When ride-hailing app Uber listed on the New York Stock Exchange in May 2019, it reset the scales for all venture capitalists. In one of the all-time largest initial public offerings in the United States, the company raised $8.1 billion on a $82 billion valuation.
Early backers like venture fund Benchmark, Google Ventures and Lowercase Capital held stakes worth over $12 billion at the time of the float. But the numbers for that deal — one of the best of the last era of startups — now look quaint.
That’s because the valuation of just three startups, SpaceX, OpenAI and Anthropic, have exploded over the last year. Elon’s space giant is now tipped to go public at a valuation of over $1.5 trillion as soon as June following its merger with xAI in February, which valued the combined business at $1.25 trillion. OpenAI and Anthropic are now valued at $852 billion and $380 billion respectively, with Anthropic reportedly in talks to at least match its archrival’s valuation in a new fundraise.
Pitchbook data shows that $1.58 trillion was generated in total from all the stock market listings, takeovers and mergers in the United States over the last five years (with 2021’s listing and SPAC bonanza driving over half of that number). The SpaceX’s market cap alone could eclipse this (but is reported to plan to float only around 5% of its equity).
Anthropic could go public at the nearly $1 trillion valuation its shares currently trade at on Forge Global, a platform that enables sales of private startup stakes. OpenAI trades at around $900 billion on Forge. Public listings for Anthropic and OpenAI at that price would mean that the headline valuation of just three deals would outstrip the $2.64 trillion generated from a decade of exits stretching back to 2016, including some of biggest ever from the likes of Coinbase (IPOed at $86 billion in April 2021), Airbnb (IPOed at $79 billion in December 2020) and DoorDash (IPOed at $71 billion in December 2020) and Uber.
Venture capital funds hold relatively modest stakes in the three giants, compared to Musk, who is poised to become the world’s first trillionaire with SpaceX’s IPO, OpenAI’s trust, and Anthropic’s corporate backers like Google and Amazon, according to Forbes estimates, corporate and court filings. Even so, corporate and venture investors could stand to make $815 billion in profits from these three companies at current valuations. That outstrips the net gain of $666 billion investors took home from the last decade of startup investing, says Meghan Reynolds, managing partner at tech fund Altimeter.
“It is a wildly, wildly concentrated market,” says Reynolds, whose $20 billion fund has invested in OpenAI and Anthropic. “Venture gross profits have always been very concentrated because of the power law but this explains all the investor FOMO around OpenAI, Anthropic, and xAI to a certain extent as well.”
That demand has spawned an industry around selling access to this tiny club of the hottest startups to investors, and family offices. The invite-only deals often see early backers or employees sell shares or options to buy them via special purpose vehicles. It’s hard for investors who invest in such SPVs to know what they are actually buying, but the size of the opportunity is hard to resist.
Previously, the largest ever enterprise software listing to date was Snowflake’s $68 billion IPO in September 2020. “When I did the math that was my holy shit moment, where this was entirely different from anything we have ever seen before,” says Everett Randle, a partner with venture fund Benchmark.
The growth that took Google, Amazon and Meta from startups to illion-dollar market caps largely played out in the public markets and took decades, says Randle. But today, a handful of AI-linked startups have surged to similarly massive valuations while still private. “Now, we have compressed that timeline by 3X plus and everyone is trying to grapple with that reality,” he says.
These three companies are very different from the earlier breed of software startups that required relatively little capital to spin up AI by contrast requires unfathomably amounts of compute to train it and scale it up. Collectively, investors have already committed $310 billion to just these three companies.
Anthropic doesn’t forecast that it will breakeven until 2028, and OpenAI’s timeline is even longer, according to reports. SpaceX is already profitable, thanks to its Starlink and satellite launch business. But it plowed money into a merger with xAI, which runs at a massive loss thanks to the data center buildout required to train up Musk’s chatbot Grok. The company also now plans to build a semiconductor fab, and potentially orbital data centers which will require major capital expenditure up front.
Despite the mass amounts of cash they need to run, the three companies have already claimed a string of outsized superlatives. SpaceX has long been the world’s most valuable startup. OpenAI landed a record $800 billion valuation in just three years from ChatGPT’s launch, and Anthropic stunned investors with reports that its annual revenue run rate was on track for $45 billion this year. Its CEO Dario Amodei claimed in early May that revenue grew 80-fold in the last quarter alone.
That mold-breaking potential is now shaping investor behavior, says Randle. “It feels like a bit of a return to more of a kind of cowboy days of venture capital, where the point was to take a lot of risk in order to participate in a power law asset class,” he says, referring to how just a handful of companies drive the majority of a fund’s returns.
That toggle away from a “spreadsheet-based” era of investing in software-as-a-service (SaaS) companies also comes with risks, and investors should also expect that the current batch of AI startups are likely to have a higher rate of failure, says Randle. “The growth for these companies is really high but they don’t have the same stickiness or retention we saw in the 20-year SaaS era.”
Randle is more concerned for the founders that have built multi-billion-dollar businesses by tapping into models like Claude, ChatGPT, and Grok. But Anthropic, OpenAI and SpaceX have their share of challenges too. Musk has tried to buy his way into the AI race with a $60 billion deal to eventually acquire coding startup Cursor. Anthropic’s revenue has surged on the strength of its new Claude models, but OpenAI’s Codex coding agent seems to have helped close the technical gap. Both loss-making companies need to juggle massive investments in new models and the data centers needed to train and run them, while fending off competition from Google and Chinese labs like DeepSeek that have aggressively cut pricing.
The last era’s biggest deals could also serve as something of a warning. Uber’s listing was a banner day for its early backers like Benchmark but the IPO was marred by its share price closing down 7% on its first day. It turned out that public market investors had less patience than its venture capital backers for the business spending way more money than it brought in. Uber’s share price whipsawed over its first few years as a public company and only stabilized above its listing price in 2023 after Uber began posting back to back quarterly profits. Today, it trades with a $152 billion market cap.
SpaceX will be the first of these mega IPOs and test sentiment from public markets investors. Retail traders might buy into Musk’s narrative that his fusion of SpaceX, xAI and Twitter should command a price tag as high as $1.75 trillion. But institutional investors will likely look askance at a business that has reportedly seen losses mount to $4.94 billion on revenues of $18.6 billion last year. His venture backers now eagerly await for the date of the IPO, and perhaps more when importantly when the lock-up period on share sales will end.
More from Forbes
