The Venture Exit Wave
A handful of times in an investment career, a moment arrives that forces you to challenge existing thinking and ask whether you need to adjust your approach. I think this is one of those moments.
Over the next twelve to eighteen months, arguably one of the most significant groups of private businesses ever assembled will transition from private ownership to public markets. The combined value about to be released into the public domain is without historical precedent. For investors who have not been paying close attention to private markets, it will arrive as something of a shock, the extraordinary wealth creation they are witnessing at IPO has already happened, largely out of sight. These investors may be at a structural disadvantage, not a cyclical one.
Arrow has been navigating this landscape on behalf of clients for some time, both locally and abroad. We hold exposure across several strategies in this space, and we believe it is one of the more meaningful differentiators between advised and unadvised investors. This piece is our attempt to explain what is unfolding, why it matters, and how we think about accessing it responsibly.
The Market Shift
For most of the twentieth century, the arc of a great company was well understood: raise venture capital, scale the business, go public. The IPO was the beginning of the growth story for public investors, the moment ordinary capital could finally participate.
That model has changed.
By remaining private for longer, companies have been able to scale efficiently before public exposure, allowing investors to benefit from extended growth cycles and stronger return profiles. Fuelled by the maturation of private capital markets, the improvement of secondary market infrastructure, and the reduced pressure to list early, the world's most ambitious companies are now staying private and the majority of that value and wealth creation occurs well before public or retail investors can access a share.
The result is a structural transfer of wealth creation into private markets. If your portfolio is confined to the ASX and global listed equities, you are increasingly investing in the second act, arriving after the defining growth has already occurred. That's not a criticism of listed markets. It's just the reality of where markets have shifted.
In 2024, global venture capital funding for AI startups alone surged to $131.5 billion, a 52% increase year on year, with landmark deals including Databricks at $10 billion, Anthropic at $13 billion, and OpenAI at close to $7 billion, underscoring the scale of private investment flowing into foundational technologies. The companies defining the next decade of the global economy, across artificial intelligence, space infrastructure, biotechnology, energy transition, and defence, are all being built and scaled in private markets. For many of these themes, private markets are the only way to access pure-play exposure.
The Upcoming Graduates
What makes the current moment genuinely unusual is not simply that great companies are staying private for longer. It's that several of them appear to be converging on public markets at the same time. The coming eighteen months may represent the most consequential IPO window since the dot-com era, and with considerably more substance behind the valuations. We'll preface this by saying that markets will play a little game of chicken. If the first listing doesn't go well, we may see companies defer and stay private for longer, because they can.
SpaceX is the most talked about and one of the hottest names doing the rounds at the moment. The company submitted its confidential draft registration statement to the SEC on April 1, targeting a June Nasdaq listing that would raise approximately $75 billion at a valuation of $1.75 trillion, one of, if not the largest, IPO in history. Its valuation has ramped from roughly $350 billion in mid-2025 to $800 billion by December, and reached $1.25 trillion following a February 2026 merger with Elon Musk's AI venture xAI. At $1.75 trillion it would slot in at number nine in the S&P 500 at the time of writing. The core investment thesis is not rockets, it's Starlink, the satellite internet division that has quietly become a global telecommunications infrastructure business, now serving over ten million subscribers worldwide. We hold exposure to SpaceX indirectly via a couple of different strategies across the firm.
OpenAI follows closely, the company behind ChatGPT. In February 2026, the company closed a $110 billion funding round, the largest private technology financing in history, at a post-money valuation of $840 billion, with SoftBank, Amazon, and Nvidia among the participants. OpenAI is reportedly targeting a valuation of $1 trillion at IPO, anticipated in Q4 2026. The risks here are real and worth naming, OpenAI is not yet profitable, burns significant capital, and the competitive landscape in AI is fierce. But the strategic importance of its position at the centre of the global AI economy is genuinely difficult to overstate.
