From Public to Private: The Structural Shift in Growth Equity

At a Glance:

• Public markets represent an increasingly narrow opportunity set: The number of listed high-growth companies has declined significantly, leaving public market investors with a more concentrated universe of mature, lower growth companies.
• More value creation is occurring in private markets: Deep pools of private capital now support companies through later stages, allowing them to remain private for longer.
• Investment discipline matters: Strong outcomes require careful manager and company selection, valuation discipline, diversification, and liquidity management.

Recent headlines around the SpaceX IPO filing have drawn renewed attention to a long-running trend: many of the world’s most transformative companies are staying private for longer than in past decades. This shift is reshaping where, and how, investors access growth.

It wasn’t always this way. Three decades ago, gaining exposure to the most transformative companies in the world generally meant investing in public equities. Microsoft listed in 1986 with a market capitalization of approximately US$500 million; Amazon followed in 1997 with a market capitalization of approximately US$430 million. Since their IPOs, these companies have grown over 5,900x and 6,700x, respectively. Generations of investors were able to benefit from this stock price appreciation as these companies became among the world’s largest technology companies.

Today, the opportunity set has shifted: an increasing share of value creation is occurring while companies remain private.

The Great Migration to Private Markets

Increasingly, many of the most dynamic, highest-growth companies are staying private for longer. The median age of a U.S. company at IPO has risen materially over time. This shift is particularly evident within the technology sector, as the private capital market has become deeper and more competitive. Companies that once relied on public markets to fund expansion now have abundant private alternatives: venture capital, growth equity, sovereign wealth funds, family offices, and strategic investors. Many are well capitalized and able to deploy capital at scale.

The practical result is that a greater share of a company’s early and mid-stage value creation (product-market fit, scale-up, international expansion, and, increasingly, competitive dominance) now occurs before public investors ever have access. Where value creation once largely occurred in public markets (Amazon growing from roughly US$430 million to US$2.9 trillion, Microsoft from approximately US$500 million to US$3.1 trillion), an increasing portion now takes place while companies remain private.

Consider SpaceX, which recently filed for an IPO reportedly targeting a US$1.75 trillion valuation, which would make it among the most valuable companies ever at the time of listing.  Anthropic is another prominent example, having recently announced a financing that valued the business at approximately US$380 billion. These are public-market-scale enterprises whose growth and liquidity events have been occurring through private fundraising rounds and secondary markets rather than through IPOs. 

The Shrinking Public Opportunity Set

The migration is not only about individual companies, but about a structural reshaping of the opportunity set. In 1996, the United States had roughly 8,090 listed domestic companies. By 2024, that figure had fallen to approximately 3,908 (a decline of about 50%), even as the overall economy expanded substantially over the same period (World Bank). The result is a more concentrated public market, with a meaningful share of index returns increasingly driven by a relatively small cohort of mega-cap stocks (e.g. the Magnificent Seven).

Meanwhile, private markets have expanded significantly. McKinsey estimated total private market assets under management at approximately US$22 trillion in 2024, representing an increase of approximately 60% since 2020 (McKinsey Global Private Markets Report 2025). The scale of private markets is particularly evident in growth and venture capital: as of December 2025, Crunchbase estimates that there are over 1,500 private, venture-backed companies valued at over US$1 billion, representing aggregate company value of US$7 trillion, up 30% over December 2024 (Crunchbase News 2025).

The takeaway is not that public markets are irrelevant, but rather that they now represent a narrower cross-section of the economy. As a result, investors seeking diversified growth exposure may increasingly need to look beyond public markets.

Growth Rates: Private vs. Public

The growth differential can be meaningful. Mature public software businesses often grow at rates constrained by size, quarterly earnings expectations, and a greater emphasis on profitability. Today, the median public software company is growing annual recurring revenue at roughly 15% (Meritech Software Index), compared with 30% growth for the median growth-stage private company (ICONIQ Compass Benchmark)(1).

Growth-stage private companies, earlier in their market-penetration curve, can compound revenue materially faster, albeit with greater dispersion and higher failure risk.

For investors focused on long-term growth rather than short-term gains, private markets represent a growing share of that opportunity. But translating access into actual returns requires thoughtful strategy: disciplined entry valuation, diversification, rigorous due diligence, and liquidity planning.

Accessing Growth in Private Markets at Nicola Wealth

Our Private Equity strategy is designed to provide clients with institutional style exposure to private companies. The portfolio is primarily focused on mature buyout investments, with a deliberate allocation of approximately 20% to growth and venture capital. This reflects our view, outlined in our prior article, From Startups to Buyouts: Navigating Risk and Return Across the Private Equity Spectrum, that selective exposure to earlier stage and high-growth companies can enhance long‑term return potential within Private Equity. The overall risk profile remains anchored by mature, cash generative businesses.

Through this strategy, clients gain exposure to a range of high-growth private businesses, including select large-scale platforms (e.g. SpaceX and Anthropic), and a diversified set of private companies with varying levels of maturity. Today, SpaceX and Anthropic alone represent nearly 10% of our overall growth and venture capital exposure across our Nicola Private Equity Limited Partnership (PELP) and Nicola Venture Capital Limited Partnership (VCLP) funds.

We offer exposure across the Private Equity spectrum through three complementary strategies: primary investments in funds with established managers, selective direct co-investments alongside those managers, and exposure to secondaries.

The Bottom Line

In our view, many of the most consequential growth businesses of the next decade will not be accessible through public markets until they have reached a mature scale, either because they remain private longer, or because their most rapid scaling occurs before an IPO.

For investors with the ability to accept an element of illiquidity relative to public markets and underwrite manager and deal risk, private markets can expand the opportunity set and help improve portfolio diversification.  Our broader Private Equity strategy includes dedicated exposure to the high-growth opportunity set, built on institutional access, careful selection and thoughtful portfolio construction.