Are public markets enough to capture tomorrow’s growth leaders?

Many of today's most innovative companies are staying private for longer, meaning investors who only invest in public equities may miss out on much of the value creation that occurs before a company goes public.

For many companies, an initial public offering (IPO) was traditionally a major milestone, allowing them to raise funds from public investors to fund their next phase of growth. However, in recent years, it has become easier for companies to access private capital, reducing the need to pursue a public listing, if at all. 

As a result, many companies are now generating a larger share of their growth while they remain private. 

With more value creation taking place outside public markets, it is becoming increasingly important for financial advisors and investors to consider how they can access long-term growth opportunities across both public and private markets.

We sat down with Claire Shaw, Portfolio Director at Baillie Gifford to discuss the investment case for private equity, the AI opportunity set across private markets, and where she sees the most compelling opportunities in the asset class.

Interview transcript

Understanding the private equity landscape

Jason Teo: Many of today's most innovative companies are choosing to remain private for longer. This has prompted many advisors and investors to take a closer look at the role private equity can play in one’s portfolio.

Claire Shaw: Yes you're absolutely right. Companies are staying private for longer. If you look at the average age of a company that's IPO-ing today, it's something like 14 years old. You go back a decade, that number was something like 7 years, so back in 2014, it was only seven years that companies were IPO-ing.

So what you've seen over the last decade is you've almost got this era of missed growth if you've only invested in public vehicles.

And I would say there's a number of structural factors as to why companies are staying private for longer. One issue is that it's simply become more expensive to be a public company. There's more regulatory hurdles and documentation and hoops you need to go through.

It's also become easier to scale in private markets. A lot of these software companies you saw over the last decade are asset light. So they have not needed the same quantum of capital to get to scalability.

The third reason, which I think is more interesting, is there’s a cultural angle. If you go back a decade, I think a lot of the founders wanted to ring that bell in the New York stock exchange. That was their coming-of-age moment. Founders now think that by becoming a public company, there's more short-term noise if you like. They're not able to focus on that kind of long-term vision because of the pressure for quarterly earnings and results.

Why private equity?

Jason: As more of a company’s growth journey takes place in the private markets, what is the investment case for including private equity as part of a long-term portfolio?

Claire: There's also a diversification angle that comes with investing in private equity. If you look at most global growth portfolios, they will look the same. You'll have the same names in there and there's very little diversification probably.

What private equity offers you is diversification benefits which manifest itself in performance. You have different performance cycles but also different exposures because you have a number of assets that are unique, but often don't have public market peers.

So SpaceX was private. And if it was doing very well, there was nothing in the public markets that would be comparable. Likewise with the large language models, there's not really any public market peers.

What that gives you as an investor is very uncorrelated returns that when your private companies and these unique assets are doing very well, there's often not a public market equivalent. I think for clients that's a really attractive addition to a global growth portfolio, having private equity in there as well.

Jason: For advisors considering private equity for client portfolios, what are the factors that they should think about when determining whether the asset class is suitable for their clients?

Claire: I think a long-term time horizon is what's key. By their nature, private companies are typically on a different stage in their journey. And so I think you need to be aligned with the founders and the management teams of these companies, and that you need to have that long term vision and share their alignment with where the company could get to in five years time.

Jason: Private equity is often seen as a complex asset class. What are some of the most common misconceptions that investors have about private equity?

Claire: I think people still think that private equity means small. I mean, I look at Anthropic today at $900 billion, Bytedance at $550 billion¹.

You know, these are some of the biggest companies, bigger than many public companies. So that's a big misconception, people sort of equating them to being small. These are big global cash generative businesses who often dominate their respective industries.

Jason: When assessing a private company, what are the key characteristics that indicate it has the potential to become a successful long-term investment?

Claire: I think there's a formula of three things. The first is the scale of the opportunity. What is the problem this company is looking to solve? How big could that opportunity set be for them?

The second thing is a founder who has ambition. If you look at the most successful companies in history, they're typically founder-led. And we think that is a very, very important attribute.