Anthropic is a US‑based artificial intelligence company founded in 2021 by former OpenAI researchers, with a mission centred on building highly capable yet safe and reliable AI systems. It is best known for Claude, a family of large language models widely adopted by enterprises and developers for reasoning, coding, and workflow automation. Commercially, the company has shown exceptional momentum, growing from an approximately $1B annualized revenue run rate at the end of 2024 to $9B by the end of 2025, and reaching roughly $30B by the end of Q1 2026, driven primarily by large enterprise customers and high‑value usage of its API and Claude Code products. Against this backdrop of rapid scale and investor interest, a Q4 2026 IPO is widely anticipated.
And for Australian investors, there is a name closer to home. Local success story Canva, founded in Perth in 2013 by Melanie Perkins, Cliff Obrecht, and Cameron Adams, has confirmed it is working toward a public listing, now most likely in 2027. Obrecht told the media this month that the company is fully IPO ready, citing 40% revenue growth last year. The delay to go public has been driven by a desire to complete its transition to an AI-first business model before facing the scrutiny of public markets. Canva shares last traded at an A$65 billion valuation in an August 2025 secondary sale. With 265 million monthly active users and AI-native tools embedded across its global platform, Canva is not a niche Australian success story, it is one of the most significant technology businesses this country has ever produced.
There is also a second-order effect here worth understanding. When high-profile IPOs perform well and provide exits, they return capital to early investors, much of which gets recycled into the next generation of private companies. The ecosystem rewards those who are already inside it.
The broader structural opportunity
The IPO cohort grabs the headlines, but the more durable observation is about venture capital as an asset class. One that has historically been the preserve of institutions and the ultra-wealthy, but is increasingly accessible to private investors.
It's worth noting that these businesses aren't your stereotypical early-stage, pre-revenue venture investments. These are substantial companies turning over billions in revenue, some of them cash flow positive, with seven, eight, or nine private funding rounds behind them and deep institutional ownership well before going public. This pocket of the market is carving out its own category, one that sits outside traditional asset class definitions and demands its own framework for thinking about risk, return, and access.
An emerging class of advised investors is now participating through vehicles including evergreen funds, interval funds, and fund investment platforms. Structures that invest in the same securities as institutional investors, though through different access points. This allows private investors to access a part of the market and a source of value creation that has historically been reserved for the well-connected and the ultra-wealthy.
We also believe this allocation warrants structural consideration in portfolio construction. The range of solutions available to us has expanded considerably, which means the primary barrier today is not access, it's education. It’s a conversation advisers are well placed to navigate with clients, and one we are actively having.
How Arrow accesses Venture markets
At the core of our approach is a simple conviction, private market exposure is not a single product, instead it is a capability. The right vehicle depends on an investor's liquidity requirements, investment horizon, and risk tolerance. Arrow also services investors across a wide range of sophistication and complexity. The combination of these factors means we need to have varying solutions for varying needs, and it's worth explaining what that actually means in practice.
“The range of solutions available to us has expanded considerably, which means the primary barrier today is not access, it’s education.”
For retail investors
For clients who are earlier in their private markets journey, sit outside the sophisticated or wholesale investor classification, or are investing via superannuation, Arrow can provide access to managed funds and listed structures that offer exposure to venture capital through a regulated, liquid wrapper.
These vehicles, typically open-ended or exchange-traded, provide diversified access to venture-backed businesses without locking up capital for extended periods. A major advantage is that capital can be deployed immediately across a diversified portfolio, something that may take years to build via a traditional closed-end model.
The trade-offs are worth understanding. Most of these structures are required to hold a liquidity sleeve, generally 10 to 20% of the portfolio held in lower-risk liquid assets to meet redemptions. That portion isn't working in the asset class, which can dilute return outcomes. For listed structures trading on an exchange like the ASX, a second issue emerges, investors are exchanging capital with each other rather than transacting directly with the underlying portfolio. This removes the pressure on the manager to meet redemptions, but it does mean the vehicle can disconnect from the value of its underlying assets, sometimes materially, depending on where sentiment sits in the cycle.
The Middle Ground
For clients with longer investment horizons and a genuine comfort with illiquidity, we provide access to specialist venture capital and growth equity funds, some with a particular sector focus or a more niche investment approach. Capital is provided upfront, removing the need for clients to manage capital calls.
