IPO Madness
-- by B. Keith Geddings II
Record-Sized IPO Liquidity
Records aside, the most promising thing about the SpaceX IPO may be what it signals for the venture ecosystem. We may have finally arrived at the tipping point, after which we might realistically expect to see VC funds realizing gains and making meaningful returns to investors. It is estimated that the SpaceX IPO alone will return $150 billion dollars to VC investors. To put that in perspective, total VC exits for the 2024 calendar year totaled $154.5 billion, and 2025 saw $297.6 billion in exits. In addition to the impact of proceeds from the SpaceX IPO, the staggered approach that SpaceX is using to manage the lockup period could put money back in the pockets of investors sooner than is typically expected.
Gateways to Distributions
The typical lock-up period for investors following an IPO is 180 days. In a normal market environment, VCs wouldn’t be able to sell SpaceX shares until December, which would push LP distributions into the tail end of Q4 or the first quarter of 2027. You didn’t need us to tell you that we are not in a normal market. SpaceX’s staggered approach releases a specified number of shares from lockup at predetermined milestones, or when the stock meets and sustains certain performance benchmarks. SpaceX will publish its first set of quarterly earnings on September 2, 2026. On the second full trading day after that earnings release, investors will be able to sell 20% of their holdings. If the stock is trading at 30% above the IPO price for five of the 10 days following the September earnings release, investors will be able to sell an additional 10% of their shares. By freeing up shares in stages, as opposed to en masse, SpaceX is aiming to manage supply while satiating demand from retail investors and index funds, thereby stabilizing the stock price in the near term. The added benefit is that VC investors may see meaningful liquidity as soon as Q3 of this year.
Looking ahead at the AI IPOs
Anthropic and OpenAI have filed draft registration statements (Form S-1s) with the SEC, so we know that their IPOs are in the works.
Anthropic’s most recent round saw it raise $65 billion at a $965 billion post-money valuation. The anticipated IPO valuation is roughly $1–1.2 trillion. That equates to a return of up to 24% in a matter of months for the most recent investors. Looking back just five years provides a true sense of the magnitude of returns for early backers. Anthropic raised $124 million in its Series A round in May of 2021, at which time the valuation of the company was pegged at around $623 million. A conservative estimate by Anthropic’s very own Claude chatbot places the value of that initial Series A stake at $25 billion, or roughly a 200x multiple. This is the type of investment that can return an entire fund.
OpenAI is also targeting an IPO around the $1 trillion mark. In its most recent round of financing, it raised $122 billion at a post-money valuation of $852 billion. Investors who poured $6 billion into its earliest priced round in October 2024 are likely to see their stake valued at around $30 billion in a $1 trillion dollar IPO scenario. While that is only a ~5x return, it still represents a $24 billion dollar return to those investors, which is substantial in terms of absolute dollars.
On Deck This Year
Anthropic is expected to announce a fall 2026 IPO date. OpenAI has yet to commit to an IPO date. As far as proceeds are concerned, the IPO just starts the clock. But there is reason to believe that Anthropic and OpenAI will pursue similar post-IPO strategies to SpaceX, as they will likely be managing similar supply and demand market dynamics.
Distribu-When?
Taken together, the timeframe for investors seeing cash hit their accounts following these IPOs is broad enough to encompass much of the 2027 calendar year. If Anthropic’s IPO takes place sometime in Q4 of 2026, and they follow SpaceX’s example of the staggered approach for releasing shares from lock-up, distributions could begin to flow in the first half of next year. From that point forward, depending on the stock’s performance, and any other lock-up period milestones, we could continue to see a steady drip of distributions to investors as funds are able to liquidate their shares. If market conditions hold, and that’s a major if, OpenAI could follow suit, and investors may see distributions in the back half of 2027.
Industry Impact
The venture ecosystem has been in a prolonged slump following the frenetic fundraising and dealmaking activity that peaked in 2021. This has made it particularly hard for fund managers to raise money, notably because their Distributions to Paid-In Capital (DPI) have been as low as 4.2%, hovering near the lows experienced during the global financial crisis. Analysts believe that these AI IPOs could provide a systemic level of liquidity, which is credible when considering the total amount of dollars that could be returned to investors by the end of 2027. Given that LPs often recycle capital into VC funds, it is possible that they could finally be willing to commit capital to VC funds again. Just how soon is anyone’s guess, but as it stands, circumstances are aligning for a strong fundraising environment in 2027.
