JP Morgan Private Bank is making a compelling case that the most significant value creation in next-generation technology winners is happening in private markets before these companies ever reach public investors through an IPO. Kristin Kalligas-Roland of JP Morgan wrote that power is the bottleneck and private infrastructure is central to the next phase of the technology buildout.
The shift in thinking is significant. A couple of years ago, most investors looked at the Magnificent Seven and other large-cap technology stocks as an easy and efficient way to access the growth story. But now, platform companies are forcing a rethink as the S-curve of value creation is happening pre-IPO, suggesting that by the time these companies go public, much of the explosive growth phase may already be behind them.
The numbers illustrate the scale of the opportunity in private markets. There are currently 4 trillion dollars worth of unicorn companies globally, but the concentration is striking. Approximately 80 percent of that value is concentrated in about two dozen platform companies, the so-called decacorns that have grown far beyond the billion-dollar threshold that once defined a unicorn.
SpaceX serves as the prime example of this dynamic. Founded 24 years ago, the company has created enormous value for its private investors over more than two decades before any public listing. The upcoming IPOs of companies like SpaceX, OpenAI and Anthropic will bring these names to public markets, but early private investors will have captured the most dramatic phase of their growth curves.
The risk profile of private market investing is evolving rapidly. The massive capital expenditure needs for the buildout mean that companies are raising new funding rounds not every couple of years, as was traditional, but every six to nine months. This accelerated cycle means that companies that fail to hit their targets are identified and cut off from funding much faster than in previous cycles.
Beyond pure technology plays, JP Morgan sees global fragmentation creating additional private market opportunities. Europe needs to increase defense spending by two to three times current levels, US trade policy realignment is creating new investment needs, and China is pursuing energy and resource independence. Each of these structural shifts is generating deal flow that was not available even a few years ago.
For investors, the message from JP Morgan is clear: the old playbook of waiting for companies to IPO and then buying shares may leave significant returns on the table. As the technology buildout continues and geopolitical fragmentation accelerates, the private markets are where the most consequential capital allocation decisions are being made, and where the largest potential returns are being generated before companies ever reach public exchanges.