These strategies generally carry a lock-up period, after which there is less frequent liquidity, typically quarterly or biannually. These portfolios tend to be more fully deployed than the retail structures above, meaning investors get significantly greater exposure to the assets they're actually targeting. This pocket also includes fund-of-funds structures, where investors benefit from diversification across companies, sectors, and vintage years, alongside the expertise of dedicated teams focused entirely on sourcing and underwriting private market exposure.
The trade-offs here are also worth naming. These structures are generally less regulated and accessible only to wholesale investors & investors are signing away several retail protections as part of that process. Fee layering is also a genuine consideration, particularly in fund-of-funds structures where costs compound across multiple layers of management.
Close End Funds
For our most sophisticated investors, we allocate to dedicated closed-end programs that provide deeper, more concentrated, and more specialised access to the market. These structures operate on a capital call basis, an amount is committed to a strategy, drawn down over 2 to 4 years as opportunities are identified, and capital is returned to investors as the underlying portfolio companies are exited.
These programs are designed for investors who understand illiquidity as a feature rather than a flaw, a structural advantage that enables patient capital to access opportunities unavailable to those who need liquidity on demand. For Australian investors, there can also be meaningful tax benefits and incentives attached to deploying capital into the local venture ecosystem that are worth exploring with your adviser.
The downsides here are the most significant of any structure, and we think it's important to be direct about them. You cannot put capital to work immediately. A client committing to implementing a closed-end program today would likely take three to five years to fully deploy that capital, and would be unlikely to see distributions before year seven or beyond. There is also blind pool risk, meaning you don't know precisely which companies you are investing in at the time of commitment. Instead, you are backing a manager with an established track record and trusting their process, they will inform you of investments after they are made.
These programs are not appropriate for every client. They carry meaningful risk, require genuine patience, and demand a real understanding of how private markets work. They are also, in our view, among the most compelling risk-adjusted opportunities available to sophisticated Australian investors over the next decade.
The risks we always name
We would be doing clients a disservice if we didn't call out the risks clearly.
Illiquidity is real. The underlying investments in these portfolios cannot be exited quickly and must be considered long-term commitments, you cannot trade in and out of them at the same pace as listed assets. Capital committed to a closed-end fund cannot be recalled at all, you get your money back when an underlying investment is exited, not before. Valuation opacity is also real, private company marks are infrequent and rely on judgment rather than daily price discovery. This is worth noting practically, using SpaceX as an example, the same position can be marked at different prices across different investment vehicles, depending on when the last valuation was struck and the methodology applied.
There is also a cannibalisation risk to other parts of a client's portfolio that is worth understanding. Emerging, high-growth businesses have historically been accessible via small and mid-cap equity strategies, which are explicitly designed to identify nascent companies before they become household names. The long-run evidence suggests that smaller companies outperform larger ones, and higher growth rates are a key driver of that. But if companies are staying private until they are too large to fit within that segment of the market, then small-cap strategies are no longer receiving the pipeline of opportunities they once did. It is a structural shift that has implications beyond private markets alone.
Our role is not to obscure those risks, it is to help clients understand them clearly enough to make genuine decisions and to size and structure exposures appropriately so that private market allocations complement, rather than compromise, the overall portfolio. These are not reasons to avoid private markets, they are reasons to size & manage them appropriately.
A final observation
When this generation of private companies goes public over the coming eighteen months, the coverage will be immense. The names, SpaceX, OpenAI, Anthropic, and Canva, are already household terms. The IPOs will be hot, the enthusiasm will be enormous, and much of the financial media will frame them as fresh opportunities.
What will receive far less attention is the quiet reality that the investors who genuinely benefited from these companies were those who had found their way in many years earlier and through structures such as those Arrow has been providing access to. The next cohort already exists, and they’re being built right now. These companies will stay private for years, creating value behind the scenes that public market investors cannot yet touch.
The question we put to clients is not whether they believe in innovation. Almost everyone does. The question is whether their portfolio is actually structured to benefit from it.
That conversation is one we are always happy to have.
General Advice Warning:
Any general advice on this page does not take account of your personal objectives, financial situation and needs, and because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Information contained on this page was correct at the time of posting.
