office? Yeah, we're looking at. The Blaswald SS office? Okay. Yeah, Blaswald. So what is an alpha VC and what's a beta VC? And why is this debate happening now? So I was actually talking with a couple founders who were trying to decide how to think about the partnership they would form in their next round of financing. and they were trying to figure out the difference between the offers that they had, the type of partnership they would form.

14:35And they started talking about the incentives of those partners, the way the firms operated. And it just became clear to me that as the market continues to mature and as you're just talking about with the previous segment, you know, we're sort of seeing all these new financial products get created in the private markets. It feels like there's a bifurcation and that certain firms are sort of chasing market coverage and other firms are chasing very specific sort of idiosyncratic founders within a market believing they can outperform. And so I think the difference to me became sort of a pretty simple split between people seeking alpha and people looking for market exposure and generally providing access to beta, meaning access to the broader technology, private markets to their investors.

15:21Right, okay. So you mean alpha and beta from like a financial term perspective? Yeah. Okay. And so what are... No judgment whatsoever. Right. Okay. Yeah. As someone, you're on the side of the alpha, I think. So no judgment for sure. Well, I want to go a little bit into your firm in a second. But first, what are some examples you see more broadly, you know, sort of around across the market that VCs are talking about? Like examples of these two approaches. Maybe firms would not admit to taking necessarily just one versus the other, but what are examples we might recognize here? Yeah, so I think it's operating style.

15:59I think you look to smaller partnerships, tending to be top-heavy senior partners who are still very active, making larger investments relative to fund size into a smaller number of companies. working more deeply with those companies and forming long-term partnerships with them i think is is sort of the alpha approach um and regardless of stage i think it really plays out in terms of concentration of of time and and capital relative to fund size and the 24 hours that everyone has in a day and then i think on the on the beta side you tend to see more pyramid structures and and firms that as they continue to evolve look increasingly similar to large asset managers from Wall Street.

16:42And as we saw the evolution of private equities, you sort of saw this play out there as well. And I think you see large teams, you see market maps and coverage banking approaches, hustling not just to meet the one company that you really believe in, but to meet the 10 others that you believe fit that same box in your market map and then choosing amongst them. And you also see fast following. So if a leading beta VC firm who sort of designates a category as legitimate by investing in it, you'll see fast follows from many of the other beta firms into that same category or companies that are competing for that same market.

17:20Because none of them can afford to, if you're a beta investor, you can't afford to miss the drivers of the market, at least you fall behind the benchmark. Are you going as far as arguing to founders when you're talking to them? Like, hey, don't take money from a big multi-stage firm? No, no. I don't think, I think founders should just know the choice they're making. And I think you can form fantastic partnerships with beta VCs and you can form fantastic partnerships with alpha VCs. And it really depends how you want to build your company and where you think your needs lie in terms of resources and approached.

17:55Viewers may not totally know about your firm. Can you walk us through what the strategy is at the gp sure so we're we're at we say we're a talent-centric firm and that really comes from the the dna of the firm comes out of the talent side of the of the startup ecosystem so my partner dan portio um one of the best talent partners in the valley until he started uh investing at a firm called sweat equity ventures after he came out of graylock um and then we we joined up and formed the gp and we maintain this approach of a very concentrated portfolio spending a tremendous amounts of time with founders and providing service across talents or recruiting to build your team, go to market, helping you find revenue, and then product and engineering, helping build the technology that underlies the business.

18:43And we do that in a unique way where rather than a pooled resource of a platform team that is paid for with fee, we invest resource into a team of builders that are deployed into these companies for high context, deep engagements where they're working in a dedicated basis. And in exchange for that, we earn common equity grants in the form of advisory. Okay. So it strikes me that to be a so-called alpha VC and to take this more concentrated approach, you better be right or you're going to blow up a lot more capital than if you're taking kind of a market exposure or beta approach. What's the best evidence you have so far that your approach or an approach like yours is working?

19:26Is there empirical evidence? Is there firsthand evidence? I feel like the, I think you're correct. And, you know, when you look at the firms that are able to concentrate capital into a small number of companies, if you look, I think those will drive the best returns in terms of multiples and probably IRR as well. When you look at VC portfolios over time, I think what you tend to see is there are a few companies within any given portfolio that drive the majority of returns. That's been the historical precedent. And so if you can choose those companies and pour capital into them versus a broad-based market performance metric, I think you can outperform.

20:05You also can miss and underperform the market in dramatic ways. But I think when you think about the decision of an investor now, a capital allocator, to choose VC, the role of VC within their portfolio is quite different if that VC is seeking alpha versus the beta VC. And so when you're an LP and you're choosing where to place your capital, the role of that partner in your portfolio really matters quite a bit. The last thing I wanted to hit here is how sort of the current dynamic around AI startups affects this mindset or this different strategy. Because like another thing I hear from VCs these days, along with this debate, is how it's harder than ever to figure out if revenue in an AI startup is sticky or durable um and and i feel like when you go big and concentrated into a category or into a startup um that kind of uncertainty i would think would would loom large um how does that you know sort of how are you thinking through you know that question of of is is some of this like ai revenue actually going to be there in a few years i mean i think i think the um both both alpha vc and beta to VC face that same question as you're making your investments.

21:20Much of the market today is in these AI companies. And I think the customers for these companies, we're at a stage, we're so unimaginably early in this technology and the adoption of this technology that I think the reason we see a lack of stickiness or uncertainty around the quality of revenue is because from a customer perspective, from a buyer perspective, we're still at a place where every user is told, use as many tools as you want. and you have unlimited budget. And so I think it's very hard to tell when looking at revenue, if you have something that's sticky and durable, or if you have something that's being used as part of an experiment.

