Odd Lots• Feb 20, 2026• 48:30Interview

A16Z's David George on How Private and Public Markets Fused Into One | Odd Lots

From Odd Lots

David George•Head of the Growth Fund, Andreessen Horowitz (A16Z)

Executive Summary

The private technology market has swelled to a $5 trillion market capitalization, representing a significant shift where the majority of a company's value creation now occurs before an IPO.
Top-tier private companies, like those in the Andreessen Horowitz (A16Z) Growth Fund portfolio, are exhibiting hyper-growth (averaging 100% YoY), a rate rarely seen in public markets.
Deeper private capital markets and mechanisms like regular tender offers provide liquidity and stability, reducing the urgency for companies to go public and allowing them to mature privately.
A wave of mega-IPOs from capital-intensive sectors like AI and space (e.g., SpaceX, OpenAI) is anticipated around 2026, driven by the need for even larger pools of capital.

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Concerns Raised

Public market investors may struggle to properly model and value hyper-growth companies, potentially undervaluing them post-IPO.
The immense capital requirements for leading AI companies create a constant need for fundraising.

Opportunities Identified

Investing in market-leading private companies exhibiting hyper-growth (100% YoY) at a relative discount to public comparables.
Capturing value creation in the pre-IPO stage, which now accounts for over half of a tech company's total market cap creation.
The anticipated wave of mega-IPOs around 2026 from dominant private companies in AI and space.

Key Themes

The Ascendancy of Private Markets

The market capitalization of highly-valued private tech companies has grown tenfold in a decade to $5 trillion, equivalent to 15% of the NASDAQ. This growth is fueled by deep private capital pools, which allow companies to scale massively before considering an IPO, fundamentally altering where and when value is created.

This structural shift means public market investors are missing out on the hyper-growth phase of today's most influential companies, forcing a re-evaluation of where to find alpha in the technology sector.

Growth Investing at Scale

A16Z's growth investing strategy focuses on market-leading, founder-led companies exhibiting hyper-growth, with its portfolio averaging 100% YoY growth. The firm has deployed approximately $22 billion across its growth funds, investing in companies like SpaceX, Databricks, and OpenAI at an average multiple of 21 times revenue.

This demonstrates the scale and sophistication required to access premier late-stage private deals, which offer growth profiles largely unavailable in the public markets.

Public vs. Private Market Dynamics

Companies are staying private longer due to the burdens of public market reporting and short-term focus, coupled with the private market's ability to provide liquidity through mechanisms like tender offers. Public market investors often struggle to accurately value hyper-growth (60%+) companies, leading to a valuation discount for private firms that accept illiquidity for stability.

Understanding these dynamics is crucial for founders choosing a capital path and for investors allocating capital, as the private market offers a different risk-reward profile focused on long-term, sustained growth.

The Future of Tech IPOs and AI

The primary catalyst for a top-tier private company to IPO is the need for massive pools of capital that even the private markets cannot satisfy. This is particularly relevant for AI and space companies, with a potential wave of mega-IPOs predicted for 2026. The rise of AI is also expected to shift enterprise software pricing towards outcome-based models.

The immense capital requirements of foundational AI models will likely force the largest AI players into the public markets, creating significant new investment opportunities and reshaping the public tech landscape.

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Topics

Venture Capital Growth Equity Private Markets Public Markets IPOs Andreessen Horowitz (A16Z)Valuation Revenue Multiples Market Capitalization Tech Investing AI (Artificial Intelligence)SpaceX Databricks Stripe OpenAI Capital Allocation Tender Offers

Processed Apr 2, 2026 yt-dlp + mlx-whisper + Gemini