Private growth equity: the underappreciated opportunity

As with any investment, your capital is at risk.

Every business starts with an idea – one that grows over time into a product or service. But for companies to truly thrive and expand, they often need one crucial ingredient: capital. In the early days, that funding typically comes from venture capital firms willing to take on the risks of investing in young businesses, when products aren't yet fully developed or widely available.

Companies that prove their viability and achieve a certain level of revenue historically chose to continue their growth journey through an initial public offering (IPO), selling shares to a broad range of investors.

However, since the Global Financial Crisis, companies have been choosing to list later and later. The average age of a company at the time of its IPO in the US has jumped from eight to 14 years over the last two decades. SpaceX, one of the world’s most valuable private companies, has a market value over $400bn, for example. If it listed at this valuation, it would be among the 25 largest American companies.  

This paradigm shift has created a relatively new asset class – private growth equity. It is large, numbering over 1,500 unicorns (private companies valued over $1bn) and is growing, with a total market value over $6tn. 

By the time a startup becomes a private growth company, it has overcome three big hurdles that lead to startup failure: product market fit, having the right team, and nearing profitability. Investing in private growth equity is therefore less risky than venture capital and provides faster growth than buyout.

Baillie Gifford has been investing in exceptional, high-growth public companies for over 100 years. In 2012, we invested in our first private company, Alibaba, because we noticed that the type of high-growth companies we were used to investing in in public markets were opting to stay private for longer.

It was a natural extension of our public market expertise. Since then, we’ve invested over $10 billion in more than 160 private growth companies. Many remain private, such as SpaceX, ByteDance, Stripe and Bending Spoons, but many have also gone on to list, like Spotify and Wise, and we remain shareholders today.

Unlike some other private market investors, we don’t view a listing event as a trigger for an ‘exit’. To us, it is just another financing round. Our private company investment team sits next to our public market investors. Being public market investors makes us better private market investors, and being private market investors makes us better public market investors.

Of course, investing in private companies requires a long-term outlook, as does investing in any type of equities. These opportunities are not about quick wins, but about patience and belief in the power of innovation and growth over time.

For the right kind of investor, it can be a rewarding strategy.

Learn more: how Baillie Gifford invests in private companies

Risk factors

The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

This communication was produced and approved in November 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

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