The Blurring Lines Between Public and Private Markets

The historical firewall separating public and private markets is crumbling — and fast. The institutions that once defined Wall Street are now scrambling to reposition themselves, acknowledging a sobering truth:

The most compelling innovation and value creation is happening before companies ever hit the public exchanges.”

From minority investments in venture capital firms to publishing research reports on private companies for the first time in history, traditional financial institutions are planting flags in private markets at a scale we’ve never seen before.

We’re witnessing the beginning of a systemic realignment in how capital flows, who gets access, and when value is captured. And the trend is unmistakable.

A Shrinking Public Market

The number of publicly listed companies in the U.S. has fallen by over 50% since the late 1990s, from a peak of ~8,000 in 1996 to around 3,700 today.

Even more concerning is the increasing concentration of market cap. The top 10 companies in the S&P 500 now account for over one-third of its total market capitalization, per a 2025 Goldman Sachs report. The result? Fewer investible growth stories and less diversification for public market investors.

This scarcity has Wall Street looking elsewhere for alpha.

Wall Street Wades Into Venture

The world’s largest financial institutions — long the gatekeepers of the public markets — are now reshaping their role by stepping directly into venture capital and growth equity. Their motivations are clear: private companies are staying private longer, and the most significant returns are now realized before IPO.

Here’s a closer look at the shift:

IPOs Are No Longer About Raising Capital

Historically, the IPO was a company’s moment of public debut — raising fresh capital to fund expansion and R&D. But that model is collapsing.

Today, IPOs are increasingly liquidity events, not capital-raising events.

1. (2025, July 12). Private equity dry powder growth accelerated in H1 2024. S&P Global.
2. (2025, June 2). IPOs: 44 Years of Data! The Corporate Counsel.

Why This Matters for Investors

This shift from IPOs as growth mechanisms to IPOs as cash-outs means that the public markets are getting the leftovers. By the time a company rings the bell at the NYSE, much of the explosive growth — and value creation — has already occurred.

Wall Street understands this, which is why they’re increasingly investing in Series C, D, and pre-IPO rounds. They’re not just advising companies on going public — they’re owning equity long before the IPO filing is ever made.

Alumni Ventures Is Already Here

While the world’s largest financial institutions are racing to build infrastructure for this new paradigm, Alumni Ventures (AV) has been operating here for years.

Our model was built for the modern capital markets reality. With access to hundreds of venture-backed startups across stages — including late-stage and pre-IPO deals — AV offers our investors a way to engage with the companies shaping the next decade before they become household names.

Whether it’s through our diversified venture funds, targeted growth portfolios, or strategic co-investments, we provide investors access to the part of the market where value is created — not extracted.

As public and private markets continue to converge, the traditional playbook is being rewritten. The institutions that adapt fastest will lead the next era of wealth creation.

At Alumni Ventures, we’re already playing in this new frontier.
Are you?

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This communication is from Alumni Ventures, a for-profit venture capital company that is not affiliated with or endorsed by any school. It is not personalized advice, and AV only provides advice to its client funds. This communication is neither an offer to sell, nor a solicitation of an offer to purchase, any security. Such offers are made only pursuant to the formal offering documents for the fund(s) concerned, and describe significant risks and other material information that should be carefully considered before investing. For additional information, please see here. Achievement of investment objectives, including any amount of investment return, cannot be guaranteed. Co-investors are shown for illustrative purposes only, do not reflect all organizations with which AV co-invests, and do not necessary indicate future co-investors. Example portfolio companies shown are not available to future investors, except potentially in the case of follow-on investments. Venture capital investing involves substantial risk, including risk of loss of all capital invested. This communication includes forward-looking statements, generally consisting of any statement pertaining to any issue other than historical fact, including without limitation predictions, financial projections, the anticipated results of the execution of any plan or strategy, the expectation or belief of the speaker, or other events or circumstances to exist in the future. Forward-looking statements are not representations of actual fact, depend on certain assumptions that may not be realized, and are not guaranteed to occur. Any forward-looking statements included in this communication speak only as of the date of the communication. AV and its affiliates disclaim any obligation to update, amend, or alter such forward-looking statements, whether due to subsequent events, new information, or otherwise.