Tech's New Boom: Startup Exits Surge, QSBS Expands, and Musk Launches a Political Movement

Jason Calacanis and Alex Wilhelm discuss the recent surge in startup exits, QSBS expansion, AI investment trends, TikTok's potential reboot, and Elon Musk's 'America Party' initiative. | Published July 7, 2025 by This Week in Startups

Exits Are Back, QSB Stock & The New America Party?

Key Insights

• Q2 2025 saw $67.7 billion in startup exit activity, the strongest quarter since 2021, indicating a significant recovery in the exit market.

• AI companies are now capturing approximately two-thirds of all venture capital investment value, demonstrating a stark 'feast or famine' environment for startups.

• The Qualified Small Business Stock (QSBS) exemption has been expanded, allowing investors to avoid capital gains tax on up to $15 million (up from $10M) with more flexible holding periods.

• TikTok appears to be preparing for divestiture from Chinese ownership with a new app version (codenamed 'M2') potentially launching in September 2025.

• Large public companies with high market caps like Coreweave ($76B) are using their valuable stock to acquire strategic assets like Core Scientific.

• Elon Musk's 'America Party' could potentially influence US politics by focusing on energy independence, fiscal responsibility, and government efficiency without necessarily running a presidential candidate.

• Companies not originally branded as AI-first are now needing to reposition themselves to attract investment in today's market.

  
  

04:29 | Elon Musk's America Party Initiative

“I think if you're going to be involved in politics, picking a side is not great for business. But there is an interesting platform I think Elon could build on: energy like unlimited energy investment, fiscal responsibility, government efficiency, pronatalism, and recruitment as part of immigration.”

Jason Calacanis discusses Elon Musk's newly launched 'America Party' political movement, analyzing its potential strategy and impact.

Rather than running a presidential candidate, Jason suggests the movement could be more effective by targeting House and Senate seats with candidates who pledge fiscal responsibility.

He draws parallels to historical movements like the Tea Party and Grover Norquist's tax pledge, suggesting Musk could require candidates to sign agreements to balance the budget.

Alex Wilhelm adds historical context by referencing Germany's 'debt break' constitutional limit on deficits.

Both hosts express support for the energy independence aspect of Musk's platform, pointing to Tesla's recently launched Oasis Supercharger station that operates completely off-grid as an example of sustainable energy innovation that could be replicated nationwide.

Takeaways

• Elon Musk's America Party could be most effective by targeting 5-6 Senate seats and similar House positions rather than running a presidential candidate.

• The platform appears to focus on energy investment, fiscal responsibility, government efficiency, and pronatalism.

• Political movements can be effective through specific policy pledges rather than broad party allegiances.

• Energy independence through sustainable infrastructure like Tesla's off-grid supercharger stations aligns with potential policy goals.

15:02 | Startup Exits and M&A Activity Heating Up

“The amount in dollars of VC-backed exit activity in Q2 was $67.7 billion according to Pitchbook. As always, I'm curious if this is going to be enough to actually shake things loose or if this is kind of an amuse-bouche for LPs, but certainly a positive sign.”

Alex Wilhelm presents data showing Q2 2025 was the strongest quarter for startup exits since 2021, with $67.7 billion in exit value.

This represents significant recovery in M&A and exit activity, though IPO volume remains below historical averages.

The hosts discuss specific examples like Superhuman's acquisition by Grammarly and how these exits create positive momentum for the venture ecosystem.

The conversation shifts to innovative financial structures like Robinhood's tokenized SPVs (Special Purpose Vehicles) for private company equity, which could allow 24/7 global trading of private company shares.

While expressing enthusiasm for democratizing access to private markets, the hosts acknowledge the regulatory challenges and potential disconnects between tokenized assets and their underlying value.

Takeaways

• Q2 2025 saw $67.7B in exit activity, the strongest quarter since 2021's peak.

• Despite IPO numbers remaining low, strong M&A activity is creating liquidity for investors.

• Robinhood is pioneering tokenized SPVs for private company equity, potentially allowing 24/7 global trading.

