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<\/a><\/p>\nAnd it\u2019s not just AI. SpaceX, Anduril, and Palantir (albeit public) are now adding billions of net-new revenue every year while the large defense primes grow at low-to-mid single digits. Obviously, as a growth-stage investor, I was excited to see these stats. But I think it\u2019s also important for investors to 1) understand how drastically the composition of the public and private markets has changed, and 2) recognize that today, the top decile of high-growth companies are almost exclusively in the private markets.\u00a0<\/p>\n
In addition to the current crop of private companies staying private for longer, the cohort of IPOs of the last 5 years demonstrate that the majority of the value creation has happened in the private markets. Companies used to go public much earlier in their growth journey and generate tremendous equity value once public. The median company in the crop of 2014\u20132019 IPOs, for example, generated 80%+ of their market capitalization after becoming public companies. The more recent cohort, however, went public after already capturing a higher portion of their market opportunity in the private markets. Combined with the fact that they IPO\u2019d at valuations that appropriately reflected their long-term potential\u2014and with the caveat that they\u2019ve been public for a shorter amount of time\u2014these companies generated over 50% of their market capitalization when they were private.<\/p>\n<\/a><\/p>\n