Indirect Exposure to Private AI Assets: Strategic Vehicles and Risk-Adjusted Returns in a Pre-IPO Landscape

The rise of artificial intelligence (AI) has redefined the venture capital and private equity landscapes in 2025, with AI-related deals accounting for over 50% of global VC funding according to Morgan Lewis. As private AI companies like OpenAI, Anthropic, and Databricks soar to trillion-dollar valuations as research shows, investors are increasingly seeking indirect exposure to these high-growth assets. This analysis explores the strategic investment vehicles-venture capital funds, SPACs, and AI-focused ETFs-and their risk-adjusted return profiles, offering a roadmap for navigating the pre-IPO AI ecosystem.

The Dominance of Venture Capital in AI

Venture capital remains the cornerstone of indirect exposure to private AI assets. In 2025, AI-focused startups have secured record funding, with mega-rounds reshaping the sector. A single $40 billion AI deal in Q1 2025, for instance, propelled venture investment to its strongest quarter since 2022. The Forge AI thematic basket, a curated portfolio of 19 AI companies, exemplifies the sector's outperformance, appreciating 165.9% through November 2025-triple the return of broader private market indices.

However, investors must exercise caution. A framework for evaluating AI-focused investments emphasizes the need to distinguish between hype and genuine innovation. Startups with high barriers to entry, such as trust-based models or specialized use cases, tend to outperform. For example, Wiz, a cloud-security firm, embedded in both cloud and AI innovation cycles, achieved a $32 billion valuation. Conversely, private equity firms have prioritized infrastructure investments-such as data centers-over high-risk AI startups, recognizing the foundational role of compute power in AI deployment.

Leveraged ETFs: High Returns, High Volatility

For retail and institutional investors, leveraged AI ETFs offer amplified exposure to the sector. The Leverage Shares +3x Long Artificial Intelligence ETP surged over 120% year-to-date in 2025, driven by demand for semiconductor manufacturers and cloud infrastructure providers. Similarly, the Roundhill Generative AI & Technology ETF (CHAT) delivered a 49.5% return, with a Sharpe ratio of 1.30.

Yet leveraged ETFs come with structural risks. Daily compounding mechanisms and volatility drag can erode long-term returns, particularly in choppy markets. CHAT, for example, exhibited 27.08% volatility over 20 days, underscoring the trade-off between amplified gains and heightened risk. These products are best suited for tactical traders rather than long-term holders. Non-leveraged alternatives, while offering lower returns, provide more predictable compounding and lower volatility according to Fool.

SPACs and Co-Investment Funds: A Backdoor to AI Giants

SPACs have resurged in 2025 as a vehicle for indirect exposure to pre-IPO AI companies. Chamath Palihapitiya's American Exceptionalism Acquisition Corp., for instance, targets high-growth sectors like AI and energy, raising $345 million with institutional backing. SPACs offer advantages such as flexible merger terms and alignment incentives for sponsors, who receive promote structures tied to 50%, 75%, and 100% stock price appreciation according to TechCrunch.

However, SPACs remain contentious. Many post-merger companies underperform, with some dropping below 10% of their IPO prices. Palihapitiya's previous SPAC-backed ventures have seen a 16.75% portfolio decline as of March 2025. Regulatory changes in 2025 have further complicated the landscape.

For OpenAI, which is expected to launch a $1 trillion IPO in 2026, SPACs could provide a backdoor pathway. However, structural risks remain-such as oversupply in data centers and chip capacity-investors must weigh these against the potential for outsized returns.

Risk-Adjusted Returns: A Comparative Lens

The risk-adjusted return profiles of AI-focused vehicles vary widely. The Forge AI basket's 165.9% appreciation reflects robust demand, but its performance is tied to the sector's rapid valuation growth. In contrast, SPACs and leveraged ETFs exhibit lower Sharpe ratios due to volatility and compounding effects. For example, Palihapitiya's SPACs have historically delivered low Sharpe ratios, reflecting overvaluation of speculative tech ventures.

Meanwhile, non-leveraged ETFs like the VanEck Semiconductor ETF, with a 222% three-year return, demonstrate the enduring appeal of infrastructure plays. These vehicles offer a balance between AI growth and risk mitigation, particularly for investors wary of speculative bets.

Conclusion: Balancing Innovation and Prudence

Indirect exposure to private AI assets in 2025 requires a nuanced strategy. Venture capital funds and thematic ETFs offer high-growth potential but demand rigorous due diligence. Leveraged products amplify returns at the cost of volatility, while SPACs provide speculative opportunities amid regulatory scrutiny. As OpenAI and peers approach IPOs, investors must align their risk tolerance with the structural terms of these vehicles.

In a market where AI valuations are soaring, the key lies in distinguishing between transformative innovation and fleeting hype. By leveraging diversified, risk-adjusted strategies, investors can position themselves to capitalize on the AI megatrend without overexposing their portfolios.