• Regulatory concerns remain about tokenized private equity, including disclosure requirements and potential valuation disconnects.

• Consolidation of smaller companies (like Grammarly acquiring Superhuman) may lead to more IPO-ready entities.

26:32 | Liquidation Preferences Explained

“You see a $3 billion sale, but the cap table actually shared in $1 billion. And this is where we have to explain to our LPs when these things happen. Here's what actually happened. You read a headline number. Here's what actually happened.”

Jason provides a clear explanation of liquidation preferences in venture capital deals, using a hypothetical example of a $3 billion company with investors who hold preference rights.

He illustrates how investors with liquidation preferences can receive multiples of their investment before common shareholders get anything, potentially leaving common shareholders with significantly less than the headline exit value suggests.

The hosts emphasize the importance of information rights for investors, explaining that without board representation or observer status, investors might be making decisions with severely limited information.

This segment serves as an educational primer on the complex structures that can dramatically affect returns in startup investments, particularly relevant as more retail investors gain access to private markets.

Takeaways

• Liquidation preferences can dramatically alter how exit proceeds are distributed, with preferred shareholders often getting multiples of their investment before others receive anything.

• Information rights and board representation are crucial for investors to understand a company's true financial position.

• Headline acquisition numbers can be misleading without understanding the underlying preference stack.

• As private markets become more accessible to retail investors, understanding these structures becomes increasingly important.

29:11 | AI Companies Dominating Investment

“The share of deal value that AI startups command has reached roughly two-thirds now. And we're seeing roughly about a third of the deals according to PitchBook's Q2 data be in AI startups. So it seems that really it's feast or famine out there.”

Alex presents data showing AI startups now command approximately two-thirds of all venture capital dollars and about one-third of all deals. This demonstrates a stark concentration of investment in the AI sector.

Jason discusses how the definition of an "AI company" has become increasingly important, with almost all companies now incorporating some AI features or capabilities.

The hosts note that many established SaaS companies are now rebranding themselves as "AI-first" to better position themselves in the current market.

Jason specifically references Superhuman's evolution from a premium email client to an AI-powered email platform.

The segment includes global comparisons showing North America and Europe investing most heavily in AI, while other regions lag behind.

Takeaways

• AI startups are receiving about 2/3 of all venture capital dollars but represent only 1/3 of deals, indicating larger round sizes.

• North America and Europe are investing more heavily in AI than other global regions, potentially creating competitive advantages.

• Established companies are rebranding as "AI-first" to better position themselves in the current market.

• The definition of an "AI company" has broadened, with most companies now incorporating some AI features.

36:26 | QSBS Expansion Analysis

“If people who are already making a lot of money, if you give them the ability to invest more and you make it easier for them to invest more, it's actually better for everybody. That's hard for people to get their heads around.”

Alex explains the significant expansion of the Qualified Small Business Stock (QSBS) exemption in the recent "one big beautiful bill."

Previously, QSBS allowed investors to avoid capital gains tax on up to $10 million in gains from investments in small businesses (under $50M in assets) held for 5 years.

The new provisions increase the exemption to $15 million, introduce graduated benefits for shorter holding periods (50% at 3 years, 75% at 4 years), and raise the qualifying company asset threshold to $75 million.

Jason discusses the economic impact of this policy, arguing that while it primarily benefits wealthy investors, it ultimately drives more capital into early-stage companies that create jobs and economic growth.

He notes the expansion will cost an additional $17 billion over 10 years but suggests this investment will generate 10-20% more company formation and investment activity, making it worthwhile despite potential criticism from those who see it as a tax break for the wealthy.

Takeaways

• QSBS exemption has been expanded from $10M to $15M with more flexible holding periods (50% at 3 years, 75% at 4 years).

• The qualifying company asset threshold has increased from $50M to $75M, making more startups eligible.

• The expansion will cost an additional $17B over 10 years in tax revenue.

• While primarily benefiting wealthy investors, the policy aims to increase early-stage investment and company formation by 10-20%.

• The exemption has existed since 1993 and correlates with America's technology sector dominance.

