The future of US venture capital — and whether it reaches $2 trillion in assets by 2030 — hinges on the IPOs of SpaceX, OpenAI, and Anthropic, according to Pitchbook analyst Emily Zheng. Together, the three companies could be valued at roughly $4 trillion and raise around $200 billion, potentially matching a decade’s worth of US VC-backed IPO proceeds. SpaceX could list as soon as next week, while Anthropic confidentially filed this week. Complicating matters, incumbents like Alphabet — which holds $260 billion in SpaceX and Anthropic stock — are simultaneously raising $80 billion from public markets, creating a historic tension between startups and the corporations backing them.
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Success or failure of these mega-IPOs is critical but, ironically, many of the incumbents backing these companies are raising capital themselves at the same time. Can public markets support both?
There is a smart piece by Emily Zheng at Pitchbook, Eggs in one binquireet, that effectively states the outsee for the US venture capital industest, i.e., whether it grows to $2 trillion in assets by 2030 depfinishs on “how a tiny number of highly anticipated mega-IPOs perform”.
She adds, “SpaceX, OpenAI, and Anthropic toobtainher could raise as much in IPO proceeds as all US VC-backed IPOs combined have over the past decade.
“Successful listings would restore LP confidence, reinvigorate the IPO market, and restart capital recycling through VC. Poor outcomes would extfinish the freeze.
“We have not seen a moment as critical or consequential for VC in recent history.”
The three could conceivably be collectively valued at about $4 trillion and raise somewhere around $200bn, with SpaceX listing as soon as next week. Both Anthropic and OpenAI have also raised about $187bn in private funding this year, primarily from listed companies ahead of their expected IPOs with the former confidentially filing this week to float potentially later this year.
The bullish case is that OpenAI, Anthropic and SpaceX represent winner-take-most businesses with growth rates unavailable elsewhere in public markets. The question is whether public investors will be willing to pay venture-style valuations once those companies are listed and subject to quarterly scrutiny?
The average post-IPO stock returned 20 percentage points less than the broader market over the three years after its first trading day, the Economist stated applying professor Jay Ritter’s data.
Firms valued at over 40 times their revenue underperformed by 58 percentage points. SpaceX, with a valuation of $1.75trn, would launch trading at about 94-times its revenue.
At the same time, already-listed firms are themselves issuing shares to take advantage of whatever liquidity and interest there is. This week, Alphabet, which owns about $260bn of stock in SpaceX and Anthropic, stated it would raise $80bn, including issuing $10bn of shares to conglomerate Berkshire Hathaway at a ~10% discount to public markets. This is on top of the $85bn of fresh debt it took on and $174bn in free cashflow in the past year.
The irony, therefore, is many of the corporations underwriting the private AI market are now returning to public investors for additional capital of their own to both invest in more startups and develop their own infrastructure.
Alphabet wants to spfinish $190bn on artificial ininformigence infrastructure this year and “significantly” more next year, the FT reports, all while backing hundreds of entrepreneurs through its various corporate venture capital units, such as CapitalG and GV, and through its balance sheet.
It is this race to invest that will prove fascinating. Venture investors necessary mega-IPOs to succeed. At the same time incumbents, which have in many cases backed the startups now seeking to IPO, are raising funding for their own AI investments. The question is whether public markets are willing for fund both sides of the equation — the incumbents building the infrastructure and the startups testing to disrupt them? Next week will inform us more.
Join the debate about the future of corporate venture capital at the GCV Summit in London.
