Value Creation Shifting to Private Markets Before IPO, Says Neostellar Executive

The most significant wealth creation is increasingly occurring in private markets, leaving public investors with a much different and often diminished opportunity by the time a company lists, according to Willy Lee, a principal at Neostellar (NASDAQ: NSLR).

In an interview with Investing.com, Lee stated that companies are now building massive businesses and creating substantial value long before an initial public offering, a stark contrast to previous eras. He noted that venture capital has historically been a restrictive asset class, locking out most retail investors.

The Shrinking IPO Opportunity

Lee pointed to the tendency for companies to stay private longer as a key driver of this shift, forcing public investors to "sit on the sidelines through much of their growth." He used SpaceX as an extreme example, which investors had to wait over 20 years to access on the Nasdaq, by which time it had achieved a $1.77 trillion valuation.

This dynamic continues with today's technology leaders. "With Anthropic, OpenAI and others following a similar path, many investors may not get their first opportunity to participate until these companies are already the size of major S&P 100 businesses," Lee said. He contrasted this with Google's 2004 IPO at a $23 billion valuation, which offered a fundamentally different growth opportunity.

Stricter Demands on Private Firms

The bar for going public has been raised significantly. Citing a Q3 2025 PitchBook report, Lee highlighted several key metrics for the average technology company at its IPO:

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• Average revenue generated was $831 million.
• 25% of companies were profitable, more than double the share seen in 2021.
• The median revenue multiple has fallen from 17x in 2021 to just 4x.

These figures indicate that companies are now required to build much larger and more proven businesses before they can access public markets. While acknowledging that some private AI valuations may appear high relative to current revenue, Lee asserted that leading AI-native companies are demonstrating real, high-speed growth from large revenue bases.

Growing Access to Private Markets

As this trend continues, Lee believes retail access to private markets through publicly traded vehicles will expand. He noted that when Neostellar launched its platform in 2011, it was one of few options, but today a growing number of vehicles offer various private-market strategies.

Lee differentiated Neostellar's approach, which focuses on identifying compelling businesses "before they achieve broad recognition and associated scale." He cited the firm's investments in companies like WHOOP, CoreWeave, and Palantir as examples of this strategy, which aims to generate venture-like exposure and long-term value for its shareholders.