Will We Get a $1 Trillion Private Tech Firm?
Will a private tech company reach a $1 trillion valuation in the coming years?
It’s not a ridiculous question. A couple of companies seem like potential candidates. OpenAI is closing in on $300 billion in its financing with SoftBank, and SpaceX recently shot to $350 billion.
Other private tech heavyweights are reaching impressive fresh new valuations, without going public. My colleague Sri Muppidi broke the news Monday that Stripe is talking to investors about an employee share sale that would value the company at $85 billion, more than Capital One or Barclays. Waymo’s $45 billion valuation last year put it above Ford and Honda.
What’s more, there are few rumblings that any of these companies are going to go public anytime soon. Top-tier private companies have plenty of access to capital. Even Goldman Sachs’s CEO says delaying an IPO seems logical for big private companies. It’s becoming more likely that name-brand Silicon Valley firms might end up like other privately held, globally important conglomerates like Koch Industries, Bloomberg or Hearst.
A handful of tech companies are expected to go public in the first half of this year. Most will have strong businesses, but they are not seen as industry defining. Investors aren’t as excited about Chime or Klarna as they would be about Stripe. Data center operator CoreWeave is sure to get plenty of hype, but it isn’t OpenAI or Anthropic.
Another question I’ve been mulling: Is this a problem?
One obvious downside is that everyday stock market investors can’t invest in the most successful recent crop of startups without resorting to sketchier investment vehicles.
Another issue is more esoteric—the potential costs to society when some of its most valuable companies keep a tight lid on their financials, governance structures and risks. Reporting on these companies, as well as disclosures to investors during private fundraising events, only go so far. Companies have to open up a lot more as they prepare to go public.
Jeff Nykun, a former senior analyst at the asset manager Artisan Partners, put it to me this way: “If the world stays the way it is, wouldn’t it be weird if we didn’t know what’s going on with the biggest companies in the world? I don’t know if that’s good for anybody.”
Nykun is one of the many tech investors optimistic that the IPO drought has to end within the next year or two. It’s crucial to the venture capital industry that the dam breaks. He is a general partner at tech investment firm WndrCo, which has invested in private software companies like Databricks, Deel and Figma—hot companies that IPO watchers expect to begin marching to public listings by next year.
He thought what might finally push top startups over the edge comes down to brass tacks—that they will be able to sell stock for a higher price in the public markets than to private investors. Private software companies that are growing faster than 30% a year, a quicker pace than nearly all their publicly traded peers, are in high demand, he added. “I think people will be shocked how well they trade,” he said.
That could drive another classic tech-industry phenomenon: fear of missing out.
Right now, tech founders appear to be taking cues from the same elite crew that have proven allergic to going public, like Elon Musk at SpaceX or Patrick Collison at Stripe. Cool kids just don’t IPO. Their companies are too precious for public hands.
Another crop of celebrity founders, at least by Silicon Valley standards, might make IPOs trendy again. I’d bet Dylan Field of Figma or Ali Ghodsi of Databricks will ring the IPO bell at Nasdaq or NYSE by sometime next year. They might be in for a wild ride but their employees, investors and customers will thank them for their new transparency.