Private Markets Outlook 2026: When “Private” Becomes the Default

The case for venture capital in Australian portfolios

‍

Private markets have been growing for years, but 2026 feels like an inflection point in how investors think about it. This is because more companies are choosing to build and scale privately for longer, supported by deeper pools of private capital.

‍

A simple way to frame it: the public market is increasingly the “later chapter,” not the whole story.

‍

Globally, the OECD estimates there were about 44,000 listed companies worldwide at the end of 2024, with total market cap around US$125 trillion. That’s still enormous. But the route to listing is changing and Australia is a clear case study of what that looks like when the IPO pipeline slows.

‍

‍

Private markets are bigger and they are being “repackaged”

‍

Private markets used to mean mostly closed-end institutional funds (private equity, venture capital, infrastructure). Today, they also include a growing layer of non-traditional private market capital - separately managed accounts, evergreen vehicles, co-investment structures and other formats.

‍

In its 2025 report, McKinsey & Company argues that when you include these newer channels, private markets are materially larger - around ~US$22 trillion by their framing.

‍

Why that matters for everyday portfolios: the more “packaged” and varied private markets become, the more they start competing with (and complementing) traditional asset classes (shares, property, bonds), particularly for long-horizon capital.

‍

The public-to-private shift is structural, not just cyclical

‍

A key “private becomes the default” driver is straightforward: companies can raise more money privately than ever before, and they can do it later into their lifecycle.

One useful global signal: stock exchange leaders coordinated by the World Federation of Exchanges warned in 2025 that public markets face pressure from a sustained listings slowdown. Financial Times reported WFE data showing global IPOs fell 22% between 2020 and 2024, to 1,133 listings in 2024.

‍

‍

Why are companies staying private for longer?

‍

There isn’t one reason, it’s a stack of incentives:

• More private capital is available across stages (seed → growth), reducing the “need” to list purely to fund expansion.
• Public market overhead is real: continuous disclosure, governance cost, short-term scrutiny.
• Private liquidity options have improved: secondaries and M&A can provide partial liquidity without a full IPO (not guaranteed, but increasingly used as a tool).
• Modern companies are intangible-heavy: software and AI businesses often prioritise flexibility while product and distribution mature.

J.P. Morgan Private Bank notes the median age of a tech IPO is now ~14 years (versus ~7 years in the late 1990s).

If public markets used to be the “graduation ceremony” after a few years of building, today they are more like “post-grad”: many companies spend longer building skills, scale and systems privately before they step onto the public stage, if they step on at all.

‍

Australia: the IPO slowdown is no longer a blip

‍

Australia has its own version of the same story and it’s measurable.

‍

Research from Mandala Partners (in partnership with FinClear) reports that only 29 companies went public in 2024, an 85% decrease from 2021, and that the value of equity raised in IPOs declined by “over 80%” from 2014 to 2024.

‍

Australia’s VC market also reflects the “selective recovery” dynamic seen globally: fewer deals, but more dollars concentrated into fewer opportunities. The State of Australian Startup Funding 2025 reports 390 deals in 2025 (down 20% on 2024) while total funding rose to $5.1b (up 24%), with the most funded sectors led by AI, fintech and biotech/medtech.

‍

Meanwhile, Australia’s pool of long-duration capital continues to expand. APRA reported total superannuation assets of $4.5 trillion as at September 2025.

And ASIC has been explicit that Australia is experiencing shifting dynamics between public and private markets, including opportunities and risks (transparency, valuation practices, conflicts, and investor protection).

‍

The takeaway: when the listings pipeline slows, investors relying only on public markets may see fewer opportunities to access earlier growth via IPOs and more growth value may remain private.

‍

So where does VC fit alongside shares, bonds and property?

‍

Venture capital (VC) is the segment of private markets that funds early-stage and growth companies before (or instead of) a public listing. It behaves differently to traditional assets because it’s typically:

• Illiquid (capital is tied up for longer; liquidity events are uncertain)
• High dispersion (a small number of outcomes can drive most of the value)
• Milestone-driven (progress is measured in product, customers, revenue, governance, not daily share prices)

Cambridge Associates describes the “power law” dynamic bluntly: nearly 90% of VC value has been driven by the top 10% of companies.

