This year's mega-IPOs have reopened an old argument about where equity investors find the most growth. In "Growth Investing in Private Markets: How Times Have Changed1,” David Miller, Managing Director and Global Head of Private Credit & Equity at Morgan Stanley Investment Management, and Tim Clarke, Executive Director and Head of Private Credit & Equity Research, lay out the full menu of choices: public or private, big or small, IPOs or secondaries, venture or private equity, active management or "just buy and hold the Mag 7." They start from one principle. "While investing at a compelling value certainly helps, what's undeniable is that growth is the key ingredient to high compounding returns on a sustainable basis," they write.
Who Is Collecting the Gains?
The current IPO class has grown to an estimated ~$3.4 trillion since founding. That is more than the exit value of every VC-backed IPO before 2026 combined. "Private market investors stand to reap this enormous windfall, just as they did for the trillions in value generated by previous IPOs," Miller and Clarke observe. Public buyers have not done as well. Since 2021, post-IPO returns trail the S&P 500 by 100 percentage points (Display 1).
The 2021 Hangover
The authors trace that gap to a flood of supply. In the 18 months after the pandemic reopening, 801 companies and $1.6 trillion in market cap moved onto US exchanges. That was nearly five years of normal supply arriving at once (Display 2). New listings then fell to a two-decade low. Leave out this year's mega-IPOs, including SpaceX at $1.7 trillion, and listings have only recently climbed back above their pre-pandemic average.
Poor post-IPO returns have taught companies to stay private longer. The median age at listing has risen from 6.9 years in 2014 to 11 years in 2025. "This has shifted even more growth, return capture and value creation into the private phase of the life cycle for an IPO-worthy company," they write (Display 3).
Venture Meets Growth Equity
The line between venture capital and growth equity is fading. Companies on their sixth or later funding round used to take about 25% of venture capital. That share reached 40% in 2025, and 2026 is running at 60%, or $414 billion (Display 4). The authors describe "a new breed of late-stage private companies that increasingly resemble public-quality assets in terms of age and maturity while featuring growth rates more akin to start-ups." Since April 2021, the Global Unicorn Index is up 255%, against 84% for the S&P 500 (Display 5).
The Herd Is Thinner Than It Looks
This is where the report adds caution to its enthusiasm. A PitchBook analysis found that 40.6% of reported Unicorn values were at least three years old. Once those stale marks are replaced with new estimates, the US count drops from 857 to 635 (Display 6). The share of "fallen" Unicorns rose to ~14% a year, up from ~5%. Even so, the value of the smaller group nearly doubled in 2025 to $4.4 trillion (Display 7). "Given the high level of hidden churn and fluid nature of rising and falling Unicorns, this suggests that active management and diversification are key when approaching late-stage private growth investing," the authors conclude.
Revenue at AI Speed
AI is driving much of this. OpenAI reports $50 billion in annualized revenue as of September 30, 2026, up from $4 billion two years earlier. That matches Salesforce's total annual revenue (Display 9). As a group, the top AI-native challengers grew from $0.15 trillion in 2023 to $2.93 trillion, a 134.5% CAGR. Legacy public SaaS took 20 years to reach $2.71 trillion (Display 10).
Getting into these deals is the hard part. Rounds are often oversubscribed several times over. AI companies raise every 1.32 years on average, compared with 1.85 years for non-AI companies (Display 8). "That's good news for access, but experience is still needed to underwrite valuations and discern between winners and losers within this emerging technology," Miller and Clarke caution. Many of these valuations rest on PitchBook estimates or recent funding rounds, so the authors' emphasis on experience matters.
Conclusion
"The most exciting growth companies no longer make their debuts and generate their greatest returns in public markets only," the authors write. They add an important condition: the opportunity holds "only if they resemble public-quality assets and are executing on transformative technologies."
Five Key Takeaways for Advisors and Investors
- Value creation has moved earlier. Companies now take about 11 years to reach IPO, and much of their compounding happens before public investors can buy.
- IPOs are no longer an automatic win. Post-IPO returns have trailed the S&P 500 by 100 points since 2021.
- Check the marks. Updated estimates cut the US Unicorn count by about 25%, so ask how private holdings are valued.
- AI sets the pace. AI companies raise capital faster and reach revenue sooner than earlier tech waves did.
- Manager skill counts most. With heavy churn and competitive deal access, diversification and experienced active management drive results.
Footnote:
1 Miller, David, and Tim Clarke. "Growth Investing in Private Markets: How Times Have Changed." Morgan Stanley Investment Management, Oct. 2026, www.morganstanley.com/content/dam/im/assets/publication/thought-leadership/article/article_howtimeshavechanged.pdf. Accessed 4 Nov. 2026.
