AI companies may not run out of funds from private markets anytime soon—but they might exhaust the alphabet first.
Databricks raised $1 billion in August, announcing it as a “Series K” funding round. In venture capital, that’s rare enough to signal something fundamental has shifted.
Anthropic secured $13 billion in Series F funding. OpenAI raised $8.3 billion in its latest round.
Despite speculation about an imminent IPO for OpenAI, CFO Sarah Friar has made it clear that a public listing isn’t on the horizon.
“We are continuing to get the company into a state of constantly stepping up into the scale we are at, so I don’t want to get wrapped around an IPO axle,” Friar told The Wall Street Journal.
That phrase — not wanting to get wrapped around an IPO axle — neatly captures the prevailing mood in today’s market, where many high-profile companies prefer the control and flexibility of staying private.
OpenAI is hardly alone. Several other firms with sky-high valuations are also in no rush to step into the public markets.
The timeline has lengthened. In the United States, companies in the tech sector now wait nearly 14 years before going public, up from less than 11 years a decade ago, according to J P Morgan.
The barriers include regulatory filings, quarterly earnings pressure, disclosure obligations, governance scrutiny, and volatile investor sentiment.
Moreover, current market conditions exacerbate the situation.
Higher bond yields have done more than raise discount rates — they’ve forced a reset in valuation logic.
Public investors now prize profitability and cash flow over growth stories, creating what EY refers to as a “flight to quality.” Companies without clear earnings visibility face tougher pricing and delayed listings.
Private valuations, meanwhile, lag reality. Because rounds are episodic, they still reflect older, cheaper capital assumptions.
That gap means firms valued generously in private markets often confront markdowns when they test public sentiment. In short, public markets now price on proof, private markets on promise — and bridging that gap requires not more capital, but credibility.
VC Market Reshaped
But the bigger story is where the money went.
According to CB Insights, 2024 recorded 5,725 equity funding deals totalling $108 billion. As of 2025, year-to-date, 4,480 deals have raised $158.8 billion, implying fewer deals, bigger checks.
Source: CB Insights
Kory Jeffrey, principal and VP of technology at Inovia Capital, which recently led a $500 million round for enterprise AI startup Cohere, told AIM: “I think there are people who are willing to do much bigger, and much later rounds of investment, because the ceiling for these companies like Databricks has risen quite a lot.”
“There’s a lot of belief out there that this will play out, and companies like Databricks, others will have a lot of revenue traction,” he added.
The VC market has been reshaped. Some firms now rely solely on AI signals, making investments based purely on category. Others aim for concentrated bets and close relationships, but the lively market and tight fundraising timelines make slow, cautious approaches more challenging to implement.
More significantly, investors are moving downstage. Jeffrey explained the shift: “Growth VCs are now doing Series B. The Series A and B VCs are moving into seed and seed-plus rounds. The seed and seed-plus VCs are focusing on company formation.
Emerging managers are backing ideas before they even fully take shape. Because prices are up, money is flowing, and access at the price points needed for returns is pushing everyone earlier.”
In 2024, global VC investment hit approximately $314 billion, with AI startups alone accounting for around 37% of that total.
Yet exit activity has not kept pace: in the US, only ~220 companies valued at over $500 million exited in 2024, despite more than 1,200 private companies meeting that valuation threshold.
These imbalances suggest capital is building up in private markets rather than flowing into public markets.
Instead of going public, private companies are providing liquidity through secondary transactions.
Secondary Market Goes Boom
EquityZen, a New York-based platform that enables accredited investors to trade pre-IPO shares of private companies, shared data from Q3 2025, indicating that secondary trading deals rose significantly.
The secondary market isn’t merely an outlet for insiders; it’s now a price-discovery arena where hedge funds, family offices, and crossover investors secure exposure earlier, while employees and early backers convert paper gains without waiting for an IPO.
“Our research shows that the vast majority of the wealth creation for the 2025 IPO class happened before they ever rang the opening bell. Therefore, as IPO optimism increases and the demand for all things AI continues, private secondaries are becoming the main stage for more investors to access the next wave of tech leaders,” said the investment management firm.
Secondary market transactions by company valuation, EquityZen Q3 data.
AI, IT, and fintech led secondary sales over the last 12 months. Deal volume on EquityZen’s platform almost doubled from the first half of 2024 to the first half of 2025. In Q3 2025, 14% of deals involved the sale of equity at a premium, up 9% from the previous quarter.
The numbers tell the scale story. “The secondary market is actively easing liquidity pressures stemming from the $4.4 trillion in value tied up in over 1,200 global unicorn companies. It is estimated that 71% of VC exits in 2024 came from secondaries, a sign of their growing role in the broader venture ecosystem,” said EquityZen in a report from the last quarter.
M&A activity is also increasing as a profitable alternative to an IPO. CB Insights reported that “AI M&A activity remained near record highs with 172 deals in Q3 ’25, just behind Q2 ’25’s 181 deals.”
Source: CB Insights
CEO of Apollo Global Management Marc Rowan told CNBC that the availability of capital in private markets is allowing companies to do a series of things — to invest for the long term, not to be driven by quarterly earnings, and to obtain massive amounts of debt and equity to finance their business plan without accessing public markets.
He pointed out that defence companies of the future are also staying private. “I think we’re heading to a world where we not just have private credit, but we have equity that is private — not just private equity,” he added, noting that private equity historically has been with leverage and concentrated bets and in funds.
“It will not surprise me that we end up with an S&P 500 index and an index of companies that are private.”
Staying private also allows different risk profiles and more room for experimentation compared to public companies.
Where Public Markets Still Win
Public markets still offer what private capital, no matter how abundant, cannot replicate at scale — a mechanism to distribute risk and participation across thousands of investors.
When companies reach the $100 billion-plus “centicorn” range, as Databricks and Stripe have now, the pool of private capital willing to continue funding them narrows sharply.
Public listings expand that base and impose a discipline that, while uncomfortable, can strengthen long-term governance.
In a recent podcast episode, the founders of the investment management firm Coatue, Thomas and Philippe Laffont, argue that there’s also a deeper case for stepping into the light.
“I happen to believe that all these companies should go public,” Thomas said, calling it a ‘democratic’ act — one that returns wealth creation to the public market.
He characterised an IPO as a defining milestone for a brand: demonstrating that a company can withstand scrutiny, indicating financial strength, and gaining legitimacy with customers and regulators.
Philippe took it a step further, cautioning that if companies avoid “the sunshine and ray of light of the public markets,” they will encounter it eventually “through a regulatory agency.” In essence, transparency isn’t a choice — it’s just postponed.
Going public remains a mechanism to reward and retain top technical talent, since equity compensation often hinges on tradable stock.
It also amplifies brand legitimacy, critical when selling enterprise AI or global infrastructure, and provides a strategic “stock-currency” for acquisitions and global scale.
As private markets drive AI, growing valuations and societal impacts will shift concern from whether companies can stay private to whether they should, and how this secrecy might affect the economy when wealth becomes more hidden.
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