21:58There were many fewer zeros involved in the market, but ad tech went through this, I think, in the 2009 to 2011 time, when every large brand wanted to find a new ad unit or try a new DSP or ISP. And I think we're seeing the same thing when it comes to whether it's AI coding, AI marketing, AI-enabled CRM, et cetera. Everybody is allowed to try everything. And I think the winners have really yet to emerge. Well, Finn, we'll check back. Let's check back every few months or at least every few years to see how this debate is playing out on Alpha versus Beta VC. Finn, thanks so much for joining us. Finn Barnes from the GP.

22:40Good to see you too. Well, OpenAI's chorus of products has swelled to a web browser, shopping recommendations, of course, the video generation app Sora. Now it's working on music generating AI that would allow users to create songs from scratch. One of our reporters, Erin Wu, was one of the journalism some maestros behind that story on Friday, and she joins me now. Hey, Erin, welcome to the show. Hey, Kari, thanks so much for having me. Of course, of course. What is OpenAI working on for music? What is your story talking about here? Yeah, so OpenAI is starting to work on AI that can generate music.

23:27It's hard to tell how far along they are towards this, but they've started working to collect the kind of training data that they would need to receive, so they're working with juilliard students to have them annotate scores to produce training data they're also starting to discuss the idea of being able to generate uh music from text or audio prompts so that can mean something like having a track and then wanting to like add guitar or add piano or something like that okay and yeah i've been using like the the the chat gpt voice and I did test it out to see, would it actually play me a song if I asked it to?

24:04And no, it did not. So this is not something OpenAI currently can do. Is that right? Yeah, that's correct. So they've done some work on music in the past. They've released two models years ago prior to ChatGPT Newsdown in 2019 and Jukebox in 2020. Neither of those are currently available for users. And then they also have some speech-to-text and text-to-speech models that would have some overlapping capabilities because it's about generating audio, but they don't currently have something where you can give it a prompt and it'll spin out a full song. This sounds challenging, but video almost sounds more difficult in a way.

24:45Why is music potentially a challenging category for them or any other AI model? Yeah. So I mean, music is something that has been a focus of a lot of startups. Google also has a music model. So Suno and Uduo are probably the best known startups for this. It's something that's exciting for Google, for example, because they have been really touting this ability for marketers and to be able to use it in advertising. And OpenAI has kind of started talking about a similar thing, the idea that it's something with a lot of commercial potential. Okay. I guess we don't know yet whether this would be geared towards more commercial users or marketers or individuals to tack on to their ChatTBT subscription.

25:37Yeah. I think we don't know specifically, but looking at the kinds of products OpenAI has released so far, I think it's a safe bet to say that this would be for all of the above. okay now this is sure to generate a ton of controversy like a lot of open ai product launches as like as it moves closer if it launches if they're able to figure this out um obviously uh there's a lot of people around you know around where i live in hollywood or elsewhere that is going to take a lot of issues with the potential copyright um with you know with their music being stolen or used in OpenAI's training for a music product, they're going to be like, hey, that sounds a little bit like a melody I came up with.

26:24What do you have an understanding of is the copyright issues around music generation? Right. The music industry is very powerful and also famously very litigious. They've already sued the two leading startups in the space, Suno and Udio. Essentially, I mean, this is similar to what's going on with other kinds of training data. The startups are claiming that what they're doing is fair use. The labels are contending that what it amounts to is theft. That said, though, it's not that the labels are pursuing a purely litigation-based strategy. There's also been reporting that they're in talks with some of the startups working on this, so like Suno, Udio, Google.

27:05And from my reporting, OpenAI has already started making advances to the music industry. So we saw the Spotify integration, for example, where users are able to use ChatGPT to cue songs. And from my reporting, they've also been in talks with at least one of the major music labels. And so OpenAI is obviously in a deal-making mode. And I think the labels also, from their perspective, see a lot of value to the idea that, okay, like maybe there could be some kind of partnership maybe ai is something that could be good for helping people discover music for example so there is definitely some openness on all sides has google run into any particular issues here with their product i would think that they would be a little bit more risk averse or legally you know sort of cautious than someone like an open ai yeah so there's nothing publicly known about where google is in its ai data licensing discussion specifically, but Google does have an existing relationship with the music industry through YouTube, which is very important to that product.

28:08And so they have some of that relationship already built to be able to strike these deals. All right. Well, Erin, thanks so much for joining us. This was a fascinating scoop, and thanks for coming on and talking to us. Thanks for having me. Well, we're in an era where AI is obviously reshaping not just music, but every other part of our lives, including how we take care of our health. Spring Health is one company. It's a unicorn working to transform mental health care by using data and AI to create a more personalized experience. It's analyzing thousands of signals to match individuals with the right kind of support more quickly.

28:47And joining me now is the co-founder and CEO of Spring Health, April Koh. April, welcome to TI-TV. Hi, thanks so much for having me. Thanks for coming on. You guys have been around since about 2016. I feel like your journey has been a really interesting one, especially now in the world we live in. So set the scene for us. How are LLMs affecting mental health providers kind of broadly? How is this affecting a company like yours? Yeah, well, first off, I just want to quickly introduce the company and what we do. So we're a global comprehensive mental health platform that makes it really easy to get mental health care that works for you.

29:27And nine years ago at Yale, I started the company with the world's leading expert on computational psychiatry. So he was an expert in AI and mental health. And he was actually the first to prove that we could match people to the right care for them from the start using machine learning. And so fast forward to now, you know, we're one of the fastest growing, if not fastest growing mental health companies out there. We serve, you know, 20 plus million lives with some of the world's largest employers and health plans like Microsoft and Target. And, you know, for their employees and their family members, we match them to the right mental health care for them.