Venture capital and growth equity are at an inflection point. After a bruising multi-year correction, the setup today looks increasingly compelling: Value creation is migrating into private markets at precisely the moment of a generational technology shift, capital markets are reopening across every major exit channel, and distributions are poised to inflect after years of drought.
The opportunity is real, but it is uneven. We believe returns will concentrate among a narrow set of winners and top-tier managers, which makes disciplined portfolio construction and manager selection the decisive levers.
In what follows, we lay out what venture capital and growth equity actually are, why the environment is compelling today, where the opportunities lie (e.g., artificial intelligence, security), what accelerating capital markets activity means for distributions and sentiment, and think about implementation and allocation. Consider this our roadmap for investors seeking to navigate one of the most dynamic periods in private markets in recent memory.
What are venture capital and growth equity?
Venture capital and growth equity invest in private companies at different stages of maturity. Venture capital targets early-stage companies where the business model is unproven and risk is highest. Growth equity focuses on mid- to late-stage companies with established product-market fit, demonstrated revenue traction and clear paths to market leadership. Together, they capture innovation from earliest inception through to public-market access—or, increasingly, indefinite private status.
The distinction matters. Early-stage venture is front-loaded in risk and back-loaded in returns, driven by a handful of outsized winners across many investments. Growth equity targets more de-risked models with higher revenue visibility and nearer-term liquidity. Both share a critical trait: access to high-growth innovation increasingly unavailable in public markets. As companies stay private longer amid a generational technological shift, these strategies capture economic growth that public-only portfolios structurally miss. This is not simply return enhancement; it is about adding access points to innovation that can’t be accessed in public markets.
Why now: A resurgence after the post-2021 correction
We became more constructive early last year. Three reinforcing forces drove that shift: the structural migration of value creation into private markets, the acceleration of secular growth themes (AI, healthcare, defense) and revitalization in exit channels across M&A, IPOs and GP-led secondaries.
This resurgence is structural, not cyclical. Innovative companies increasingly spend their growth phase in private hands. Meanwhile, attractive entry points are emerging in early-stage venture, where valuations have been more insulated than late-stage names now dominated by LLM leaders.
The opportunity set
Companies with the size and scale to IPO are staying private longer, creating meaningful value in the private markets. There are four reasons for this in our view:
- Abundance of capital in private markets (the strongest driver in our view).The meaningful growth in private capital over the past decade has removed the historical pressure to tap public markets for scale capital.
- Desire to avoid the short-term focus and regulatory burden of public markets.Quarterly reporting cycles and disclosure requirements are increasingly viewed as a tax on long-duration strategy.
- IPOs are no longer the default exit—secondaries, continuation vehicles and strategic M&A have created credible alternatives for both founders and investors.
- While IPOs are a more important exit route for VC versus buyout, it was still only ~40% of total exit value for U.S. VC in 2025.
- Secondary spotlight: Secondary markets are also maturing rapidly: 2025 secondary volumes exceeded $240B (+48% y/y), the GP-led market reached $115B and has grown at a ~30% CAGR since 2017, and single-asset continuation vehicles have risen from $2B in 2018 to $31B in 2024—the fastest-growing segment of the secondary market. VC secondaries, in particular, are gaining traction as more GPs adopt the route.
- And the speed of innovation in AI is unprecedented, which only sharpens the case for staying private.The ultimate winners of the AI / defense race may not yet exist. Innovation at this pace requires patient capital paired with strategic guidance—a combination that today lives primarily in the private markets. The top 100 AI companies hit $5 million ARR in 24 months on average, versus 37 months for SaaS comparables.
