Why the IPO is no longer the main event

As companies scale privately for longer, the decisions that shape value, control and risk increasingly happen before the opening bell.

When Elon Musk’s aerospace and satellite maker, SpaceX, went public on Nasdaq in early June, it made the largest stock debut in history. Valued at $1.77 trillion, the IPO sparked a trading frenzy that saw shares soar by almost 40 percent in its first week shattering records and generating a good deal of media hype. The ensuing rollercoaster, with SpaceX shares fluctuating wildly over the summer, has continued to dominate headlines around the world – Musk’s status as founder, primary owner and the “world’s first trillionaire” filling newspaper columns on both sides of the Atlantic.

But behind the furore, there’s an even bigger story. And that is the remarkable rise of private markets – and the way they are changing where and how value is created.

No longer a waiting room before the IPO

Historically, private markets have been seen as something of a staging post: a place where fledgling companies mature before accessing the deep pools of capital and liquidity available in the public markets. For decades, the IPO was regarded as the holy grail of finance – a coming of age in which companies graduated to the big leagues, early investors gained a route to realise returns and the real action was thought to begin. The SpaceX story turns that narrative on its head.

For years, this firm has been financed, governed and scaled outside the public equity markets, backed by venture capital, growth equity and late-stage private investors. By the time SpaceX reached Nasdaq in 2026, much of the heavy lifting had already been done. The IPO was the moment that public investors were finally invited into a company that had already been built – and at extraordinary scale.

If the SpaceX story tells us one thing, it’s that some of the most important, innovative and influential organisations are today being grown in private markets. No longer the waiting room before going public, private markets have become a principal engine of corporate growth, investment and governance long before companies reach an IPO – if they choose to go public at all.

Increasingly, many do not. Instead, companies are acquired by larger strategic buyers, allowing early investors to realise returns through mergers and acquisitions. This points to a profound shift in how companies are financed, scaled and ultimately exited in global finance today.

It also raises important questions – not least about governance.

The real action is happening inside the deal

Publicly listed companies operate under scrutiny from regulators like the U.S. Securities and Exchange Commission or its UK equivalent, the Financial Conduct Authority. They’re subject to extensive disclosure requirements and governance rules – rigorous checks and balances that offer protection to investors while holding management to account. Private markets work differently.

While headlines may fixate on billion-dollar funding rounds or eye-watering valuations such as SpaceX, the real action is happening much further upstream and largely behind the scenes, long before any kind of public announcement.

Within a less standardised and less publicly visible disclosure and governance framework, the deals negotiated between founders and investors are much more than legal documents. They become highly sophisticated governance mechanisms that determine everything: how ownership is distributed, control rights are allocated, losses and gains are shared, and incentives are aligned between investors and management.

The contract decides who has the authority to make critical decisions and who bears the downside when things go wrong, as they frequently do. For every SpaceX there is a multitude of ventures that never fulfil their promise. In private markets, governance is shaped more extensively through contract, boards, monitoring and negotiation. The deal itself becomes the blueprint for how new organisations are governed, and ultimately how value is created.

All of this makes private capital a highly nuanced and complex environment to navigate. Being successful in this high-stakes, high-risk space doesn’t simply depend on acumen, intuition or an appetite for risk. It calls for different ways of thinking about investment and governance, negotiation incentives and decision-making – capabilities that go well beyond traditional financial analysis. And as private markets continue to grow, those capabilities will be increasingly critical not only for finance professionals, but for decision-makers across diverse functions and organisations everywhere.

Making decisions in the absence of certainty

In a world where companies are staying private for longer, where governance is contractual rather than regulatory and value creation is happening long before the IPO, making sense of the mechanisms at play is no longer the sole preserve of venture capitalists or private equity specialists. As institutional investors – from pension funds, sovereign wealth funds to family offices – allocate ever more capital to private markets, and as companies increasingly look to acquisitions to bolster their technology capabilities, understanding how private investments work will become essential for decision-makers across finance, but also law, strategy and corporate leadership. And this is not easy.

Unlike public markets, private markets operate with limited information. Financial statements, comparable transactions, market prices – all of these things may be scarce or unavailable. In this environment, decisions must be made with incomplete data. Professionals must learn to act in the face of uncertainty – to value companies, estimate future cash flows, and arrive at disciplined investment decisions without historical evidence or reliable benchmarks. Then there’s the issue of liquidity.

In public markets, if circumstances change or investors decide they have backed the wrong venture, exiting is usually relatively straightforward: you can generally sell your shares in the market. Private markets work differently. It can be difficult to get in, and just as difficult to get out. Investments may need to be held for years, and secondary markets are more limited. In private capital, exiting is a planned event rather than the click of a button.

All of this requires careful planning: preparing for unexpected liquidity needs, managing longer investment horizons and designing exit strategies in markets where nothing – including buyers – can be taken for granted. It also means building relationships.

Nobody can know for sure what the future holds in private capital, because most of the companies that inhabit this space are still developing. This makes trust incredibly important. Success here again hinges not only on technical acumen and know-how, on being able to operate amid ambiguity, but also on the relationships and networks that individuals build. Making it in private markets is a game of judgment, patience, working with uncertainty, and meeting like-minded people – watching them in action and learning how they think.

LSE’s Private Equity and Venture Capital

We have launched a new course at LSE that goes deep into these and many of the other challenges that characterise this fast-growing, fascinating and increasingly influential world. Our course will explore:

• How organisations operate: how they’re financed, how they grow value and exit their investments. How key players evaluate firms, structure contracts and relationships and how debt sits alongside equity financing.
• Value creation through operational improvements, technology adoption and strategic change.
• Hands-on simulations: applying real-world examples to participants’ own workplace, identifying and valuing investment opportunities and determining what a success exit strategy looks like.

At the end of the day, private investing is an exit business. Every decision is made with one question in mind: how and when value will ultimately be realised.

Our aim is to equip learners with the knowledge, analytical frameworks, practical judgement and professional network they need to make decisions with confidence – and to be ready when their own defining moment arrives.

SpaceX’s IPO broke records this year, drawing public attention to a company whose financing, governance and growth had been shaped largely in private. With OpenAI and Anthropic taking preliminary steps towards possible US listings, the next generation of market-defining companies will provide a fascinating test of how businesses built through venture capital and private equity continue to reshape global finance.

The challenge now is not just to understand how their value is measured at exit – but how it has already been created by the time they ring the opening bell.