The Payday From These 3 Companies Would Outstrip A Decade Of VC Returns

Today on Forbes, the payday from these three companies would outstrip a decade of VC returns. 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 an $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 fund raise. 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 5 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. Open AI trades at around $900 billion on Forge. Public listings for Anthropic and Open AI 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 the biggest ever from the likes of Coinbase IPO'd at $86 billion in April 2021, Airbnb IPO'd at $79 billion in December 2020, and DoorDash IPO'd at $71 the previously mentioned Uber IPO. Venture capital funds hold relatively modest stakes in the three giants compared to Musk, who's poised to become the world's first trillionaire with SpaceX's IPO. Open AI'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, according to Megan Reynolds, managing partner at tech fund Altimeter. Reynolds, whose $20 billion fund has invested in Open AI and Anthropic, says, quote, "It is a wildly, wildly concentrated market. Venture growth profits have always been very concentrated because of the power law, but this explains all the investor FOMO around Open AI, 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. Everett Randall, a partner with venture fund Benchmark, says, "Quote, when I did the math, that was my holy moment, where this was entirely different from anything we have ever seen before. The growth that took Google, Amazon, and Meta from startups to trillion-dollar market caps largely played out in the public markets and took decades," says Randall. "But today, a handful of AI-linked startups have surged to similarly massive valuations while still private. " He says, "Quote, now we have compressed that timeline by 3x plus, and everyone is trying to grapple with that reality. " Anthropic doesn't forecast that it will break even 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. For full coverage, check out Iain Martin's piece on forbes. com. This is Kieran Meadows from Forbes. Thanks for tuning in. — Mhm.