Private companies are delaying IPOs and opting to remain private, creating a growing wealth gap as early investors and employees benefit while retail investors are excluded. The number of publicly traded companies in the US has halved since 1997, while private markets, now worth $8T, are dominated by unicorns like SpaceX, OpenAI, and Stripe, whose valuations are starting to rival the $55T market capitalization of US public companies. While private firms enjoy fewer regulations and increased flexibility, they limit access for most potential investors. Funds like Destiny Tech100 offer a narrow entry point but often come at a steep premium, highlighting the challenges and disparities in investing in private markets.
My Take
The rise of private companies isn’t inherently good or bad—it reflects broader shifts in capital markets. To make this trend more inclusive, we need balanced solutions. More transparent private investment platforms and regulatory innovation could open access for retail investors while ensuring protection. This democratization could not only empower individuals but also drive new growth opportunities. Simultaneously, companies that go public should retain the flexibility to avoid the pitfalls of rigid shareholder expectations, such as adopting dual-class share structures to preserve long-term decision-making power for founders and key leaders.
Ultimately, the challenge is to balance innovation with inclusion and ensure that wealth creation benefits a broader society.
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Credit: Bloomberg
This post was enhanced with AI assistance, thoroughly reviewed, edited, and reflects my own thoughts.