Skyrocketing Valuation Increases Appetite for Private Investments

Structural changes in global finance and a cultural shift among founders are driving world-class companies to remain private for unprecedented periods, creating a new class of "mega-cap" private entities. According to executives at investment management firm Baillie Gifford, while 2026 may bring a significant unlocking of liquidity through major IPOs, the sheer scale of these businesses presents new challenges for public market absorption.

Key Points

• Structural Shift: Regulatory hurdles like Sarbanes-Oxley and the availability of secondary capital have fundamentally altered how companies capitalize themselves, allowing them to stay private longer.
• 2026 Outlook: The market is eyeing 2026 for potential massive listings from industry giants such as SpaceX, Anthropic, and OpenAI.
• Scale Challenges: The potential IPOs are so large—with SpaceX potentially targeting a $1.5 trillion valuation—that they enter "uncharted waters" compared to historical benchmarks like Alibaba.
• Growth Gap: Investors limited to public markets are missing out on significant growth phases, illustrated by the disparity between Tesla's $2 billion IPO and current private valuations of varying hundreds of billions.

The Era of the "Mega-Cap" Private Company

The landscape of capital formation has undergone an "irreversible change," driven by a combination of regulatory friction and strategic necessity. Baillie Gifford notes that regulations such as Sarbanes-Oxley have made public listing more onerous, while the Jobs Act and robust private markets have made staying private increasingly viable. Beyond regulation, there is a distinct cultural shift among modern founders.

"Founders today realize that you can build a better, more enduring business by staying private for longer because you can be more focused on the fundamentals of business building. We're seeing exceptional world-class businesses of real scale in the private markets."

This environment has fostered companies that possess the operational robustness and maturity of public firms but choose to retain the flexibility of private ownership. This delay is further enabled by an active secondary market. Liquidity events for employees and early investors, which traditionally required an IPO, are now frequently solved through secondary transactions for companies like Stripe, ByteDance, and Databricks.

Uncharted Waters for Public Listings

While companies are staying private longer, the pipeline for 2026 suggests a potential wave of listings that could test the capacity of public markets. High-profile names such as SpaceX, Anthropic, and OpenAI are widely discussed as candidates for this window. However, the valuation metrics for these companies dwarf historical precedents.

Baillie Gifford highlights that the largest tech IPO in history, Alibaba in 2014, was a $25 billion listing. In contrast, if SpaceX were to list just 10% of its equity, the offering alone could reach $80 billion based on current valuations.

"I think we're in slightly uncharted waters with regards to the scale of these IPOs. The real question is: at what valuations will public market investors be willing to commit significant amounts of capital, and how do the public markets digest IPOs of this scale?"

The shifting Location of Growth

The trend of delayed IPOs has significant implications for retail and institutional investors restricted to public equities. The "growth phase" of a company's lifecycle—formerly a public market event—is increasingly contained within private markets.

Comparing Tesla to modern counterparts illustrates this disparity. Tesla went public in 2010 with a valuation of roughly $2 billion, allowing public investors to capture its subsequent meteoric rise. Today, companies like SpaceX remain private with valuations hundreds of times higher, effectively locking out democratized access to that initial hyper-growth curve.

As Baillie Gifford prepares for the potential 2026 IPO cycle, the firm emphasizes that private markets remain "non-democratic." Founders continue to steer allocation toward value-add partners who offer long-term stability and governance expertise, rather than purely capital-driven investors.