‍

VC in a portfolio: why “satellite” is the common framing

‍

For many investors, VC is best understood as a satellite allocation - a smaller portion of a broader portfolio built on core exposures like listed equities, bonds and property. The goal isn’t to replace those foundations or provide predictable liquidity. It’s to broaden exposure to parts of the economy where more company building and scaling now happens privately.

‍

The trade-offs are material: VC is typically illiquid, valuations are less frequent than public markets, and outcomes can vary widely. That’s why “how much” matters as much as “why” - and why diversification across managers, stages and vintages is often discussed as a risk-management principle.

‍

VC vs traditional asset classes: different job, different trade-offs

‍

This isn’t “better vs worse”, it’s different portfolio behaviour:

• VC vs listed equities: less frequent pricing and typically longer holding periods; outcomes can be more concentrated.
• VC vs bonds: not income focused; higher uncertainty and illiquidity.
• VC vs property: both can be long horizon and illiquid, but VC cashflows depend on company outcomes and exit pathways.
• VC vs cash: not a liquidity reserve; capital is committed and timing of returns (if any) is uncertain.

‍

What investors may miss without VC exposure

‍

This is not about promising returns. It’s about recognising what part of the economy a portfolio does (or doesn’t) touch.

1. Earlier participation in innovation cycles
   A growing share of the innovation economy is funded privately for longer (AI is the clearest example).
2. Access to “private-market value creation” before IPO (or without IPO)
   If companies delay listing, public markets may capture a later slice of the journey and some companies may never list.
3. A different return shape
   Public markets (especially diversified indices) tend to be broad and continuously priced. VC is narrower, less frequently priced, and more outcome-skewed.

VC vs listed small caps in Australia: similar ambition, different mechanics

‍

Listed small caps are often the closest public-market cousin to VC: earlier-stage, higher growth potential, higher risk. But the experience is not the same.

• Listed small caps: daily liquidity (in theory), continuous market pricing, public disclosure regime
• VC: long-horizon illiquidity, periodic valuations, information rights vary by structure

Why it matters in 2026: if more growth companies are choosing to stay private longer, small caps can still provide public exposure to emerging businesses, but they don’t automatically replace exposure to companies that haven’t listed (and may not list).

‍

VC market outlook for 2026: improving activity, concentrated themes, evolving liquidity

‍

The most recent global (and Australian) data points paint a nuanced picture:

‍

·       Crunchbase: US$425B invested into 24,000+ private companies in 2025, up 30% YoY (from US$328B in 2024).

·       PitchBook: AI captured 65% of total VC deal value in 2025, and the theme is expected to remain influential in 2026.

·       S&P Global Market Intelligence: Global VC fundraising was US$86.7B as of 30 Nov 2025, tracking for the first sub-US$100B year since 2015.

·       Australia (State of Australian Startup Funding 2025): 390 deals in 2025 (down 20% on 2024) while total funding rose to $5.1b (up 24%), with funding concentrated in AI, fintech and biotech/medtech.

‍

Taken together, the signal into 2026 is a market that’s active but selective: capital is flowing, but it’s clustering by theme and perceived quality, while fundraising and liquidity remain the constraint.

‍

What that likely means in practice‍

• More money, but narrower lanes: capital can cluster in a few categories (especially AI), while other sectors face higher bars for funding.
• Liquidity is still the constraint: IPO windows matter, but so do M&A and secondaries as practical routes to liquidity.
• Manager and vintage selection matter: when dispersion is high, the gap between outcomes can widen.

