The Private Market Surge: Why Now Is the Time to Lock in Pre-IPO Gains Before the Floodgates Open

The private markets are on the cusp of a historic shift. Companies are staying private longer, valuations are soaring, and the pipeline of potential IPOs has swelled to levels not seen since the dot-com boom. According to Citigroup's latest research, the combination of secondary sales, convertible bond activity, and strategic corporate needs is creating a perfect storm for an IPO wave that could redefine growth investing for years to come. For investors, the window to access these opportunities before public listings compress returns is narrowing—and the stakes have never been higher.

The Private Market Boom: Fueling a Backlog of Billion-Dollar Firms

The private markets are no longer a holding pen for startups. Fueled by institutional investors hungry for exposure to sectors like AI, robotics, and defense tech—areas underrepresented in public markets—companies such as SpaceX, OpenAI, and Databricks have raised staggering sums while avoiding the scrutiny of public trading. Citigroup estimates that $60 billion in secondary sales occurred in 2025 alone, a 20% jump from 2024, as investors clamor to buy shares from employees and early backers of these high-growth firms.

This trend isn't just about liquidity for insiders. It's a strategic move for companies to delay IPOs until they've reached scale and stability. The result? A backlog of high-valuation, high-quality firms ready to enter public markets once conditions improve—a scenario Citi's Cully Davis likens to “a convertible bond market opening, signaling IPO readiness.”

Secondary Sales: The Lifeline Sustaining Private Valuations

The surge in secondary sales is critical to understanding why pre-IPO opportunities are so compelling today. By allowing investors to trade shares privately, these transactions create a de facto “market” for private equities, setting valuations that often rival—or exceed—their public peers. For instance, a robotics firm valued at $10 billion in a private sale could enter the public markets at a $15 billion valuation, rewarding early investors handsomely.

Critically, secondary markets are now attracting institutional capital at scale. Pension funds, endowments, and family offices—entities traditionally focused on public equities—are deploying billions into these deals. This influx isn't just about chasing returns; it's a bet that technological disruption in AI and defense will outpace public markets' ability to value it.

The Signals Pointing to an IPO Uptick

Citigroup's research identifies two key indicators that an IPO wave is imminent:

1. Convertible Bonds: Tech giants like Apple and Alphabet have issued zero-coupon convertible bonds, a move Citi analysts interpret as a sign of confidence in upcoming market conditions. These bonds often precede share offerings, as companies test investor appetite for risk.
2. M&A Advantages: Public companies with liquid stock are better positioned to acquire private rivals. As tech firms race to consolidate in AI and robotics, the pressure to go public—or risk being left behind—will intensify.

Why Investors Must Act Now: Sectors to Prioritize

The message is clear: investors should prioritize sectors where private firms are pulling ahead of public peers. Here's where to focus:

• Artificial Intelligence: Private AI startups (e.g., OpenAI, DeepMind) are advancing generative models and enterprise tools faster than public peers. Their valuations reflect this edge.
• Robotics: Companies like Boston Dynamics and Vicarious are revolutionizing automation in manufacturing and defense—a sector underpenetrated by public listings.
• Defense Tech: Cybersecurity firms and drone developers are capitalizing on geopolitical tensions, but many remain private to avoid regulatory scrutiny.

The risk of waiting? Once these firms go public, their stock prices could surge as retail and institutional investors chase the next big thing. Missing the pre-IPO window means missing the highest returns.

Investment Strategy: Accessing the Pipeline

For most individual investors, accessing pre-IPO opportunities requires creativity. Options include:
- Secondary Market Funds: Platforms like SecondMarket or Forge Global provide exposure to private shares.
- Venture Capital Funds: Allocating to VCs with strong track records in AI and robotics can capture pre-IPO gains indirectly.
- Publicly Traded “Playbooks”: Firms like NVIDIA (NVDA) or Palantir (PLTR) may benefit from M&A activity as public companies acquire private tech assets.

The Bottom Line

The private market boom isn't a bubble—it's a structural shift. Companies are staying private longer, valuations are being set in secret, and the pipeline of IPO-ready firms is bursting at the seams. Investors who wait until these companies go public risk paying a premium for assets that were available at a discount just months earlier.

The time to act is now. Focus on AI, robotics, and defense tech. Embrace secondary markets. And prepare for the day when the private unicorns of today become the public giants of tomorrow—and your portfolio's next breakout winner.

Invest wisely—and act before the floodgates open.