The shape of capital formation in the United States has shifted, and the consequences may now extend well beyond Silicon Valley.
In a recent Fortune op-ed, Alpha Partners Managing Partner Steve Brotman argues that the private market has quietly replaced much of the traditional IPO path, with mega-funds, mutual funds, sovereign capital, and other institutions absorbing growth that public investors once captured. As he writes in the piece, what used to be late-stage venture rounds increasingly look like private-public hybrids that front-run the public market.
The op-ed makes the case that this is not just a story about concentration at the top of the venture market. It is a story about who gets to participate in wealth creation at all. Earlier generations of technology companies like Microsoft, Cisco, Intel, and Amazon delivered much of their upside in public markets, where ordinary investors could participate. Today, a much larger share of that value creation may be happening before the public has access, if it has access at all.
Brotman points to several reasons the system keeps expanding. Going public has become more burdensome, more litigious, and in some cases less rational, with Sarbanes-Oxley costs and shareholder litigation falling especially hard on smaller public companies. Accredited-investor rules, meanwhile, continue to reserve much of the most attractive private exposure for institutions and wealthy individuals. The combined effect, he argues, is a market that works very well for the people already inside it.
That matters because it changes capital formation itself. Private markets may look efficient on paper, but they come with intermediaries at every stage, while public markets have lost some of what once made them so important, including broad participation and transparent price discovery. The op-ed notes that the public market has visibly narrowed over time, with the Wilshire 5000 now containing only about 3,100 companies.
Brotman’s proposed response is notable. Alongside shareholder tort reform and broader access to private vehicles, he argues that the most important opportunity may be the creation of a US sovereign wealth fund — a structure that would allow the country to participate alongside the institutions already benefiting from rapidly appreciating private assets. As he notes in the piece, more than 90 countries already operate sovereign wealth funds, and several US states have built versions of their own.
The broader takeaway may be that the inequality conversation around AI and private markets is often framed as a tax question, when the more durable issue is one of access. If the most valuable companies of this cycle continue to do most of their compounding in private markets, the question of who can participate on the front end may matter far more than how value is redistributed after the fact.
Read the full Fortune op-ed here.
Note: The views expressed by Steve Brotman represent his personal perspective and may not reflect the views of Alpha Partners as a firm.