And then the third bit of the formula is the ability to execute on that vision; having a team of people around you who have that strength and depth of talent and skill and desire. We think that is what increases the chances of success. 

Does an IPO change the investment case?

Jason: An IPO is usually seen as a major company milestone, so from an investment point of view, what actually changes when the company goes public and what remains the same?

Claire: There's a lot that changes, but there's also a lot that doesn't change. Taking those three ingredients that I mentioned, when a company becomes public, those three ingredients don't change.

However, like I mentioned earlier, there are things that do change, which is more scrutiny. There are more disclosures, there's that kind of short-term noise in market. You'll get different market participants, and you'll have hedge funds potentially shorting the company. So there are other variables that are protected in private markets that you're obviously more susceptible to in public markets.

But from our perspective, what is more important is those factors. Does the company still remain on track to deliver on that opportunity set? So with an IPO, yes, it’s a tremendous occasion for many companies. But for us, as I say, we just see it as the next stage of a company's journey.

Understanding the AI opportunity set

Jason: AI has been a key investment theme this year. Beyond the obvious beneficiaries, where do you see the most attractive opportunities for investors to participate in the growth of AI across both public and private markets?

Claire: AI is obviously one of the most exciting topics of conversation right now. We don't think that AI is just another technology trend. We think it's fundamentally going to change the foundations of the global economy and touch every sector and industry and company across the globe.

From our perspective, how we think about AI is trying to get exposure across the whole AI value chain. When you think about what's happened in the last couple of years, a lot of the enthusiasm around artificial intelligence has been at the hardware or the picks and shovels end of the value chain.

It's been Nvidia. It's been TSMC, SK Hynix. The performance of these companies has been phenomenal. And so for anyone wanting to get exposure to AI, they've channelled all their enthusiasm to these sort of companies.

However, what's more interesting is as you come down the value chain towards the infrastructure layer where you have companies who are essentially helping enterprises with starting out their data to be able to use AI or the intelligence layer, you know, the Anthropics, the large language models, or companies like MiniMax as well. These companies are actually driving that innovation forward. So that's the next layer of the AI value chain.

And then the final layer of the value chain is what I'd call the application layer, which is where AI is going to be deployed in industry. In healthcare, for example, to help diagnose cancer or heart disease, or in finance to help with risk control metrics.

We think that while a lot of enthusiasm has been channelled down the hardware layer to begin with, the opportunity set across infrastructure and applications is getting bigger and broader.

So I think it's about making sure that you have exposure across the value chain, but also across geography. I mean, we talked about Anthropic earlier and Open AI. I think people are mistaken for thinking this is just a US phenomenon. You've seen what's been happening in China whether it's with DeepSeek, whether it's MiniMax or more recently with Moonshot and their model. There are two parallel ecosystems we think developing in two different sides of the globe.

And we think it's important to have exposure to both and to understand the ecosystems developing around both those areas.

Jason: Which theme are you spending the most time thinking about today, both within AI and beyond, and which company or business model best illustrates what you are seeing at this moment?

Claire: In AI, what's been interesting from our perspective, is where the bottleneck has shifted to. If you go back a couple of years ago, the bottleneck was chips, and you saw that manifest itself through Nvidia. They just could not keep up with the demand. You had this huge demand-supply imbalance that everyone wanted more chips.

Now I think the bottleneck is power. If you look at just how much consumption of electricity and power that's needed, and you see the growth of data centres, you see the consumption growing exponentially.

I think increasingly what you're seeing is that the power is almost like the new capital, you need to have that power to be able to fuel this growth.

And what's a really interesting way of thinking about this in slightly different terms is the role that SpaceX will play. SpaceX is a company that not only has two monopolies currently in launch rockets and satellites. But their potential ability to put data centres into space and really address the constraints that we have on earth in space is fascinating from our perspective.

So I think that that's been a really interesting evolution, I would say in terms of our thinking on AI and what the role of SpaceX and those data centres in space can help resolve a problem on the Earth.

¹Source: Baillie Gifford, as of 20 July 2026