As artificial intelligence companies move closer to the possibility of public listings, a growing share of the sector’s value may already have been created while these businesses remain privately held. In a Bloomberg Television segment, Hamilton Lane’s Erik Hirsch discussed why investors may need to look beyond the stock market to gain broader exposure to the AI industry. The firm’s private AI portfolio includes companies such as OpenAI, Anthropic, xAI and Databricks, illustrating the importance of private capital in financing prominent technology businesses. Hirsch explained that companies can remain private for longer because they have access to substantial funding without immediately turning to public markets. As a result, some major growth opportunities may emerge before individual companies conduct initial public offerings, or IPOs. However, the potential to participate in that early growth comes with important considerations, including limited transparency, valuation uncertainty and the difficulty of selling privately held investments.

Hirsch also highlighted several ways investors can access private companies, including primary investments, secondary transactions, continuation funds and co-investments. Primary investments provide capital directly to companies, while secondary transactions can allow investors to purchase existing shares; continuation funds and co-investments offer additional structures for participating in private-market assets. Depending on the transaction, investors may find opportunities to buy at a discount or evaluate a more established asset, although neither advantage is guaranteed and private investments carry significant risks. Unlike publicly traded shares, private-market holdings may be difficult to value consistently and can remain illiquid for extended periods. Hirsch’s broader argument is that investors seeking exposure to AI’s long-term expansion may need to consider both public companies and private businesses rather than relying exclusively on future IPOs. Ultimately, the appropriate balance depends on each investor’s financial goals, risk tolerance, liquidity needs and ability to evaluate complex investments.