What to understand before considering VC exposure‍

• Illiquidity / long holding periods
• Valuation lag and limited price discovery
• Concentration risk (manager, sector, vintage)
• Loss of capital risk (company failure)
• Exit timing uncertainty (M&A/secondaries/IPO windows)

If you are evaluating VC exposure, these are the questions that matter‍

• What stage focus (seed / Series A / growth) and why?
• How diversified is the portfolio (number of companies, sector concentration, geography)?
• What’s the liquidity plan (secondaries, follow-ons, typical holding periods)?
• What are the fees and structure (closed-end vs evergreen, capital calls, distribution mechanics)?
• How does the manager support companies (governance, hiring, follow-on access)?
• How are valuations determined and how often?
• What risks are most relevant (concentration, down rounds, follow-on funding cycles)?

‍

Key takeaways

• Private markets are larger and more structurally embedded in capital formation than a decade ago.
• Companies are staying private longer, shifting more value creation into private ownership.
• Australia’s IPO slowdown is pronounced, reinforcing the private-market trend locally.
• Australia’s VC market is rebounding in dollars but not breadth: fewer deals, more capital, and clear sector concentration, reinforcing the importance of diversification and realistic liquidity expectations.
• VC is distinct from traditional assets and from listed small caps: it’s illiquid, milestone-driven, and highly dispersed.
• 2026’s VC environment looks active but concentrated, with fundraising still selective and liquidity evolving beyond IPOs alone.
• As “private longer” becomes the norm, some investors may consider VC as a complementary growth exposure alongside shares, bonds and property not as a replacement, but as a way to broaden exposure to earlier-stage innovation.

‍

Why FB Ventures exists in a “private longer” world

‍

For some investors, VC can sit best as a small satellite allocation alongside core holdings in traditional assets, a way to broaden exposure to innovation happening earlier in the private market lifecycle. It isn’t a substitute for liquidity or stability. VC comes with illiquidity, valuation lag and wide outcome dispersion, which is why expectations, time horizon and diversification matter.

‍

That’s where FB Ventures comes in. Our mission is to open access to venture capital and startup investing, with a focus on helping Australians participate in diversified VC exposure and understand how the asset class works in practice.

‍

‍

Disclaimer

This article has been prepared by FB Ventures Pty Limited (ABN 63 670 888 758, AFSL 553008), Investment Manager of the FB Ventures Fund (ARSN 680 942 670). FB Corp Limited (ABN 16 675 876 490, AFSL 557810) is the Responsible Entity. The information is general in nature only and does not take into account your objectives, financial situation or needs. It is not personal advice, an offer, recommendation or invitation to acquire units in the Fund. Before deciding whether to invest, you should read the Product Disclosure Statement and Target Market Determination available at www.fbventures.vc and consider seeking independent advice. Past performance is not a reliable indicator of future performance. Returns are not guaranteed and you may lose some or all of your capital.

‍

Reference

Australian Prudential Regulation Authority (APRA) 2025, APRA releases superannuation statistics for September 2025.

Australian Securities and Investments Commission (ASIC) 2025, REP 823: Advancing Australia’s evolving capital markets – Discussion paper response report.

Cambridge Associates n.d., 2026 Outlook: Private Equity & Venture Capital Views, Cambridge Associates.

Crunchbase 2026, Global venture funding in 2025 surged (funding data), Crunchbase News.

Financial Times 2025, ‘Public markets “under threat” from listings slump, exchange bosses warn’.

J.P. Morgan Private Bank n.d., 4 reasons for a resurgence in growth equity, J.P. Morgan Private Bank.

Mandala Partners 2025, Diverse alternative infrastructure for competitive Australian capital markets.

McKinsey & Company 2025, Global Private Markets Report 2025: Braced for shifting weather,.

Organisation for Economic Co-operation and Development (OECD) 2025, OECD Corporate Governance Factbook 2025.

PitchBook 2025, PitchBook releases 2026 outlook reports showcasing key trends shaping global private markets.

S&P Dow Jones Indices, S&P/ASX Small Ordinaries.

S&P Global Market Intelligence 2026, ‘Private equity fundraising totals continue to decline in 2025’.

Cut Through Venture & Folklore Ventures 2026, The State of Australian Startup Funding 2025.