46:27 | TikTok's Potential Reboot

“Tik Tok is getting ready to release a new version of its app. Now internally, Tik Tok is called M apparently and the new version is going to be called M2. They're going to have to drop this app potentially in September. And the way that I understand it, people are going to have to re-download a new application.”

Alex shares breaking news that TikTok is preparing to release a completely new version of its app (codenamed "M2") in September, requiring users to download a fresh application rather than updating the existing one.

This development suggests TikTok is preparing for the forced divestiture from Chinese ownership mandated by US legislation, with the new app likely structured to meet US security requirements.

Jason expresses strong concerns about the national security implications of TikTok's Chinese ownership, arguing that access to user data, location information, and device capabilities creates unacceptable risks.

He references the targeting of former US officials by foreign entities to illustrate the potential dangers of data collection.

Both hosts note that the repeated extensions of divestiture deadlines and reports of progress suggest a deal is likely being negotiated as part of broader US-China trade talks.

Takeaways

• TikTok is preparing a completely new app version ("M2") for September 2025, requiring users to download a fresh application.

• This development suggests TikTok is preparing for divestiture from Chinese ownership to comply with US requirements.

• The hosts argue that social media apps with access to user data, location information, and device capabilities present significant national security concerns.

• Multiple deadline extensions suggest divestiture negotiations are now part of broader US-China trade talks.

• Despite the challenges, TikTok's brand power likely gives it the ability to successfully transition users to a new app.

59:22 | Coreweave's Acquisition of Core Scientific

“Coreweave has an advantage here because of that huge market cap. They can go buy things, and especially private things, and then you don't have a choice as an investor in a private company.”

Alex reports that Coreweave, a recently public AI infrastructure company with a $76 billion market cap, is acquiring Core Scientific for approximately $9 billion in stock. The deal represents a strategic consolidation in the AI compute space, with Core Scientific pivoting from crypto mining to AI infrastructure. Interestingly, Core Scientific's stock dropped 13% on the news despite the acquisition premium, suggesting investor skepticism about Coreweave's valuation.

Jason explains how companies with high market capitalizations can use their valuable stock as currency for acquisitions, particularly when they may not have sufficient cash. He notes this creates both opportunities and risks, as acquired company shareholders generally have limited options to reject stock-based acquisitions.

The discussion extends to broader consolidation trends, with the hosts suggesting companies like Grammarly may be pursuing roll-up strategies to create IPO-ready entities by acquiring multiple complementary businesses.

Takeaways

• Coreweave is acquiring Core Scientific for approximately $9B in stock, continuing consolidation in the AI infrastructure space.

• Core Scientific's stock dropped 13% despite the acquisition premium, suggesting investor skepticism about Coreweave's valuation.

• Companies with high market caps can use their stock as acquisition currency even when they don't have sufficient cash.

• Industry consolidation through roll-ups can create efficiencies through shared infrastructure like accounting, marketing, and HR.

• The acquisition represents a pivot from crypto mining to AI infrastructure for Core Scientific.

Conclusion

The tech industry is experiencing a significant resurgence in 2025, marked by the strongest exit quarter since 2021 with $67.7 billion in activity.

This recovery is happening despite an increasingly bifurcated market where AI companies command roughly two-thirds of all venture dollars, creating a 'feast or famine' environment for startups.

The expansion of the Qualified Small Business Stock exemption further supports early-stage investment, potentially increasing company formation by 10-20%.Major structural shifts are underway across the ecosystem.

TikTok's planned relaunch suggests resolution of long-running security concerns, while tokenized private equity initiatives from Robinhood point toward increasingly accessible private markets.

Meanwhile, companies with high valuations like Coreweave are using their stock as currency for strategic acquisitions, driving consolidation.

For founders, the message is clear: position your company as AI-first to attract investment in today's market, and prepare for a potential exit as M&A activity continues to heat up.

For investors, the expanded QSBS exemptions create new tax advantages for early-stage investments, while the surge in exits suggests better liquidity prospects after years of limited options.

The biggest winners will be those who can navigate this resurgent but highly concentrated market while understanding the increasingly complex financial structures behind both private investments and exits.